Despite the underlying premise that United States manufacturing is a dead or dying business, manufacturing here in the states is alive, well and actually on the incline.
“The U.S. is fast becoming one of the lowest-cost countries for manufacturing in the developed world,” says CNBC, citing the Boston Consulting Group. BCG found that the average manufacturing costs in Germany, Japan, France, Italy and the United Kingdom will be 8 to 18 percent higher than the U.S. by 2015. So is manufacturing dead? On the contrary, it is increasing.
Watch for hurdles to overcome
In our soon-to-be-published book, “Maximizing Profits Immediately: How to Dramatically Improve your Company’s Bottom Line,” we continue the program started by Harry E. Figgie that helps manufacturing companies compete more effectively. Many people believe that the U.S. cannot compete in a global environment. This is simply not true; however, manufacturing does have some distinct hurdles:
There is no question that the manufacturing sector does not dominate the U.S. economy. In the past 60 years, the U.S. employment in manufacturing has wavered from 50 to 10 percent. If you measure this by the gross domestic product, the manufacturing share of the economy has fallen by 25 percent in the 1950s to 11 percent today.
While there is a profound shift, the collapse that we are so-called witnessing is simply a hangover from the earlier 2000s, when the number of workers declined from 17.3 million to 13.5 million. More than 4 million jobs were lost in manufacturing from the U.S. not being competitive and outsourcing. Since 2003 this has stabilized at low levels, and in the last several years manufacturing employment has actually risen for the first time since the late 1990s.
Manufacturing is moving forward, growing, thriving, competing and doing well. U.S. manufacturing still accounts for 50 billion exports every month. If you measure manufacturing on a stand-alone basis, it is still the eighth largest economy in the world. One in every six private sector jobs is in manufacturing.
An edge on global competition
Today, the manufacturing sector employs 12 million people or 9 percent of the total workforce. It also accounts for 6.6 million jobs in other sectors, including accounting, wholesaling, shipping and more. For $1 in manufacturing in manufactured sales, that final sale supports $1.37 in other areas of the economy, larger than any other economic multiplier.
Recent headlines highlight General Electric Co., Apple Inc. and other companies reporting that manufacturing is back in the U.S. They are employing better, faster and more economic processes than global competition, leading to increased productivity.
It is widely reported that the labor transportation and energy costs in China have made offshore manufacturing more expensive. The Hackett Group reports that the gap between manufacturing in the U.S. and China has shrunk by nearly 50 percent in the last few years and likely will be less than 13 percent in 2013.
With our ability to be nimble and creative, U.S. manufacturing is becoming more profitable. We are focusing on better design, better performance, safety and a superior product. Most importantly, we are offering a superior life cycle of a product — better than you can get anywhere else in the world.
With rising costs in China, the movement now is to eliminate sweatshops, push out the foreign competition and develop superior and lasting products. With that, the U.S. promises to continue its movement to keep manufacturing and jobs plentiful here at home. ●
Matthew P. Figgie is chairman of Clark-Reliance, a global, multi-divisional manufacturing company with sales in over 80 countries, serving the power generation petroleum, refining and chemical processing industries. He is also chairman of Figgie Capital and the Figgie Foundation, a member of the University Hospitals Board of Directors, corporate co-chairman for the 2013 Five Star Sensation and chairman of the National Kidney Walk.
Rick Solon is president and CEO of Clark-Reliance and has more than 35 years of experience in manufacturing and operating companies. He is also the chairman of the National Kidney Foundation Golf Outing.