All-Axis

Technology is evolving in every industry, including manufacturing. This evolution toward automation, IoT and Industry 4.0 mean manufacturers need an even stronger focus on quality, value and operational efficiency. The All-Axis podcast will address the topics, technology and solutions that are critical for manufacturers to successfully evolve their business with the changing industry. It is brought to you by the experts at Tebis, provider of technology solutions that improve efficiency, drive quality and produce better products for the manufacturing industry. To learn more, visit www.tebis.com.

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All-Axis

Manufacturing Economics Decoded

August 04, 2025 • The Experts at Tebis Americas

0:00 | 42:25

If you're a manufacturer who's been overwhelmed by doom-and-gloom economic headlines, this episode delivers the perspective you've been missing. Economic expert Michael Feuz of ITR Economics joins our host, Michael Thiessen, and cuts through the noise to reveal what's really happening in manufacturing today. And what he says may surprise you.

Feuz provides practical, actionable insights on how manufacturers should position themselves during this critical preparation period. From the ideal timing for investments in automation and training to strategies for weathering tariff uncertainties, this conversation offers a roadmap for manufacturing leaders who want to maximize the coming growth cycle. Also covered in the discussion:

Current economic cycle phase
Impact of tariffs on trade with Canada and Mexico
Auto industry's temporary slump
Specific recommendations for the next 6-12 months

Whether you're concerned about rising costs, workforce challenges, or when to make your next major investment, this episode delivers data-backed guidance that will help you see beyond the headlines and make strategic decisions with confidence.

Tell us what you think - send us a text message!

Thanks for listening!

Introduction to All Access Podcast

Speaker 1 0:02

Welcome to the All Access Podcast from the experts at Tevis. Each episode we'll talk about technology topics, trends or solutions that manufacturers need to know in today's rapidly evolving times. Sit back, enjoy the discussion and let us know what you think.

Speaker 2 0:22

Hello, my manufacturing friends, welcome to the All Access Podcast. I am your host, michael Thiessen, and once again we are looking into the crystal ball and seeing what we can bring to you that is worthwhile and that keeps you up at night. Have a good guess that nowadays, um, I think money keeps you up at night, or at least the news about money, inflations and tariffs and and, uh, whatever is out there, it probably keeps you up and uh. So we over here at the podcast we were thinking you know what, what can we do so that you don't make emotional buying mistakes or emotional issues that are like knee-jerk reactions and can actually utilize some of the knowledge and the know-how that is out there, that you make smart decisions? And you know, as so often we here at the podcast, we go to various conferences and shows and whatnot.

Speaker 2 1:31

And just recently we went to the AMBA conference, the American Mold Builders Conference, in Grand Rapids, and as always, there's lots of speakers and encouragement of what's going on in the market.

Speaker 2 1:47

And there's a gentleman that really intrigued me because he took away some of those fears, some of those worries from a lot of the manufacturers that were sitting in the room and I thought you know what. It might be the perfect person for us to have that crystal ball in front of him and to tell us what we should do so that we don't make stupid mistakes. Well, this individual he is the key member of the ITR economics team. This team is built of economists and consultants. He is one of those people that loves to deal with data. He really goes in the midst of it and he produces client reports and forecast reviews and economic research and all the things that makes us afterwards feel much better with all the stuff that we're hearing in the news. So, without any further ado, let me introduce you to Michael Fuse. He is really the brains behind all the things that are happening and, honestly, he kept me up really interested in what's going on in our nation and in the world of manufacturing. Michael, welcome to the podcast.

Speaker 3 3:07

Yeah, thank you very much, Michael. It's great to be here.

Current State of Manufacturing Economy

Speaker 2 3:10

So there's a lot of things happening. If you listen to the news, it changes from hour to hour to hour. Give me the synopsis of where are we right now in our economic state in the country, when I look at manufacturing in particular.

Speaker 3 3:28

Yeah. So to your point right now, it's not boring to be an economist. We're actually at the point now where I get a little frustrated how quickly things are changing, because I will be going on the road to speak, have an entire presentation and put together and then the next day, the next, the new cycle hits and I'm like, nah, I got to go back and change things. You know the tables have turned and it's it's a little extra work. But going back to maybe 2018, 2019, it were, things were just steady, eddie Um, and we were running out of things to write about. Now we have too much to write about. But overall in the economy right now, there's actually more positivity than certainly the headlines and the sensationalism that we hear out there are letting on, and we spend at ITR the majority of our focus on the industrial sector, which we include in there Manufacturing, oil and gas, energy utilities, kind of to summarize the construction companies and organizations.

