The notion that globalization has dealt a fatal blow to the American manufacturing sector is a widespread one. Conventional belief is that the United States no longer produces much. It has become common to hear people declare that “everything is made in China.” Regardless of what the prevailing perceptions are, the simple truth is that the United States hasn’t lost its lead as the manufacturing power. It is still the world’s No. 1 producer.
But much has been said about the challenges small and medium-size American companies face from global competition. It is easy to overlook some of the advantages being smaller can offer. Well-run, forward-looking businesses can react better to the markets by repositioning themselves to ride new trends much faster than big, bureaucratic companies. They can also customize their services to a greater extent to fit individual customers. In addition, they can expand into small niche markets that are often ignored by multinationals.
That said, to ensure long-term existence and to remain competitive, all American manufacturing companies, especially small and medium-size ones, need to raise their productivity, continue to innovate, and improve their products. To do this, they must maintain a well-trained workforce, keep channels for customer feedback open, and foster an environment where collaboration with customers can thrive.
Truth in Numbers
American manufacturers sell their products all over the world. The United States makes some $5 trillion worth of goods, and the manufacturing sector still employs 13 million people across the country. In 2007 alone, the United States rang up more than $200 billion in sales of aircraft and other high-tech goods and $80 billion in cars and parts. One heavy machinery company, Deer & Co., alone recorded $16.5 billion in sales of farming equipment.
The United States has less than 5 percent of the world’s population but actually manufactures 20 percent of the world’s goods. It produces two and a half times more than China in dollar value. These numbers are impressive by any standard.
But we can’t be blamed for thinking America no longer produces anything useful. The impression our country is no longer on top of the global manufacturing game is reasserted over and over by our day-to-day shopping experiences. Clothes, electronics, toys, and household goods are likely to be made outside the country, and yes, probably in China. However, our daily experiences are telling only one side of the story. After all, most of us are never in the market for a communication satellite or an aircraft carrier, big-ticket items that are very likely to be made in America. The United States may not be making many $20 toys, but it is certainly manufacturing aircraft.
To top it off, brand USA continues to get high marks. American products are thought of as safe and reliable in much of the world, something China can by no means claim.
Those who work for small and medium-size enterprises may be wondering where they fit into this manufacturing picture. Recent statistics suggest that these smaller businesses play a pivotal role in production and export of goods from the United States. In 2007, some 266,457 American companies exported merchandise, according to the U.S. Department of Commerce. A staggering 97 percent of these companies were small and medium-size enterprises. Among these companies, 29 percent (75,220) were manufacturing firms.
It is easy to become comfortable when orders are rolling in. But it pays to always remember that the manufacturing world is not static. The survival of small and medium-size firms depends on their ability to stay abreast of emerging trends in the marketplace and then take quick, well thought out actions accordingly. In other words, it pays to be ready to pounce.