This is the first in a series of blogs where we will cover the current state for U.S. manufacturers, supply chain, logistics, transportation, and freight management. Today we focus on the realities that we face with American manufacturing.
The argument for American manufacturing is clear, and the topic has graced the stages of all political candidates. However, the hype is not necessarily reflective of reality. The U.S. closely follows China’s lead in manufacturing, and in fact, the U.S. is on track to surpass Chinese manufacturers by 2020, reports Chris Mathews of Fortune magazine. So, the dialogue needs to shift toward focusing on the problems and triumphs of modern manufacturing in the U.S. and how the U.S. can continue on a path toward global superiority in this field.
Problems Versus Myths for Current U.S. Manufacturers
Myth 1: Cheap Labor Is Most Important to Manufacturers.
In the past, cheap labor was one of the most highly sought after factors in manufacturing behaviors. Lower costs of producing products overseas led to many manufacturers uprooting factories and placing them in less regulated markets. While this helped build massive shares of wealth, the perception of the public has encouraged, if not demanded, manufacturers to return jobs to the U.S. The other problem with manufacturing in overseas settings revolves around proprietary information.
For example, a manufacturer may be able to produce 1,000 units of a product in China at a fraction of the cost of domestic manufacturing. However, the minimal regulations in foreign labor departments, which provide the key benefit, also carry the weight of infringement and lost innovation. While the manufacturing can get steep discounts on production, the proprietary nature of a product, especially products that can easily be replicated, is practically lost. As a result, the true cost of manufacturing overseas can easily start to outweigh the costs of investing in U.S. manufacturing.
Myth 2: Immigration Reform Will Hurt U.S. Manufacturers.
During the era of civil rights, U.S. manufacturers saw immigrant workers as plentiful and capable of working for much less than the cost of machinery and U.S. citizens. This notion was so important that it actually led to the proverbial ban on innovation of machinery to replace manual laborers in agricultural settings, explains Eduardo Porter of The New York Times. Furthermore, the strides made by Cesar Chavez and his followers made it to where even agricultural producers and manufacturers needed to follow procedure and adhere to rules set forth by the government when employing immigrant workers.
On the surface, it seems like immigrant workers will continue to influence agricultural production, and if you consider the number of textiles and materials that are involved in the agricultural chain, it does not take much to bridge the connection between immigration and manufacturing. Since immigrant workers who fought during the ‘50s and ’60s have turned the reigns over to a new generation, the new generation has its own demands and expectations. Ultimately, the solution to immigration must focus on what can be done to encourage immigrant workers to take positions in both agricultural and manufacturing settings, which may include the myriad, politically-charged proposals.
Myth 3: The Presidential Election Will Catalyze a Manufacturing Renaissance.
How do you define a Renaissance? If you hope to see legislation and executive orders, then yes, the election will start the process. However, the gradual decline in manufacturing is not limited to the U.S. As a result, a solution to U.S. manufacturing problems cannot completely solve the manufacturing fiasco of the modern world.
The solution must be broader than a U.S.-based ideal; it must consider how all people and countries are affected by manufacturing. The flow of products has also evolved to meet global demand, and e-commerce opportunities will only continue to drive the need for more products, in more places and at competitive pricing.
What Needs to Be Accomplished to Help America Reach #1 in Manufacturing by 2020?
Manufacturing is not dying, it is transforming. The manufacturing of yesterday involved manual labor, manual entry and lengthy, costly processes. However, the rise of digital capabilities through cloud computing will help guide U.S. manufacturers into the next era.
Manufacturers are not looking toward the future blindly either. They are creating strategic plans to ensure their organizations survive and thrive even in the worst scenarios. According to Nancy Huddleston of Precision Manufacturing, 80 percent of surveyed leaders in manufacturers believe a recession is on the horizon. Yet, at the same time, these respondents feel their companies will be able to withstand the potential disruption. Essentially, having a plan is critical to the success of manufacturers.
The demand for skilled workers in manufacturing represents another facet in the growing sphere of manufacturing changes. More organizations are turning toward trained, experienced and educated workers in place of traditional apprenticeships and intern-based training. In other words, manufacturers will need to make today’s students aware of their plans for future growth, even in the event of a recession, to encourage these individuals to attend trade schools, vocational programs, and other secondary educational opportunities.
Ironically, this topic opens the debate over funding of secondary education, but what good does knowing this information mean for the election? If you do not understand how each scenario will be impacted by the election, you cannot understand why manufacturing will continue to grow. In other words, you need to think about how each candidate will serve the global economy, but the conversation will and must start with domestic manufacturing.
Rather than focusing on the negative aspects of the election, our next post will delve into what each presidential candidate hopes to do to improve U.S. manufacturing.