Speaker 3 4:30

But from a manufacturing perspective we're actually starting to heat up. When I'm looking at a manufacturing overall, I like to look at an economic series called Total Manufacturing Production Index overall. I like to look at an economic series called total manufacturing production index. And the way we look at it is looking at those annual growth rates. Where are we year over year and what direction are we moving? And right now it's accelerating and arising and we're actually up, but barely. It's like 0.24% above where we were a year ago. But the trend is up, we're moving in a positive direction. So that point two, four is rising and if we look at the quarterly growth rate I won't get too much into the weeds which gives us a little bit of lead time.

Speaker 3 5:14

We'll call it a 312 at ITR Remember from the presentation it's at one point one percent from the last three months, compared to the same three months a year prior. So what does that tell us? That tells us that that annual growth rate is going to continue to go up. So it's still kind of flat, but we're moving in this direction of momentum.

Speaker 2 5:31

So at least we're moving in the right direction. I believe yes, obviously, you mentioned earlier the sensationalism of the media. It kind of strikes fear in a lot of the manufacturers. I mean, you already said we're heading in the right direction. Where do you think this is all going to be going? Is it all going to be going away, meaning the tariffs and all that kind of stuff? What do you anticipate? How long this will be around, and are the tariffs really going to cause that much disruption?

Speaker 3 6:02

Tariffs in and of themselves aren't going to cause the disruption or thrust the US into a recession. I feel like that the R word, as I call it, has been thrown around a bit much. It's the uncertainty that's causing the pain, and even the uncertainty is elevated. We look at two series economic policy uncertainty and trade policy uncertainty. Both are near record highs right now and the risk there is when there's uncertainty, businesses just don't make decisions. We can't plan if we're not confident in the next three years.

Speaker 3 6:34

Good news is that economic policy uncertainty I watch a little closer it just has more of a story within the data. It's starting to come down, so that's good news. It's still very elevated, but it's trending back down. That's what we want to see it continue to do and it's not again. If we keep it high or elevated, it won't thrust us into a recession. The risk is it'll kneecap our growth. Like we're going to grow. The ingredients for the growth recipe is already in play in the economy and we can talk about that. But what we're going to grow the ingredients for the growth recipe is already in play in the economy and we can talk about that.

Speaker 2 7:12

But what we're going to do is limit how much growth we're going to get if we keep uncertainty elevated, heeding the advice and saying, yes, I know it's not as bad as it could be, but I don't quite feel it, or I don't quite see it, because they're still a bit scared and timid.

Speaker 3 7:33

I would say the main theme that we've been hearing and I've been hearing when I talk to our clients that are, yeah, a good portion of our manufacturers is we're getting a lot of requests for quotes or they feel things building up, but the valve really hasn't been opened up yet because of that uncertainty and it's a mix.

Speaker 3 7:52

Some folks are starting to feel it really depends on where they fit in the overall, what sectors they're serving. Others are like we still feel kind of flat, but we see the signs and that's we're really encouraging our clients to you be. You should be using this time to make sure, evaluating your capacity, investing, looking at automation, improving productivity, and because we see things continuing to go up, accelerating next year and you got to be ready to maximize on that opportunity of growth, Like take what the market's going to give you and then take another 5% or 10% on top of it.

Speaker 2 8:28

I remember from the NBA you went very much in detail about the forecasting and how that company should do their forecasting currently by looking at their current input and output and kind of tracing it, and I think you even mentioned that. Yeah, on your webpage you have a tool or some kind of a chart that kind of can give some details. I remember that sine curve as you're going through at your company. I mean it's a lot of good insight. Do you see that companies are doing more and more of this forecasting and planning in order to, and or determine, are we, are we going in the right direction?

Speaker 3 9:07

Yeah, the more they talk and follow ITR, the more they do, and I've heard so many times what we were referencing there. What we call is a rate of change analysis and there is a nine minute free video. It's on our website, it's on our YouTube channel. I highly recommend folks check it out and, if you're not doing it, to implement it. And it's taking any data series. You have your orders, your shipments, your sales, your revenue. I tell folks you need at least five or seven years worth of data but then you can start calculating your annual growth rate, which we call a 12-12 at ITR, and your quarterly growth rate, which is a 3-12. And comparing always, where's my quarterly growth rate? The 312, where is it in comparison to the 1212 gives you very strong indication of where you're heading, where the momentum is, and it's exceptionally valuable at the peaks of your cycle.

