By Jack Healy, Director, Manufacturing Advancement Center, [email protected]
So let’s start off with some big news. The US Department of Commerce
has released an important new report, Manufacturing in America: A Comprehensive
Strategy to Address the Challenges to US Manufacturers . In the works
for nearly a year, this is the first serious attempt by the federal
government to deal with issues surrounding manufacturing.
We all know manufacturing is important to the US, currently accounting
for 14% of US GDP and 11% of total US employment. In fact, if the US
manufacturing sector stood on its own it would represent the 5th largest
economy in the world, larger than China’s economy as a whole. Now
the US government is finally sitting up and taking notice.
According to US Security of Commerce, Donald Evans, "America’s
manufacturers provide our nation and our people with good jobs, a better
quality of life, and inventions that have established our national identity.
Our goal is to help the American manufacturers compete and win in the
21st century."
The report is organized into three sections: an overview of the domestic
and international economic issues facing American manufacturers, a summary
of a series of roundtables the government held with manufacturers around
the country, and a set of recommendations to address the challenges
identified.
Long-terms vs Short-term While the recommendations are good, such as lowering healthcare costs
and decreasing the lawsuit burden on the US economy, these are long-term
efforts. They won’t help us immediately recoup the loss of manufacturing
jobs we’ve seen over the past few years.
In fact, on the same day as the report was issued, Frigidaire, the
largest employer in Greenville, Michigan, announced that it will be
closing its facility that employs 2500 and moving to Mexico. Many large
manufacturers have bought into the offshore business model, even though
the cost savings are not materializing to the extent expected. Inefficiencies
in foreign infrastructures, increased cost of shipping, and a greater
need to educate the local workforce have kept the offshore model from
fulfilling its promises for many who have tried.
To keep the US competitive, we need to maintain a solid manufacturing
base – for the innovation it brings and for the widespread effect
it has on our entire economy, including the service sector. While our
government believes that the outsourcing of service sector jobs is good
for our economy, they are having second thoughts about manufacturing
jobs. More attention must be paid to the challenges faced by US manufacturers,
large and small, both at the state level as well as the federal.
Making a Difference Now The good news is that the federal government has now recognized the
difference between large and small manufacturing businesses. This report
validates the workings of the Manufacturing Extension Partnerships and
recommits the government to supporting its work with small manufacturers.
According to the report, MEP clients showed 3.4 – 16% more growth
in productivity over a five year period than similar non-client firms.
More than 1500 firms have benefited thus far, to the tune of over $480
million in additional value-add at the firms.
So what can you do now while you’re waiting for healthcare costs
to come down and for free, open, and fair trade to become an international
standard? There are three major and immediate opportunities for manufacturers:
Get LEAN. As reported above, MEP clients show more growth
in labor and productivity across industries and markets. Now is the
time to implement lean manufacturing practices so you can show the
same gains. Stonebridge Corp. implemented a lean quality management
system and is now ISO compliant. They report increased morale, better
communication and teamwork, increased sales, and lower plant and equipment
costs.
Invest in technology. The plastics industry is the only industry
to show 25 years of continuous growth. The reason? Investment in technology
has led to significant innovations. Just ask Miniature Tool and Die
in Charlton. As a result of their commitment to technology, they can
now make multiple medical parts from a single, small pellet of plastic.
While segments of the plastics industry are now under severe competitive
pressure, the sectors dealing with new technologies are not.
Strategic planning. It’s time for small manufacturers
to start thinking competitively. Take Dell, a leader in the highly
competitive computer industry. Not only have they squeezed extraordinary
efficiencies out of their manufacturing operations, they treat their
customers like kings. Dell is closer to their customers than almost
anyone. They know how the products are used, what kind of features
customers are looking for, how much they’re willing to pay, when
they’ll be ready to upgrade, and more. Customers see them as
a friend, not an enemy. And when you look beyond the production process
itself, you too will find tremendous rewards.
Which is what the Manufacturing Advancement Center and the MassMEP
are all about. Call me with questions or ask about the opportunities
in Tech Transfer or lean manufacturing for your business. We’re
here to help you implement continuous improvement throughout your business,
if you’re looking to take that step. For those manufacturers waiting
for the federal government to address the issues of high structural
costs, such as health care and fair trade, good luck!
