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Manufacturing in U.S. can survive, thrive

As I See It

Manufacturing in the United States has suffered its fair share of setbacks in recent years.

Fortunately, as the economy awakens from its slumber, good news for manufacturers looms on the horizon, who can not only survive in the age of globalization, but thrive.

But it is going to take a new attitude.
Traditionally, manufacturers have defined themselves as companies that made something. Their goal was to make their something better, faster, cheaper than their competitors. Though these goals are laudable, they alone are no longer what it takes to succeed.

An excellent article by Patricia Panchak in the December issue of Industry Week, available online at www.industryweek.com, summarizes how several U.S. manufacturers have developed strategies for surviving and even prospering in the new global economy.
What will it take? Read on…

New rule number one: get in the middle of things. Locate yourself where things are happening, close to the customer and where innovation is taking place. This is the clustering concept that has received so much attention in recent years, and rightly so because it works.
Being in proximity to the industry cluster offers increased opportunities to interact with others in the industry. The result is relationship building, which is critical to survival in any business. Just being close to the action can generate opportunities to participate in sourcing, engineering and product design.
Mississippi is working hard to create clusters in several industries and these efforts are right on target. Technology, automotive manufacturing, furniture and plastics are some of the cluster groups in our state.

Timber and agricultural production are two areas that are ripe for expansion under the cluster concept. Currently, we are on the low end of the profit chain in these areas because we produce the raw materials and ship them off to be processed into consumable products. The big profits are in the conversion of raw materials into finished goods.
Attracting manufacturers to our state to convert our timber and agricultural raw materials into consumer-ready goods could produce an industry cluster that would generate more and better jobs for Mississippians and more tax dollars for the treasury. Dr. Lester Spell and the Mississippi Department of Agriculture and Commerce are constantly working on initiatives to promote more finished goods manufacturing in our state.

New rule number two: get productive. Using technology and good management principles to increase productivity is an important element in the survival of U.S. manufacturing. Like a good athlete, companies must be flexible and adaptable. If one product is developed to the point where it can be produced more efficiently elsewhere the company must be able to respond quickly to replace it with another where our design and engineering give us the edge over lesser developed countries.

Part and parcel of being flexible and adaptable is a good workforce. This is an area where Mississippi is sorely lacking. We have a surplus of untrained labor competing for non-existent jobs. Just as Mississippi is committed to public education for our youngsters, we must likewise commit to public funded training for workers whose skills are antiquated and no longer in demand. In bygone days, the equipment was the most important element of manufacturing. Now, clearly, the workforce is paramount and the equipment is secondary.

New rule number three: get service oriented. We need to get over the idea that lawyers and insurance agents are service providers and manufacturers have real jobs, they make things. In fact, we’re all in the service business.

Success awaits those manufacturers who become the “go to” guy for their customers. Help customers be more successful and they, in turn, will promote your success. Assist with design and product development. Assist in building prototypes. Conduct material sampling tests for new products. In short, become such a valuable asset that your customer cannot conceive of getting along without you.

Eventually high volume component production will be moved offshore. By being part of the customer’s support team, you can be right there to assist in the smooth transfer and on hand to begin production of another component. The key is to be service oriented while being adaptable and flexible.

Style and quality often trumps cost. As we wring our hands and worry about the implications of cheaper labor available to our customers offshore, we should keep in mind that cost is not the controlling factor in many consumer decisions. Look at all of those not inexpensive Mercedes and Hummers on the highways, the expensive clothes, the Rolexes and be comforted that many consumers put style and excellence ahead of price alone.

Does U.S. manufacturing have a place in the future? You bet it does. Just like any other business, some substantial adaptation will be required, but at the end of the day, we’ll still be here.

Thought for the Moment — Do you see a man who is wise in his own eyes? There is more hope for a fool than for him. — Proverbs 26:12

Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.

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