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Top 4 Manufacturing Issues in America – Part 1 of 2

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We are at an interesting time in American Manufacturing. There are so many manufacturing issues in America which should be on the forefront of every manufacturing executive. We felt compelled to compile the top 8 pressing manufacturing issues and trends in American manufacturing to share with you. Awareness of these various and extremely important topics will aid in the sustainability and growth of American manufacturing, which in turn will allow our economy to grow and thrive. This post is the first of two, covering the first 4 top manufacturing issues in America.

Top 4 Manufacturing Issues in America

Closing the Manufacturing Skills Gap

Manufacturing has evolved far beyond the days of the moving assembly line when thousands of factory workers labored side by side in repetitive motion. The “Skills Gap” is one of the most talked about manufacturing issues in America, with most of the major news outlets covering the issue over the last year in great detail.

manufacturing issues the skills gap 300x199 Top 4 Manufacturing Issues in America – Part 1 of 2Today, manufacturing is highly technical and requires understanding and proficiency in a wide variety of competencies. However, this demand for highly skilled workers comes at a time when the industry is facing the retirement of a large percentage of its workforce and an incoming generation of workers who lack the skills and technical knowledge needed for U.S. manufacturing.  The oldest baby boomers turned 65 on Jan. 1, 2011, and every day thereafter for about the next 19 years, some 10,000 more will reach the traditional retirement age, according to the Pew Research Center.  Many manufacturers are seeing an advantage to “reshore” their production back to North America, but they can only do this if they have access to skilled workers.

A key component has been the development of the (National Association Of Manufacturers) NAM-Endorsed Manufacturing Skills Certification System—a system of stackable credentials applicable to all sectors in the manufacturing industry.

Additionally, in June 2011, President Obama announced that the Skills Certification System was the national talent solution for closing the skills gap addressing this top of many manufacturing issues in America. In addition to supporting and advancing the Certification System, the Society of Manufacturing Engineers (SME) Education Foundation encourages youth to get involved in manufacturing technologies through STEM-related activities in the K–12 levels.

Reshoring/Insourcing Manufacturing to the United States for Increased Quality

Now in 2013, another major of the manufacturing issues is reshoring and insourcing. More companies are moving their services and manufacturing operations back to the United States. Caterpillar moved operations from China to Mexico and the US.  Dell moved its customer support from India to the US.  K’Nex Brands moved manufacturing from outsourcing in China to the US. K’Nex said, ‘by moving production closer to the US retailers, K’Nex can react faster to fickle shifts in toy demands and deliver what is needed faster’. It also has greater control over quality and materials, which is crucial to product safety.

The common factor of reshoring is quality. When you have lack of control or visibility of your suppliers, partners or the supply chain, you will end up with inferior products while suffering from reliability and safety issues. There needs to be consistent processes, a harmonized approach to safety and risk based management of issues, suppliers, standards and collaboration.  Quality is touted as a competitive advantage – look at the number of TV commercials with the J.D. Power & Associates quality award, or Malcolm Baldridge Quality award. Number 2 in our top manufacturing issues blog, reshoring, is still an ongoing debate, and time will tell if this trend continues, or if offshoring will cycle back in the next 20 years.

Trends in Manufacturing Fuel: Oil vs. Natural Gas

Always one of the manufacturing issues manufacturing executives must consider is fuel and energy use. Oil has always, and currently still is, the most prevalent form of fuel and energy used in both the shipping of manufacturing products and in the process of manufacturing. Oil has also made the American manufacturing community, and thus the economy, quite dependent on foreign importing, thus driving up manufacturing costs.

manufacturing issues shale gas 300x193 Top 4 Manufacturing Issues in America – Part 1 of 2However, with the recent advent of manufacturing natural gas from shale, such as from the Marcellus Formation in the Appalachian Basin, in Corpus Christi, and other parts of America, many manufacturers are finding alternative and cheaper ways to procure fuel for production and decrease transportation costs as the use of LNG (liquefied natural gas) motor carriers increase. Currently, the procedure to extract this natural gas is known as Fracking.

With this decrease on foreign oil dependence, and the increase in supply of natural gas, Economists foresee a potential rebirth of American manufacturing including such basic industries as steel and plastics that had gone overseas and that many Americans thought they would never see again.

General Electric Co. chief executive Jeff Immelt is one captain of industry who is convinced that American manufacturing can rise again, thanks to the natural gas shale revolution.

According to Immelt, “The availability of shale in the United States and around the world has to be one of the biggest game-changers I’ve seen in my career.” It is not doubt that fuel is a one of the top manufacturing issues on all American manufacturing leadership’s minds.

“Made In America” Is the New Black (Again)

Finally, in this first part of pressing manufacturing issues in American Manufacturing, we close with the Rise of Demand of “Made In USA” as of late. “Made in America” was seen with great prominence around the mid-1990s when the FTC updated it’s labeling requirements, originally in stated in 1938, and then with more stringent “Made In USA” rules amended in 1996.

American manufacturing in certain areas is on the rise thanks to increasing Chinese wages and crowdfunding fueled new production startups.    Although there was some weak manufacturing data out just as recent as May of 2013, the demand for American made goods seems to be increasing. At least that is the case when it comes to goods with the “Made in America” or “Made in USA” labels and this is especially true in the apparel industry. Indeed, many consumers like the quality perception boost associated with labels serving as certificates that these goods were in fact made in America. Strangely, American made items are also growing in popularity because our production costs are declining while Chinese labor is actually seeing wage increases and surprisingly in some cases U.S. shop owners couldn’t afford to go with the Chinese manufactured options.

We highly suggest you follow the Alliance for American Manufacturing on Twitter for information and news on the “Made In America” or “Made in USA” movement.