Dealing with Economic Uncertainty

Speaker 3 9:58

So when you're growing really fast, things are going great, but it gives you a clear sign things are about to slow and that's where you don't want to make mistakes. Or if you're in a rut and you have those. Just we're human beings, we're emotional creatures and we're short-sighted. We get in a lull. We think this is just how life's going to be the rest of forever and we get things are going great. We also assume things are never going to go bad again. So, also at the low, it'll start giving you a signal. Things are about to heat up. Are you ready and that allows our clients that use it and folks that use and follow it here and use that tool to be ready to maximize growth that's coming and also be ready to like, hey, maybe we got to keep more cash on hand. Maybe now is not the right time for an investment or an acquisition or that CapEx spend because things are about to slow down.

Speaker 2 10:50

Now this tool that you've mentioned, I mean it goes into their data points so they can kind of predict when is a good time to do certain planning or purchases for machines or training and stuff like that. Because what we see on the software side quite often when a company is slow, the owners try to hesitate and not wanting to do any kind of training because they're afraid of spending the money and because they don't know how long this lull is going to take and going to go on. And then when they're super busy, they're saying, oh, I don't have time to do this training right now because I need to get these work orders out. And is there ever? And from what I'm guessing is, from your tool and from your data research that you assist your clients with, they can get a good understanding of where in that cycle they're currently are in. Is that the right understanding that I get?

Speaker 3 11:45

Yeah, Yep, it's understanding. Where are we currently in the cycle? There's four phases of the cycle and I won't overwhelm anyone with that right now and you can learn more about it on our website. And also it's important to have when you're looking at your rates of change that, quarterly to annual, it gives you only a one to two quarter heads up where you're going, so it's not a huge lead time. So that's the real value to of having good economic indicators or using ITR, because it also understands how long are we going to be down or slow and to your point.

Speaker 3 12:17

That is exactly when you want to be training, when you want to be investing in your people and your processes, because when that upswing happens and it will happen you want to be ready to go and pull the right levers at the right time to maximize those tailwinds that are giving you that lift. And once you're already in the accelerated growth to your point, you don't have time and you're going to leave a lot of meat on the bone. And the real value of ITR is understanding when it's coming, our clients working with us so they can remain confident even when things are sluggish with us. So they can remain confident even when things are sluggish, Right. It's like it's never fun during a down period, but if you understand, all right, we're going to have two tough quarters here and then things are going to start turning around. I'm going to use these next six months to invest in training, to bring on, to bring on this new capex spend, because I know we have the cash and I know when I need the ROI on these inputs.

Speaker 2 13:10

Do you see a lot of manufacturers follow that and contact you currently and just see, okay, where are we right now? And you help them probably with that data to kind of come up with this. Do you see a lot of interest in that right now?

Speaker 3 13:25

Absolutely. Right now, especially when the certainty goes up, people want that compass or that crystal ball that I guess that is what ITR provides. We get a lot of clients. The place where I hear it the most is post-peak. So they've been on our eyes, things have been feeling good, and then they make a mistake at the peak. This is too much inventory. We overspent Things, slowed down, we had too many fixed costs and they're like I don't want to miss that again because we got burned. So it's more on the peak than on the rut, because usually they're in the rut at that point, but they recognize it was the peak that killed us.

Speaker 2 14:00

So you guys are going through a lot of data, usually looking at clients' data. You look at the market data and all of this. If you would present a snapshot right now of some of the manufacturers that you've dealt with, sometimes you can see that they're all almost sinking together right, because the market is kind of driving everything that's going on. Where would you say right now we are? Are we in the growth phase right now, going up the hill? Are we at the peak where we have to worry about that we're going to fall off the cliff? Where are we currently?

Understanding Economic Cycles

Speaker 3 14:33

Yep, we are right in between, depending on where you are in manufacturing. But majority of manufacturing is either what we would call a phase A or just entering a phase B. Phase A means recovery. You're still down year over year, but you're cyclically rising. We're seeing some tailwinds starting to form. We can shift, feel the momentum, but we're not there to growth yet. And then the other half is we just got into that growth. We're starting to see that light now at the end of the tunnel, or maybe we're in the light now, or, if you're in phase A, you're seeing the light but it's very early still. So there's, even with the folks that have just hit that, what we are calling that phase B accelerating growth. There's a little bit of apprehension I get in the conversations.

Speaker 1 15:15

Like.

Speaker 3 15:15

I think we're there. I hope we stay here. I'm a little worried things won't keep accelerating and generally we're telling most folks we're going to get growth through this year into next year, really the next five years, but it's probably not going to be as an accelerated rise as the last time we had a period of rise and that was because we were coming out of COVID printed a ton of money $6 trillion. We had that kind of sugar rush and they're like we're not getting a sugar rush this time, but we have a nice slow where the water's starting to boil, but it's been a slow boil up.

