From the Desk of Jack Healy

A Blueprint for Manufacturing Growth

By Jack Healy, Director of Operations, MassMEP [email protected]

Jack Healy – The Voice of Manufacturing in Massachusetts

Globalization has fundamentally transformed the organization and development of the Massachusetts Manufacturing Community. Historically, large manufacturers with over 1,000 employees were the driving force for the manufacturing community as a whole. It was the large manufacturers who forced their respective supply chains to try new materials, new processes, and improved schedules. These were the manufacturers who introduced game changing technologies, who created new markets, and, in turn, who led the manufacturing community to invest and develop itself to grow. 

Unfortunately, this model has changed significantly as many of these firms now contract their manufacturing out to regional production partners around the world and undertake very little of their own production. This structural change has resulted in Massachusetts losing 66% of its large manufacturers of over 1,000 employees between 2000 – 2012. This loss is not restricted to just Massachusetts as all of New England has lost 62% of their large manufacturers, as well.  There has been much discussion, mostly in the press, relative to the return of manufacturing from overseas, but there has been little evidence in the trade numbers that this is or has occurred, to date.

Apple Inc. is a leading example of such a company as it owns no large production facilities in the U.S., preferring to contract with companies in Taiwan and Korea who assemble their products in China with such firms as Foxconn.  But by controlling key elements in the value chain, Apple extracts much of the profits. As indicated by an IndustryWeek study, if Apple were to manufacture all of its products here in the U.S., they would not only incur $660 million dollars in additional labor costs but $4.2 billion dollars in additional taxes. The key to having large corporations return manufacturing to the U.S. will only occur when it is profitable from their point of view to do so. We should not expect that will occur any time soon.

Recognizing that the effects of such globalization cannot be whisked away, Massachusetts has undertaken a number of initiatives in education and innovation in an effort to restore manufacturing growth within the state’s economy. One such initiative is Greentown Labs, an organization that is providing prototyping support and office space to more than 40 new start up companies. Greentown Labs leverages its facilities in Somerville, MA, along with partners and sponsors to provide entrepreneurs access to equipment, education, and networks needed to launch their companies quickly and successfully.

In order to support the growth of the next generation of manufacturing at Greentown Labs, MassDevelopment has initiated an innovative partnership with MassMEP to address the basic existing problems of connecting the startup companies with the manufacturing suppliers who can provide the necessary services and parts. After exploring the needs of the startups, Greentown Labs and MassMEP will establish a program to communicate best practices between the startup enterprises and their supplying manufacturers. Later Greentown Labs and MassMEP will create a network for commercialization and ensure the startup enterprises develop their own manufacturing capability.

MassMEP is pleased to partner with both Greentown Labs and MassDevelopment in this endeavor as it is a good blueprint to move ideas into reality by identifying and qualifying suppliers and subsequently facilitating the process between the suppliers and the startup. This disconnect between suppliers and startups and having both parties understand the needs of each other has been one of the biggest barriers to the development of new business growth within the state. MassMEP is happy to have the opportunity to address this need and to accelerate the growth of manufacturing within our state. For further information relative to this partnership please contact the MassMEP Growth and Innovation Manager, Peter Russo at [email protected].