In the past I have written about the global Supply Chain and the risks involved in streamlining and controlling various types of risks.   I thought I would take a breather from that format and write about something else which has been on my mind for a long time.

Can and or will United States manufacturing recover and bring along with it the US economy?

I believe we are at a critical juncture where either the US manufacturing sector could either prosper or help the economy regain its’ health or continue to decline to the point where the US may never fully recover its former manufacturing prowess.

At present, U.S. manufacturers provide about 75% of the products Americans consume (never mind for now where these products are made).  The percentage could rise to 90% if the private sector and government leaders make the right decisions.  Conversely, the percentages could fall if the wrong decisions are made.  (The percentages are from a study conducted by The University of Michigan’s Tauber Institute for Global Operations).  As labor costs continually play a smaller role in manufacturing processes, this is where the possibilities for opportunities to create new conditions that support manufacturing will arise.

If these conditions surface the most likely winners in each manufacturing segment will be the following:

1. Global leaders:  Aerospace, chemicals, machinery, medical equipment and semiconductors.  These industries have a worldwide advantage that stem from their high investment scales, intellectual property, skilled workforce, and ties to customers.
2. Regional powers:    Food, beverages, tobacco, mineral products, wood products and petroleum coating segments. These markets will benefit from the fact that the U.S. is their largest and primary markets.
3. On The edge:  Paper, plastics, electrical components and computer equipment: These industries are being attacked by low cost overseas competitors.  The idea is that they may be forced to globalize or see their operations displaced to other countries.
4. Niche players:  Textiles, apparel, furniture and appliances:  Service domestic operations though most production is outside of the U.S.

Regardless of which sector or sectors win out the access to talented workers capable of supporting innovation is the critical factor driving global competition in the manufacturing field.  This has become even more critical than the “classic” factors such as material and labor costs, energy policies and government investments.  If the U.S cannot access the right kind of talent, this will contribute to becoming less globally competitive in the near future.  A strong manufacturing sector is a crucial component of a country’s intellectual capital, innovation capacity and ability and economic prosperity.  Manufacturing competiveness is driven by an empowered talent base, especially as manufacturers integrate technology and products into new platforms.

This comes down to this mantra: WE NEED TO NURTURE THE INDUSTRIES OF THE FUTURE.  Yes, this statement begs for an answer to two questions:

1. What do competitive industries look like?
2. What specifically do we need to nurture?

The answers should cause all of us to pause, take stock and formulate a new path.  While the U.S. is still the world leader in ‘share-of-manufacturing-value added’ we are no longer the most competitive location for manufacturing.  It won’t be a surprise to most of us that China is at the top of the most competitive list but it should concern us that the U.S. is losing ground and becoming increasingly less competitive.

Though, Americans believe a strong manufacturing industry is critical to our economy and recovery, as this sector of the economy increasingly goes abroad the growth or creation of jobs will prove ever more difficult.   There are many characteristics that will be inherent to the leading manufacturers of the future and chief among them are the following:

1. Global Orientation:  Sustainable manufacturers will be global, even if they never produce products outside their nation.  They will need to open their business processes to from collaboration with partners around the world.
2. Innovators:  Innovation of products, processes, services, and sales will be the most important competitive differentiators of the leading manufacturers around the world.
3. Intersection Conductors:  Innovation will occur at the intersection of intellectual capital, financial capital, human capital and physical capital.  Leaders will outpace competition by developing and deploying capital through superior leadership, collaboration and technology.
4. Customer & Supplier Assets:  Manufacturers will derive competitive advantage from the creation of assets in the form of networks of suppliers and customers.  These new suppliers and customers will play a huge role in creating new products, services and commercializing them.
5. Supply Chain effectiveness:  Effective global supply chains will become increasingly important.  The definition of productivity will be inclusive of all facets of manufacturing and the business environment.

What we are seeing is the shared factors of leading manufacturers – especially given the increased competitiveness due to the Great Recession.  Are we looking at the formation of nation-states?

All of this brings us back to the original questions:  How will we know what industries to nurture?  How can the U.S. remain among the most competitive locations for manufacturing and the prosperity that arises from a strong industrial base?

Bio:

Expertise in lean six sigma manufacturing systems, inventory systems and process improvements functions. Accomplished in use of optimization models to determine least cost facilities and drill down to workflow details in support of process and profit management. Oversaw all Inventory Collaborate effectively with business managers to resolve variances, refine forecasts and identify opportunities for improvement.  While at Reckitt Benckiser, Linde Gas and Johnson & Johnson wore several hats including inventory manager, implementer and trainer of benchmarking and dashboard analytics, leader of cost optimization projects such as Lean and Lean Six Sigma, created and implemented cost and inventory metrics, collaborated across functional silos such as production, receiving, plant personnel and shipping to ensure inventory and cost systems integrity, wrote and implemented and trained staff on new Procedures to align with projects and continuous improvement leader.

Member of various accounting and operational trade associations such as; The Council of Supply Chain Management Professionals, The International Supply Chain Education Alliance and The Society of Cost Management.  My interests outside of my work are mostly outdoor activities like hiking, camping, tennis, etc., with a slight lean to gourmet cooking.