Speaker 2 15:49

So you probably would say right now it probably would be a good time to kind of prepare for that storm that's going to be coming In terms of, okay, look at your manufacturing, look at your processes, look at your labor force, look at your training capabilities, train up as many individuals that you can Get onto the latest technology. Because my feeling is, if that boom hits and then you're starting to do some of those things, then it's too late.

Speaker 3 16:16

Yep. Our messaging has been 2025 is critical year for 26 through 29, because 25 is going to be a growth year compared to 24, but it's going to be your softest growth year of the next three years.

Speaker 3 16:29

And if you miss out on 25 in that preparation, you're not going to maximize that market share and that top line growth and the margin preservation which is really going to be the big headwind for businesses the next five years of 26 through 29. And it's really this next six to 12 months it's probably closer to that, six months now. You need to be leaning in right now on process improvement, training, getting your employees ready to go, improving productivity, improving capacity, so you're ready to go.

Speaker 2 17:01

What about purchasing machines? Because interest rates are still not perfect right now. Do you feel that the interest rates might get better as we're continuing through 25, going into 26. So what would you say there?

Speaker 3 17:13

That one's going to be a little bit on the not as good news. We will get a little interest rate easing over the next couple months and quarters. It will not be very meaningful, though, and so our messaging there is don't time your investments based on trying to figure out where the low is coming out. The interest rates it great, but at this point, the more important question is asking when do I need the roi from this investment? And that should be the primary north star or guidepost right now, and making capex decisions, because if you but if you if you need the roi and you got to buy now to get it when you need it, you're not going to be kicking yourself that much based on where the interest rates will be in September. It's better to focus on when do I need to start capturing the return on this investment?

Speaker 2 18:00

Now you said earlier about the R word that everybody fears recession, going into a recession. Obviously, everybody sees everything gets more expensive. They're fearing of inflation is going to be rising more and more. Do you see that we're going down that trend, into that black hole? Or do you see now we're going to pass that black hole completely? We're not going to go into this mini recession or whatever the media calls it?

Speaker 3 18:24

Yeah, I don't. The chance of recession is never zero. So I don't want to say that. But the chances of recession are continuing to get smaller, especially as we are getting more certainty. We're moving past and never say it's zero. But the recipes for growth, the businesses are well positioned, consumers are well positioned, savings, cash on hand, profitability, are all very healthy. It's going to drive growth. So it, significantly, is continuing to diminish. Of course, you know there's always what we would call a black swan event too. That could occur and that's just outside of forecasting. That's always a risk. We're always writing our risks to every forecast we produce, like, why could we be wrong? And of course we're writing, like China, geopolitical disruptions, you know war in Ukraine escalates. You know a lot of the. You know God forbid these happens, but we have to at least recognize they're out there.

Speaker 2 19:10

It's this continuous moving target with everything that's going on. I mean it's so I'm going to say uncertain, really to say, like you said earlier, you prepare something for today, for tomorrow's presentation, and then all of a sudden something happens and it changes everything. So obviously, when you follow the news and all those things that are going on, the current administration is trying to ramp up that. We're going to onshore a lot of the work back into the US from some of the outsides. Maybe the tariffs are going to help. Do you see that more work is going to be coming or is maybe already here at manufacturers? What do you see?

Speaker 3 19:51

Right now, onshoring is happening and it's not happening because of tariffs. I think that's the one surprising part. It's too early to judge if tariffs have been successful in onshoring jobs at this point back into the US, but since 2010, it's been a steady rise of onshoring into the US and it accelerated exceptionally post-COVID because the trust in China eroded and we just decided we prefer shorter, more secure supply chains because we got burned during COVID. So all the jobs that are heading back in the US I want to say all the majority. There's some early movers because of tariffs.

Speaker 3 20:27

Certainly, I don't want to say none, but I would say the majority were already planning on coming back into the US and I could pull up the data In the past 20,. We have data through 23. So it's a little dated. We should get the 24 data soon. But majority it's close to it's under 200,000. But it was between 150 and 200, believe. On shoring jobs actually here I found it 150 000 jobs were on short in 2023 and 137 000 jobs were created due to foreign direct investment into the us. Oh, wow, yeah, that's promising without the tariff. Right now it's too soon to say tariffs are unshoring or are creating more jobs in the US, I mean the one, I guess, leading indicator. We make our popes in America now, so maybe tariffs are working.

