From reports I have gotten, 2016 is proving to be a challenging year for the gear industry. Traditional markets such as mineral extraction and gas/oil extraction are in a down cycle and the counter balancing renewable energy sector is not robust. While some think the recent election will herald the return to “normal pricing” for commodities, it might take months before the full effects are shown. Sales departments are busy evaluating opportunities in new markets. There are already entrenched competitors in those sectors and they are not going to give up that business without a fight. New suppliers may underestimate the degree of difficulty in some parts. Or, they may also bring new technology to bear that will give them a competitive advantage. The traditional industrial engineering methods for cost reduction still work:
- Combining like operations: can you cut teeth in your CNC lathe?
- Eliminate operations: can you reduce manual deburring with better tools?
- Reduce material cost: are alternate materials available?
- Lower outside costs: should you bring processes in-house?
- Reduce scrap: can repairs or better tooling improve quality?
- Reduce waste: can packaging be reduced or eliminated?