Today, I testify to Congress about a productive government program. Really.
Trade Adjustment Assistance for Firms (TAAF) has sparked a dramatic turnaround for us. Marlin has grown revenues and profits the past six years despite the difficult economy. Per Inc. magazine, of seven million American companies, we ranked 162nd for growth among manufacturing companies. How? We embraced opportunities like TAAF.
Details: I bought a small factory that made bagel baskets. Bagel chains were opening everywhere. It was a good time to be the nation’s biggest maker of bagel baskets. Then, the Atkins diet swept the nation, so bread became passé. Plus, Chinese companies began dumping baskets cheaper than Marlin paid for wire. We began hemorrhaging cash.
Then, a representative from Boeing requested a basket to hold a delicate part through the manufacturing process. We knew only about making baskets for bagels. But the caller said price wasn’t a concern if we could deliver what he wanted quickly. Hmmm. We had to sharpen our focus on precision and engineering. We had no testing procedures, no blueprints, and no employee training. Our only measuring tool was a ruler. I knew our mission: transform or die.
Since then, we invested $3.5 million in robots that supercharged our precision and speed. Our clients include major companies in health care, aerospace, automotive, and telecommunications. We ship to 35 countries, including China.
How did TAAF help?
• On many occasions, we matched our spending of $75,000 with the same from TAAF, to gain ISO 9000 certification, purchase software, and retrain employees in new welding and laser cutting techniques.
• Despite a solid business in wire products, our clients wanted sheet-metal products with our wire baskets. TAAF’s match enabled us to meet these demands. We recently had the first month in which we sold more sheet metal than wire products. That ability to pivot quickly protects and creates jobs.
• TAAF helped us to achieve ISO 9001:2008 certification. In our field, ISO certification is rare, so we stand out from competitors, especially for global business.
Overseas competitors play by different rules and benefit from manipulated currency. Their labor costs are lower. Their material costs are subsidized. China offers manufacturers years of interest-free financing. Their environmental controls are a joke. On my trade-mission trip to China last year, the smog in Shanghai was choking. The Yangtze River is as wide as Baltimore’s Inner Harbor, but I couldn’t see across it.
The American worker will enjoy a higher wage, more benefits, and greater job security if we make him more productive. We do that with automation--computers, software, robotics--so we can produce quality parts faster.
Some wonder: how can I get factory workers down from $25/hour to $23? That’s wrong. I want to get to $27 an hour, which I justify if they produce $200,000 in revenue/year, up from $150,000. Yelling at employees is not the secret to more productivity. I need to give them the tools to push out more, better stuff more quickly. Fourteen years ago, Marlin employees made $6/hour while making 300 metal bends/hour by hand: all muscle work. Accidents were common. Now, with robots, we make 20,000 wire bends/hour while working 1,430+ days without a safety incident. Our cost per bend has dropped from 2 cents to 0.0015 cents, which helps counter the advantage of cheap labor and lax standards overseas.
The story of Marlin Steel shatters notions about American workers and competitiveness. Our transformation has relevance for employers seeking to manage their workplace and for policymakers focused on strengthening job creation and trade policy.
When I bought Marlin, I was the only employee with a car, college degree, or home ownership. Now my employees complain of the hassle to park near the factory. We have twelve degree holders. Together we are paying off fifteen mortgages. Manufacturing in America is improving. But we can do better. American ingenuity, resilience, and drive just need to be reawakened. TAAF program is helping achieve that goal.