Speaker 2 21:18

Oh yeah, yeah, that changed everything. But you know what? We deal a lot with our partners to the north and the south, with Mexico as well as Canada, over here at Tevis. It's kind of interesting this trend right now. I got to say I think Canada has been hit quite hard, and I don't think it was only, it was the terrorists, I think it was a lot of stuff that was already brewing, but I think maybe the terrorists kind of pulled it up to the forefront. Do you have any interaction with our neighbor to the north and kind of see what's going on there?

Speaker 3 21:50

Generally Mexico, canada, europe, anyone outside the US they're going to be hurt more due to tariffs. They're going to feel more of the pain. So recognize that Both Canada and Mexico though Canada is still growing, industrial production is still rising in Canada, they similarly have a lot of the growth, the recipe for growth. We see the next five years in Canada as growth years as well and, similar to Mexico, mexico is benefiting from on-shoring into their country. I guess we would call it near-shoring here in the US.

Speaker 3 22:17

Canada there has been some disruption, but when we look at Canadian real incomes, for their consumers they're rising Real means deflated. For their consumers they're rising, real means deflated. So we're kind of deflating them so we can see how are they doing in regards to inflation. Can they deal with the pain? And, similar to the US, they're in the positive direction. There's a little concern with corporate profitability in Canada. It's a little. It's weaker than the US. Canada and the US do need each other.

Speaker 3 22:42

And what's interesting too is President Trump strongly has negative views, strong negative views about trade deficits. He sees them as a negative. I personally, I see it differently. I don't see any problem with the trade deficit. I have a trade deficit with my grocery store. They bought no economic reports from me. We have a great relationship. My life's better because they exist. But with Canada, when you actually control for oil and gas coming into the US, we have a trade surplus. They buy more from us than we buy from them if we control, so there will be more pain because of tariffs.

Speaker 3 23:15

Big advice that I give for my Canadian clients when we're discussing that how to deal with it is one there's no silver bullet, unfortunately, which has got a disappointment. But first I would first focus on cost control, input management, and that's, you know, it's consulting mumbo jumbo. If I just say let's cut costs, I'm looking source supply, you know, shift supply chains and from that point is you know, are we are inputs crossing the border multiple times? Like, are we overexposing ourselves to tariffs? And then it's also you know, so that's more of a risk management, and then looking at ways to further automate. When it comes to just arbitrarily cutting costs, I do caution against it because I'm telling them the same things I'm telling my US clients we want to take as much market share the next five years.

Speaker 3 23:59

So if anything's on the chopping block, we got to ask the question does this inhibit our growth goals Got to be the main question. Next, I encourage them, like US is going to be number one for you, for a market you want to get into, for the market you want to serve and you want to grow where the largest. It's the largest market in the world. But can we expand to other regions? Let's look at the EU, let's look at Latin America, let's look domestically more. Can we be less US centric? If I'm in Canada and that's marginally less US centric.

Preparing for Future Growth

Speaker 3 24:30

And then, step number three, I'll tell them like tariffs are probably here to stay, even if we look at Trump's tariffs on the first term, biden kept them. President Biden kept most of them in place, even upped the lumber tariffs from Canada. So there's a relative agreement between the Democrats and the Republicans on tariffs and Republicans just like talking about them more. So then we're talking about let's shore up our cash flow, let's improve our margins, let's strengthen our competitive advantages and understand what they are, so we can improve customer loyalty, be more resilient and be able to just deal with those headwinds, because let's just understand they're probably not going away.

Speaker 2 25:08

So you feel more that these tariffs are going to probably be staying there for a little bit longer period of time. It's not just a pressure tactic to get to the table. It's more or less that it's going to stay around for a little bit longer. Is that what I'm hearing?

Speaker 3 25:21

That would be my guess. It's still uncertain what the goal of tariffs are in the US, and this is adding to the uncertainty. And there's three possible goals and you can only have one because they all work against each other. Goal one is if President Trump and his administration, if tariff goal is to bring more jobs back into the US, if that's the primary policy goal, you're going to keep tariffs because you have to keep foreign competition more expensive than US to help prop up the US industry.

Speaker 3 25:49

Goal number two can be we want to raise revenue because we have a deficit. If you want to raise revenue, you don't want to reduce imports. You don't want onshore, necessarily, because you want to keep the flow of imports so you can tax it via tariff. So it contradicts number one. And then number three is we want everyone to get to the table. We want to lower tariffs across the board and then they'll all go away. If that's the goal, you're not going to raise revenue and you're not going to onshore. So it's not fully unclear which one of those three it is. I think it's the first one. He even just made the claim jobs are coming back and we're going to make so much money, uh, from tariffs and I was like well, that's one or two right.

