Three main challenges face the manufacturing industry today, and they are forcing manufacturers to change the way they do business.
“The industry depends on customer spending and retail sales so that change can occur quickly within an economic downturn like we’re in now,” says Michael Trabert, CPA, CVA, a partner with Skoda Minotti. “Another challenge the industry is facing is the competition from low-cost countries like China and Mexico, which can have high production and low costs.”
Lastly, the cost to power equipment and produce heat and energy becomes one of the larger expenses to manufacturing companies, adds Trabert. The rising cost of energy will force the industry to make changes to cut down on those costs. However, companies throughout the industry have developed solutions to these problems.
Smart Business spoke with Trabert about how the manufacturing industry has adapted to face those challenges.
How has the manufacturing industry adapted to these challenges?
The industry leaders have successfully controlled the inventory levels and accurately forecasted demand in the future so they could more effectively handle a downturn in the economy. Second, successful companies are utilizing technology to compete with foreign companies or to outsource non-primary production items. Lastly, they have upgraded factory and equipment to become more energy-efficient and reduce energy costs.
What are some other ways successful companies can adapt?
There are definitely some solutions out there. One of the biggest ways companies have adapted and succeeded is through specialization of products. Some companies have built factories abroad or outsourced production of high-volume, low-technology products to the low-cost countries. The more specialized, high-tech processes in the production cycle are still produced domestically. This reduces their manufacturing cost but allows them to maintain product quality.
