Advantages for the Future State of American Manufacturing

By being active in the manufacturing industry for about forty years, I have seen and experienced many things first-hand in the field, I have taught many things in college- level classes, and I have done my own research for many key-note speaking engagements over the years. A really good thing about doing all that late-night research - I am forever a student and learn new things constantly.  My job for helping and coaching businesses requires me to stay current on all the most modern trends in manufacturing, and I have learned that you can study the past so that you can accurately predict the future.

What I find very interesting today as I do more research for the “future” of American businesses, and I have come to realize this more lately, “Made in America” is a great advantage for manufacturers that they are not paying much attention to - but they should. As we near the end of this year and head into next year, and manufacturing is forecasted to increase in America, it is even more important to realize what the consumer wants - “Made in America” products. Off-shoring of manufacturing (a trend popular during the 1970’s) is not popular anymore and in some cases, may not be economically feasible. Therefore, products made in America may be the first products sold when compared against other products made off-shore.

Why would I make such a futuristic prediction? Well, consumers drive the supply chain, it’s that simple. And their decision criteria to determine “what” products they prefer to buy and “when” they prefer to buy creates the future forecasts for all companies engaged in the business of selling products.  Period. And expanding on that “what consumers want” concept for these businesses, when they finally decide to sell a certain product, they then have to make a decision to either “make or buy” that product to offer it for sale. The supply chain engages after that decision is made.

But early in the process, before manufacturing or purchasing can begin, what does the consumer really want? I recently read an article written by Tod Marks of Consumer Reports and it engaged me to think about what businesses must think about before they start to create a product. The businesses must ask themselves: “Are we really listening to what that all-important consumer is saying?” Marks wrote at the end of 2016: “The spotlight has been on the loss of domestic manufacturing jobs…so it wasn't surprising that in a Consumer Reports survey that 40 percent of Americans said it was increasingly important to seek out gifts made in the U.S.”

He just said something very important in that sentence – this is what 40% of American consumers are thinking about as criteria that has an effect on their buying decisions. Digging deeper into this, I dove into more research and discovered even more than what was readily apparent to me - and I am in the manufacturing industry! Therefore, I learned some new things and would like to share some interesting recent manufacturing facts with you as a result of my research on this topic:

  • US consumers see job creation for American workers as a primary reason to “buy American.”
    (Of the 12.3 million workers, or 9% of the workforce, 265,000 good-paying jobs have come back to the US from abroad. Companies like Caterpillar, GE, Ford, Boeing, and General Motors all have brought back manufacturing jobs to the US. It is projected that 3.5 million more workers will be required in the next decade. Manufacturing is 12.1 % of the US GDP. Source: Reshoring Initiative/NAM.)
  • The state of the US economy and employment opportunities for American workers has an excellent forecast.
    (Manufacturing contributes $2.17 trillion to the US economy as opposed to 2009 where it was only $1.7 trillion. Source: NAM.)
  • US manufacturing has the highest return on investment than in any other American sector.
    (Reason: incentives, proximity to customers, skilled workforce, least amount of supply chain interruption, total costs to build can be lower, vendor trust and delivery schedule issues, etc., and for every $1.00 spent in manufacturing, $1.81 is added to the economy. Source: NAM)
  • Consumers get concerned over lack of environmental and safety regulations from off-shore manufacturers.
    (Consumers in some foreign countries responding to a 2013 survey said they’d buy American made over their own country's version even if it costs more due to quality. Source: Boston Consulting Group)
  • Most manufacturing firms in the US are small businesses – 99% have less than 500 employees, and 75% of those have less than 20 employees.
    (“Buy local” or from a small business is another consumer choice.)

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In summary, manufacturing in America is predicted to grow in the coming years and businesses will either decide to “make in America” or not. If you are the leader of that business trying to make that decision, you will need to first decide what your consumer base wants, and then calculate your total costs to manufacture and transport to your customer. I hope this article helps you in your decisions and just remember that the true business leader knows how to create and leverage their competitive advantage.

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To learn more about this topic, or how we can help you with manufacturing, please contact ASC or the author directly.

Author: Pete Gilstrap – December 29, 2016

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