No matter what manufacturing business you are in, the specter of offshore competition looms large. Massive amounts of manufacturing have moved overseas in recent years, specifically to China. The pressure to turn a profit in manufacturing has prompted many companies to seek refuge in low-cost labor areas, putting onshore factories at a competitive disadvantage.
The problem with this logic is as follows: in many industries, labor accounts for less than 10 percent of total manufacturing costs. Factory automation, robotic inspection and process efficiencies have made labor less of a factor in the overall competitive picture. Savvy companies have learned to take advantage of these and other innovations to make their Americas-based business a success.
According to research firm the Kauffman Foundation, there was a 67 percent increase in manufacturing startups between 2000 and 2005. That’s a significant statistic when you consider that roughly 70 percent of all U.S. manufacturing businesses employ fewer than 20 people. While it’s true that the big picture looks dim—manufacturing is contributing less to the U.S. Gross Domestic Product than it used to—there are plenty of signs of life at the small end of the spectrum.
There are plenty of success stories out there, and this blog will be a forum to tell those stories. We’ll take a look at how small companies are using methods such as lean and supply chain management to improve efficiency and reduce cost. We’ll take a look at the advantages—and disadvantages—of offshore manufacturing. Most of all, this will be a place manufacturers can turn to for advice and tips on how to make your business more competitive.
Welcome to the first installment of the Manufacturing Line. We’d like to hear about your experiences—good and bad—in the rapidly changing business of manufacturing. Or let us know what you’d like to hear about. There’s a lot of knowledge out there we can all use.