This phrase: “Reinvigorating American Manufacturing” and many many more like it (such as Renaissance, Recovery, Resurgence and more) have popped up all around the manufacturing community this year in media, by politicians, economists, and those working in and around the industry. Just yesterday, 8 days before the general election, the Obama Administration announces another push towards the support of the re-invigoration of American manufacturing with an executive order to put $300 Million towards American Manufacturing:
“U.S. manufacturing is central to the foundation of our economy, and the U.S. manufacturing sector is as competitive as it has been in decades for new jobs and investment. Since February 2010, U.S. manufacturing has added more than 700,000 jobs, the fastest pace of job growth since the 1990s.
Today, to continue to build on this momentum, the President will unveil new executive actions to strengthen U.S. advanced manufacturing, spur innovation, and continue to take steps to make the U.S. a magnet for new jobs and investment. At an event this afternoon, the President will thank the Advanced Manufacturing Partnership (AMP) Steering Committee, a working group of the President’s Council of Advisors in Science and Technology, for their efforts to develop advanced manufacturing across the U.S. The final AMP, Accelerating U.S. Advanced Manufacturing, is now available.
In response to an earlier report of the Advanced Manufacturing Partnership, which began in June 2011, the President has already launched four manufacturing innovation institutes with four more on the way; invested nearly $1 billion to upgrade our community colleges to train workers for advanced manufacturing jobs; expanded investments in applied research for emerging, cross-cutting manufacturing technologies; and launched a new initiative to deploy the talent of returning veterans to in-demand jobs, including in advanced manufacturing.
The final AMP report makes recommendations addressing three key pillars that support American manufacturing: 1) enabling innovation, 2) securing the talent pipeline, and 3) improving the business climate. The executive actions announced today align with the report’s recommendations by making investments in emerging, cross-cutting manufacturing technologies, training our workforce with the skills for middle-class jobs in manufacturing, and equipping small manufacturers to adopt cutting-edge technologies.”
As we stated in an earlier blog post titled “Manufacturers: The Great Innovators & Why Government Involvement is Appreciated, But Not Needed” we stated that although support, whether it be monetarily, by policy, or by general marketing and brand awareness of the American Manufacturing industry by the government is appreciated, the real focus for manufacturers is one of creating a culture and philosophy of business centered around innovation.
In our usual morning ritual of reading industry articles and monitoring the “#Manufacturing” search term on twitter for great twitter users and content in the space, we came across a twitter user who tweeted out his most recent article he published on LinkedIn, called “Reinvigorating American Manufacturing”. The writer is Braden Kelley, an experienced innovation speaker, trainer, content marketing strategist, and innovation culture and infrastructure specialist, who is also author of the book, “Stoking Your Innovation Bonfire.” He has been advising companies on how to increase their revenue and cut their costs since 1996. Below you will find the article which is republished with permission from Braden. We encourage you to follow him on Twitter, with his awesome twitter username @Innovate.
Make sure you read to the end, as Mr. Kelley’s request of the Obama administration and government is seemingly heading in the direction of that request. In fact, we hope Obama was paying attention to innovation execution when Braden sent an open letter to the President 3 and half years ago. It was if Mr. Kelley was fortune telling when he penned in that letter:
Innovation in America, especially in the short term, is not achieved by pumping huge sums of money into government-sponsored research and development efforts. Yes, many successful innovations have resulted from government research investments, but we need to take a more strategic approach to these efforts. The focus on research and capital projects by the Obama administration also begs the question of whether long-term investments be our only approach to innovation.
With yesterday’s monetary push from the Obama administration and other initiatives, we are cautiously optimistic, but excited for the future of American Manufacturing. Make sure you read the ENTIRE White House Press release on how the money will be spent. I bet Braden might be excited that in part, the money will go to support teaching youth about what manufacturing is today and what it is not.
Reinvigorating American Manufacturing
Back in 2012 I wrote about how as wages and shipping costs rise abroad, unemployment stays high at home, and strategic discontent with offshoring grows, American Manufacturing finds itself facing its best chance at staging a comeback.
American companies are considering a reversal of offshoring and outsourcing to reduce risk, improve agility, shorten product development cycle, and improve their ability to simplify increasingly complex supply chain management.
Missing from this list is innovation, but US companies that commit to engaging American workers in their innovation efforts may also increase their ability to justify manufacturing their products at home.
Moreover, Chinese workers are now three-to-five times more expensive than some other Asian workers, leading American firms to reconsider their sites of production.
One such firm is Nike, whose innovative Flyknit technology could allow it to make shoes easily anywhere in the world by having a machine make the most labor-intensive parts of the shoe. To bring production back to the United States allows Nike to react faster to competitors or to increase the speed of scheduled product launches. In the fashion industry, speed is crucial, and onshore production could create a competitive advantage.
Other firms are taking a second look at their reliance on contract manufacturers in China and elsewhere. Companies that once saw contract manufacturing as a strategic or economic necessity are questioning the wisdom of the arrangement as they watch original design manufacturers like HTC move up-market and strengthen their brands to compete with Apple, Motorola and others.
Adding fuel to the fire are rumors of workers at plants like Foxconn smuggling out plans and components to sell to pirates to make a little cash on the side.
But more importantly, an almost religious focus on cost and increased use of standard components across whole industries has made it more difficult for one brand to differentiate their products from another in the industry – increasing price competition and squeezing margins for all.
As a result, companies like Apple are now looking to reverse some elements of their standardization and outsourcing strategy and instead become more vertically integrated. Apple has acquired a chip design firm — and even their own chip fabrication plant (fab) — in its quest to differentiate itself and control some of its basic inputs and it may still acquire another fab to continue this strategic direction. Not to be outdone, Google is acquiring Motorola, and Nokia and Microsoft are working together closer than before.
It is possible for companies to manufacture their products in the United States and make a profit. When you invest in your workers, engage their hearts and minds and involve them in the innovation process, you can not only optimize your manufacturing processes but also uncover new growth opportunities that no contract manufacturer will ever bring to you.
Companies like New Balance, Snapper Mowers, American Apparel, Caterpillar, Syntax-Brillian (Olevia TV’s), Case IH, American Bicycle Group and many others have been working hard to keep making their products in the United States.
Now is the time for the Obama administration and state and local governments to step up their encouragement of American manufacturing. In these difficult economic times, Americans would love nothing more than to stroll down the aisles of their local Walmart, Target, or independent retailer and find more products on the shelves that say Made in the USA.
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Braden Kelley is the author of Stoking Your Innovation Bonfire from John Wiley & Sons. Braden is also the founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy, and an Innovation Excellence co-Founder. Follow him here on Linkedin or on Twitter.