Speaker 2 26:33

Well, seeing at least that there's at times some positive movement, especially at the uk, coming to an agreement of some of the terrorists, I'm hoping that with canada we can come to a resolution, hopefully quicker than later, because the longer this thing drags out, of course, the longer Canada will be a little bit in turmoil and struggling and feel a little bit more pain.

Speaker 3 26:55

Yeah, and trade's such an interesting. It's interesting If me and you decided we were going to start our own little economy and we're only going to trade with each other, we're going to realize pretty quick, I don't think, do you know how to make electricity? Because I don't.

Speaker 3 27:07

So I go well, maybe we should expand who we trade with a little bit. And so like, oh, let's do our two towns, okay. And they're like well, what about? You know, you're in Michigan, I'm in Virginia, what about Michigan, virginia? And they're like well, what about all of the US? Yeah, that seems good, we're not worried about trade deficits between states. But then as soon as we run up into the border with Canada, we're like I don't know about that and I'm like that was kind of an arbitrary place to draw the line.

Speaker 2 27:34

I'm glad that we're not into that, so I'm not starting my own town and doing all of this, but would you say that though the Canadian manufacturers right now, instead of throwing everything in the wind and giving up and closing their shops because we have seen some companies close because of them, not them fearing a little bit of what's what's out there and what's coming and maybe it's going to stay around longer do you think they're in the same boat where they, where you would advise them?

Speaker 1 28:00

and.

Speaker 2 28:00

I think you already mentioned this automate, train people. Do whatever you can to be 10 steps further. So when it does open up, you're ready to go and you have all the technology in place. Meaning technology, not buying frivolous machines and stuff like that, but preparing and automating for the future.

Speaker 3 28:21

Yes, absolutely. I think there's even more pressure on Canada because of the tariff situation. It'll probably at least be the 10% baseline when we're all through this and it's a manage. You want to be more flexible, be more resilient and generally, our big message to our clients is the next five years, you're going to have no issue with your top line. Your top line is going to grow. The increasingly mounting challenge is going to be margin preservation and margin growth. So with Canada, we're going to add on top of that tariffs. That's even more margin pressure. So it's what are you doing to train right now? What are you investing in automation and process improvement? So, one, you're more resilient and two, you're ready to rock and roll once we get past this uncertainty and hopefully we can negotiate the tariffs down lower, at least from my opinion.

Speaker 2 29:07

What about the South? Are we in the same position there, or is the South of Mexico a little bit different?

Speaker 3 29:13

Similar, same position, just different industries. Mexico is very overexposed to the automobile sector, A little bit different as well. When we look at jobs coming back into the United States, they tend to be more in what we would call the higher, call them high tech manufacturing. It's probably higher skilled required labor that's needed. The jobs that I would say is traditional manufacturing or lower skilled tend to favor Mexico a little bit of a cost advantage, pre-tariff and it's very automobile. So the automobile market's in a bit of a rut right now, which is what we've been forecasting, so we're not shocked. So Mexico's a little exposed to feeling that plus the tariff situation.

Speaker 2 29:52

Yeah, we're seeing the same kind of thing with the automotive industry. They're a little bit in a slump right now. A lot of the mold shops that are focusing only on automotive molds or automotive products are right now, in this transition phase, not quite sure. Are they going ice direction? Is battery going to be moved a little bit more forward and all that kind of stuff? And from what we're seeing, at least from some of the clients that we've been dealing with, is they're looking with one eye definitely onto the aerospace industry, because it seems like that industry is booming and has a ton of job capabilities and jobs out there.

Impact of Tariffs on Manufacturing

Speaker 3 30:30

I think you nailed it. I'm going to repeat back exactly what you said. Automobile is going to be in a rut through the rest of this year. Even by the end of this year we're forecasting it's still to be down about 3% year over year for all North America. So Canada, US, Mexico combined there in that phase B accelerated growth, it's up about seven, seven and a half percent right now. We expect this year to end the year about up 5.7 year over year and the next 26, 27, similar growth years. So good place to pivot to and you want to, I mean I think we've learned. You don't want to overexpose yourself to one, even more so because of just supply chains disruptions.

Speaker 2 31:12

Right. Would you recommend, though, diversifying right now is a good time to do it. Or do you think it's a little late right now, because if you're saying next year on the automotive we might increase it again by 3.5%, are some of the manufacturers maybe thinking you know what, I'm just going to wait till next year and see what comes? Or would you recommend, no, look into other industries. Diversify, because these kinds of things will happen more and more.

