OUR THOUGHTS ON:

Manufacturing Concerns of 2011

Manufacturing

By Shawn Edwards

Over the past decade, manufacturing in the United States has been steadily declining, but the U.S. still has one of the world’s largest manufacturing economies. In an effort to control costs and remain competitive, many manufacturers moved production and/or jobs overseas or replaced manual labor with computerized equipment. As a result, manufacturing jobs in the U.S. declined more than 30% over the last ten years.

While most people have difficulty finding anything positive from the recent financial crisis, it is this financial crisis that has driven some improvements in the U.S. manufacturing industry. At the time the economy in the U.S. began to slow down, overseas production costs were rising and quality was declining. Higher costs coupled with declining quality and slower production and shipping times caused many manufacturers to rethink overseas production.

Fast forward to the end of the financial crisis, and U.S. manufacturers have discovered the new trend to being successful. Gone are the days of mass production. The post-financial crisis era focuses on reduced inventory levels, efficient production timing and improved production quality, all delivered with good customer service. As a result, over the past two years, the manufacturing industry in the U.S. has seen an approximate 2% gain in jobs and a steady increase in utilization and production.

Unfortunately, additional issues have slowed manufacturing growth in the U.S. in 2011. Rising energy costs are affecting manufacturers as they struggle to keep costs down or risk having to pass higher costs on to consumers who are still very price-sensitive. In addition, the recent disasters in Japan have caused supply chain issues for manufacturers around the world. Lengthy delays in Japan’s recovery could affect manufacturers’ long-term ability to keep up with customer demand. This would also result in manufacturing job layoffs to employees who are just getting back on their feet.

Another issue affecting U.S. manufacturers is the ability to attract and maintain quality workforce. While it seems difficult to believe with the current unemployment rate, manufacturers are having a difficult time finding qualified employees. Over the last decade, potential employees have been dissuaded from manufacturing jobs due to the perceived decline in the industry. In addition, the employees who are available for manufacturing jobs often aren’t properly trained to operate today’s technical manufacturing equipment. When you combine the baby boomers who are retiring with the lack of qualified younger workers, you can see the labor issues manufacturers are facing. Successful manufacturers of this era will be dedicated to employee training and retention to ensure quality and customer service.

This is still a good time to be a manufacturer, as opportunities are available. The manufacturing industry in the U.S. is still projecting long-term growth. All it takes is the right company with the right team to take advantage of these opportunities.

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