Is Manufacturing's Future Hopeless?
The first two months of 2009 have been dismal for many companies. Economic uncertainty and tightened financial markets seem to be affecting many small- and mid-size companies. As a result, I see many companies frozen with fear. They are afraid to invest in developing their people or improving their processes because they don't know what lies ahead. The problem is some of their competitors are preparing their people and improving their processes. Guess who is going to gain the market share when we recover?
Yes, I believe this economy is going to recover and bounce back. Yes, I believe manufacturing is a critical piece of the US economy and our standard of living. No, I'm not just an eternal optimist. Here's why: according to a new study from Archstone Consulting many companies are looking to re-establish domestic manufacturing due to rising costs and other strategic challenges with off-shore manufacturing. This confirms what we told you back in July, 2008 about U.S. Manufacturing making a come back. The Archstone study revealed that in the last three years:
- Ocean freight costs have increased 135%.
- The global commodity price index has risen 27%.
- Chinese manufacturing wages have increased 44%.
Concerns raised in the study include:
- Slower Cycle/Delivery Times (59% of respondents).
- Reduced Supply Chain Flexibility and Responsiveness (56% of respondents) .
- Lost Visibility, Coordination, and Control (including Quality) over the Supply Chain (50% of respondents).
Based on these issues, 90% of the respondents indicated that they are considering changing - or have begun changing - their manufacturing and supply strategy. This means you need to make sure your company is an attractive alternative for these companies.
Why is our region poised for recovery and growth? First, Ohio, Pennsylvania, and New York are among the top manufacturing states (first, third and fifth, respectively) according to the Pennsylvania Department of Community and Economic Development. Second, Pennsylvania's manufacturers added $174,804 in value per employee in 2006 and are increasing that almost 50% faster than the U.S. average. Finally, manufacturing is Pennsylvania's most significant industry, accounting for more than 15% of the state's economy.
When companies are confident about the future, they invest in themselves. I believe manufacturing and this region have a bright future. Call us for a free one hour consultation on how to position your company for the recovery and growth.