Speaker 3 31:38

Yeah, I would encourage them to continue to look to diversify and even if it's like a down year, well, if you're looking for a new market, you want to look where the opportunity is, but I'll even tell folks if your markets are in a rut. One diversify, but two a million dollars of new business in a down year becomes 3 million of new business when the when things swing the other direction.

Speaker 3 31:58

A lot of it is. I'll go, I'll speak with a lot of sales kickoff teams beginning of the year, usually early on, and you got to always be careful with when you're talking to a large group of sales reps, because if you're telling them the markets are down, it becomes a self fulfilling prophecy. What I want to say is yeah, we're down right now, but here comes the upswing. What are you doing?

Speaker 2 32:18

right now to get ready for A million dollars right now of new business becomes 3 million 12 months from now. Yeah, I can see salespeople when they're down. It is very difficult to get them motivated because they're saying, oh yeah, everything's down, everything's doom and gloom, but seeing that it's ramping up again, that could get them into a positive mood and potentially be a huge benefit for their companies.

Speaker 3 32:37

Yeah, I call it the tyranny of low expectations. We want to avoid it.

Speaker 2 32:42

So tell me a little bit about ITR. What can ITR do for some of the manufacturers that are out there and are looking for answers? What can you provide to them?

Speaker 3 32:52

Yeah. So a couple different areas, but the big overarching one is we've been around since 1948. So we're the oldest privately held, continuously operating economic consulting firm in the US. Over our history we have a 94.7% forecast accuracy. Accuracy is important because it allows those who use ITR to plan with confidence.

Speaker 3 33:14

It's great to know we're going to grow the next five years, but it's even more important to know when is that growth going to accelerate? When is it going to slow a little bit? It's going to slow a little bit in 27. That'll be a little sluggish year but it will still be a growth year. So it's understanding when do I pull the right? When do I pull the levers? What levers do I need to pull and when is the right time to pull them?

Speaker 3 33:33

Because if you're already in a growth phase, accelerating growth, it's too late to do training, it's too late to bring on that to expand capacity, and if you're already in a rut, it's too late to start getting rid of fixed costs. It's usually already needed cash on hand. And it's that idea of looking three years out, four years out, five years out and being able to plan for the ups and the downs so you can one if the market's going to grow 5%. If that's what your market is, you grow that five organic percent and then you take another five because you're ready for it. So now you've grown 10.

Speaker 3 34:04

But we offer forecasting services for a lot of our clients, right. We forecast three to five years out, depending on what the client wants. Again, we're delivering the 95 to 99% accuracy. Typically we have a trends report which is like 20 bucks a month, has 50 forecasts, and then I think that alone, 20 bucks, is well worth that just to be able to get insights into key manufacturing, construction, the financial inflation side and with our. And we write for business leaders, right? You listen to an economist on the news that gets brought in sometimes and they're talking very a lot of theory. They're probably trying to talk to congressional members more about what policy you should write. We're talking to business leaders about what's the reality, where are we headed and what does that mean for you and what should you do about it.

Speaker 2 34:51

See, I knew we got the right person here when we, when we invited you to the podcast, because you you hit all the trigger points and you hit all the points what companies should be doing right now, what their forecast should be, to take that anxiety away.

Speaker 2 35:04

Because, I think you said it earlier, a lot of these manufacturers are all emotional.

Trade Relations with Canada and Mexico

Speaker 2 35:09

They do things on an emotional basis and some of them and I'm not going to say all of them, some of them are actually diving into the forecasting, the economic side and really doing their homework on it. Those are generally the companies that are probably being the more successful of Some of these other ones. They're all emotional and doing things due to being scared or being over bullish and stuff like that. So I think you hit a lot of the right points and a lot of the right thoughts and gave that in this podcast to some of these manufacturers, and I know I could be talking to you for quite some time, unfortunately, unless I want to get pulled off from my assistant here, but I'm not going to do that Any last thoughts or ideas or some tips that you can give to some of the manufacturers here, to the US, or even to our friends in Canada and Mexico what they should be doing over the next six months or year in order to prepare for that storm.

Speaker 3 36:11

Yeah, so next five years is going to be growth year through the 2020s. Big focus is got to be taken. We're encouraging everyone. You want to have a plan to take as much market share these next five years. Big things to focus on that we've hit on is especially the next six months evaluate your capacity needs, improve efficiencies and productivity. Automate where you can and reduce your need for labor. Growth right. Protect the folks. You have, your employees.

