Factories Grapple With How Fast to Ramp Up

Wall Street Journal (Maher) - reports manufacturers are stuck trying to find the balance of increasing production without overextending, a costly mistake that can have repercussions. Mike Arnold, an executive VP of Timken Co. said "Everyone wants to ramp up... but nobody wants to overcapitalize." His company laid off 20% of its workforce over the course of the recession, and now companies are asking if they will be able to deliver enough goods if demand doubled. Bringing capacity online too quickly can hurt prices, yet by waiting too long leads to shortages, which put workers on overtime and forcing companies to rush to fill retailer's needs. The Journal notes in April, US manufacturers were operating at 70.1% of potential capacity, up from the low of 65.1% in June, but still below the average of 80.8%. Hat Tip: NAM