Make sure you read tomorrow as we cover the rest of our top manufacturing issues in American Manufacturing. What other trends would you add? Let us know your thoughts on these 4 trends as stated above in the comments below!

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adam robinson Top 4 Manufacturing Issues in America – Part 1 of 2
Adam Robinson oversees the overall marketing strategy for Cerasis including website development, social media and content marketing, trade show marketing, email campaigns, and webinar marketing. Mr. Robinson works with the business development department to create messaging that attracts the right decision makers, gaining inbound leads and increasing brand awareness all while shortening sales cycles, the time it takes to gain sales appointments and set proper sales and execution expectations.
adam robinson Top 4 Manufacturing Issues in America – Part 1 of 2

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  • http://www.reshorenow.org/ Harry Moser

    Good article! Thanks for recognizing the reshoring trend.
    First, however, a correction for clarity. In the last sentence in the Reshoring section, “outsourcing” is used where I believe Adam intended “offshoring.” Work done by suppliers, including those in the U.S., is “outsourced.”
    The impacts of the factors in the Reshoring section and in the “Made in America” section can both be considered by companies by using total cost of ownership to make sourcing decisions. The not-for-profit Reshoring Initiative provides a free online Total Cost of Ownership (TCO) software that helps companies calculate the real offshoring impact on their P&L. In many cases companies will find that, although the production cost is lower offshore, the total cost is higher.
    The Initiative http://www.reshorenow.org tracks all U.S. reported and some private cases of reshoring and concludes that about 80,000 manufacturing jobs have been reshored since Jan. 1, 2010. If companies consistently evaluate all of the costs and risks, about 500,000 more manufacturing jobs would come back today. Current research shows many companies can reshore about 25% of what they have offshored and improve their profitability.
    Readers can help bring back jobs and increase profitability by asking their companies to reevaluate offshoring decisions. Suppliers can use the TCO software to convince their customers to reshore.
    You can reach me at harry.moser@reshorenow.org. Let’s work together to make sure the reshoring trend continues and grows.

    • http://Cerasis.com Cerasis IT

      Harry, thank you so much for your comment. We will revise the post now to better clarify and reflect the true meaning of what we wanted to say. Your expert guidance is much appreciated!

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  • James Martinez

    I can’t believe taxes, EPA, and DEP regulations are not at the top of your list. All the issues stated need addressing, but they’re becoming rhetoric. We need to stop denying that the United States has become an environment that is hostile towards business. If we don’t fix the issues that ran all the work out of our fine nation in the first place, we will be right back here in a matter of years, maybe with more educated, but still unemployed, people.

    • http://Cerasis.com Cerasis IT

      Great points and additions, James. We may take these talking points to write up another post soon!

  • http://www.allencbuchanan.blogspot.com Allen Buchanan

    I really enjoyed the post! I provide location advice to owners and occupants of manufacturing and distribution buildings in Southern California. Understanding these issues, helps me understand some of the issues companies are addressing.

    • http://cerasis.com Adam Robinson

      Allen, we are glad you found it helpful! Since your customers are manufacturers, and our customers are manufacturers, would love to see if there is an opportunity for us to offer value to you customers via a guest blog or by way of you sending them this blog. Let me know what you think. We would welcome you writing a guest blog about location advice for manufacturers to host on our blog if you are up for it. It would provide a backlink to your site of course, and give you full authorship. Let me know your thoughts.

  • http://celmfg.com/ Joel Anderson

    This is a really great article! Very informative and thoughtful. It is particular significant to us as a Seattle Washington based sheet metal fabrication company (Cutting Edge Laser). We wanted our blog readers to learn about these issues we’re facing as a nation, so we went ahead and wrote a blog post for our website as a commentary on your article. We linked back to your original post, as well. You can our post at: http://celmfg.com/cel-news/archives/2013/07/31/top_issues_facing_american_manufacturing_today
    Thanks for the great article!

    • http://cerasis.com Adam Robinson

      Joel, it’s great to hear the article and trends were helpful! Also, thanks for referencing the post in your own blog post. We appreciate it! We have customers in the metal fabrication field and we knew it was important to understand their issues they are facing in order to serve them better. In this way, we hope this blog post helps other manufacturers in the country stay abreast of the issues in order to remain proactive and sustainable in their business practices.

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  • http://www.reshorenow.org Harry Moser

    Adam,
    Thanks for a great article. I was pleased that reshoring gets 2 of the top 4: #2 Reshoring and #4 Made in America which is reshoring and is one of the reasons to reshore.

    In addition, reshoring is one of the keys to solving #1, the skilled workforce problem. The major reason we have too few skilled workers is recruitment. Recruitment is weak largely because students, parents, superintendents and guidance counselors believe manufacturing is a poor career choice since the jobs are going offshore. If every community publicized local reshoring successes, rescruiting would rise and schools would offer more training programs.
    The Reshoring Initiative is ready to help communities with such a program and companies evaluate whether to reshore. Email me at harry.moser@reshorenow.org.

    Best!

    • Cerasis

      Harry, Thanks for your comment. Yes, reshoring will fix a lot of these issues. We are excited to be in this exciting time to watch as companies bring jobs back but also make long term decisions based on customer service and quality products. This will create sustainable recovery and future jobs. We welcome and appreciate the support of the Reshoring Initiative. Thanks for all your group is doing!

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  • Shasha

    Thanks for this article and I like to add some more points. Reshoring which helps in reducing the total cost of owner ship and improve the quality of inputs. Most of the sheet metal fabrication companies like Bay view metals are trying this in order to eliminate the waste and instability caused by off shoring.

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