Speaker 3 36:34

But if your business is going to grow 30% and you're going to need 10, 15% more labor because of that, if, typically, what are you doing to reduce that need to 7%, because the cost of labor is going to be your largest input? Good people are essential, but what are you doing to make your current team more productive so you don't have to necessarily grow it as fast as you typically would? It's a great time to refinance debt right now. Lock it in, but avoid refinancing again to come 2029. Inflation is coming back. It's going to be slow, it ain't going to be a crazy ramp up, but by 2029, we see higher inflation in your environment and you do not want to be refinancing that year. So that's important and it's all about the margin. Battle the next five years, your top line is going to do great. It's margin preservation and margin growth is where the focus has to be.

Speaker 3 37:21

And then audit your business. Well, it's what we're telling folks. And by audit your business, it's evaluating your products and your services that you're currently offering. Which are most profitable and where's the juice not worth the squeeze and can you improve those areas or do you need to move away from them and lean into what you do well and then build? Lastly, I'll leave one other thing Build out the service side of your business. The 2030s will be not as high a growth. It will be a tougher decade first half, but it comes down to there'll be more maintenance, retrofitting going on and you want to make yourselves more stickier with the service side.

Speaker 2 37:59

So where can they? I have to assume a lot of the listeners that listen to this have probably tons of questions, want to probably contact you. Where can they reach out to you or what's your website address that they can find a lot of this information out and then get in contact with?

Speaker 3 38:14

you Yep. So our website itreconomicscom. You can find my picture, I think, under the speaking services side of it. But you can also email me. I'm always happy to do a quick intro or answer any questions you have, but my email is mfeuz at it Z at ITR economicscom. So always happy to meet folks, always happy to send over a few bullet points If anyone's got questions.

Speaker 2 38:41

Awesome. Well, michael, I'm really thankful that you decided to come on this podcast. I'm also glad that at the very end we you brought in the labor force and the retaining of employees, and then also these new employees that are emerging in the market, the youngsters, the new people. I'm hoping these new individuals are really enjoying the manufacturing circle because there's a lot to gain in there and it's a great industry to be in gain in there and it's a great industry to be in. More than likely we'll have you on again to kind of see all right, where did your predictions tell us to go and where do we know you said track rating that you guys have are phenomenal and I love those individuals that are right on the target because those are the people that the industry manufacturers should follow and trust and we need more of you guys out there to kind of give our manufacturers the hope that what you just told them today. So thank you yeah absolutely.

Speaker 3 39:40

We'd love to come back anytime, so thank you for having me.

Speaker 2 39:42

Awesome. Thank you. Well, guys, my friends, you heard it here first. It is not as bad as the media makes it sound like. As bad as the media makes it sound like. Do your research, get in contact with ITR Economics to kind of understand of where you guys are in your company. Do the forecasting to see on which part of the cycle you guys are at. Can you do right now some of the downtime and do the training and do that really, I mean I hate for you guys to invest in a lot of training when you guys are super busy because I know it's not going to happen and then you guys kind of fall back. So he does advice train up, look at the automation. There's a lot of automation that you can do if that's on the on the machine side and putting robots on there. But automation is not only about robots, it's about your processes, that you do. Look at your processes, improve those processes so that you're mean when it comes back, because that's where it helps you guys out. This was fantastic. I really love talking to Michael will. I promise you we will have him back later on in the year to kind of see where, where, uh, we've all ended up.

Automotive Industry Outlook

Speaker 2 41:01

Uh, I thank you guys all so much for listening in and tuning in to the all access podcast, and we hope that you found our discussions always insightful and valuable, as as usual. And if you enjoyed today's episode, don't forget to just subscribe. You can do this on Spotify, on Apple Music or wherever you get your podcasts. Feel free to share the episode with your network. Leave us a review. We'd love to hear back from you and also, if you have an idea for a topic that you have not heard us speak about, send us that message. We'd love to research it. We'd love to get into the weeds, so to speak, in order to help you guys out. You guys are important to us. You guys are manufacturers and you guys are what this country is built on. For more updates, follow us on Instagram X and on LinkedIn and, until next time, keep shaping the future of your manufacturing. Thank you so much. Have a good day. Bye-bye.

Key Strategic Advice for Manufacturers

Speaker 1 42:02

Thank you for joining this episode of All Access. Please leave a comment or review with your feedback or what you'd like to hear in future episodes. To learn more about manufacturing technology solutions and Tevis'' capabilities, visit our website at tebiscom.

Michael Thiessen

Host