How’s U.S. manufacturing doing these days? We’ve asked quite a few manufacturers that question, and it really depends on which people we talked to. While some are seeing record sales numbers, others are having a harder time of it.
Although statistics for 2019 are not yet available, the Reshoring Initiative reported recently that the number of companies reporting either reshoring or foreign direct investment (FDI) in the United States in 2018 reached 1,389, a 38 percent increase over 2017 and a record high. The combination of reshoring and FDI is reported to have created 145,000 jobs, contributing significantly to the nation’s manufacturing sector. Those are encouraging numbers, and sentiment for manufacturing domestically and locally shows no signs of diminishing this year.
But in an overall sense, things seem to be slowing. Although orders for goods and services had been expanding for nearly three years, the rate of that growth had been declining steadily over several months until August, when the Manufacturing ISM® Report On Business®, released monthly by the Institute for Supply Management® (ISM®), said that the manufacturing sector was contracting.
The August ISM PMI® (Purchasing Managers Index) registered 49.1 percent, just below the 50 percent threshold separating expansion from contraction. That reading was followed by a September PMI® of 47.8 percent, a further contraction of 1.3 percent.
Similarly, orders for U.S. manufacturing technology, although rising month-to-month, registered lower, year-to-date, through July 2019 ($2.64 billion), compared to the year-to-date total through July 2018 ($2.98 billion). Those figures were reported by the Association for Manufacturing Technology (AMT) in its latest U.S. Manufacturing Technology Orders Report.
Taken together, the numbers seem to reflect manufacturers’ uncertainty about the economy, which has been roiled by a trade war with China and the grounding of the Boeing Max 737. Factor in the ongoing challenges of finding qualified workers to fill available positions, and it hasn’t been easy for many manufacturers.
But there’s not only light at the end of the tunnel, there’s a lot that manufacturers can look forward to.
Although the labor shortage and workforce training issues won’t be solved overnight, progress is underway as apprentice programs have started taking root across the country. Some companies, like Toyota (in San Antonio) and Nanotronics (in New York City), are tying their expansion plans in with commitments to invest in future workforce talent. It’s an inspiring model that promises to do wonders for companies and the communities in which they operate.
According to reports from manufacturers and industry trade associations, some manufacturers have responded to the uncertainties of the markets by investing more heavily in domestic supply chains and outsourcing to local job shops. At the same time, many are recognizing the long-term value of building strong relationships with customers, employees, suppliers, and their communities.
If you look at U.S. manufacturing from a technology perspective, the industry is already showing great gains, with the potential for even greater growth ahead. Behind the scenes, in ways that may not necessarily show up in statistics, technology is creating plentiful opportunities.
Some companies are leveraging new technologies in their manufacturing operations to create efficiencies that enable them to expand capacity. Others are designing and manufacturing new technologies, like robotics, creating needs for industrial designers, mechanical and electrical engineers, software engineers, systems integrators, and, yes, cybersecurity specialists.
Other technologies in this category are 3D printing, which manufacturers are using to reduce costs of tooling, materials, and prototyping, while speeding design and development; and software-based platforms that are increasingly incorporating machine learning and artificial intelligence. These platforms are spurring developments in everything from the design of new materials, to predictive analytics, to manufacturing apps for workers on the shop floor. They’re particularly effective in creating factory operations that are more transparent, efficient, and responsive to production changes.
What can manufacturers do to maximize their prospects for success going forward?
One good strategy is to make a point of interacting more with your customers. As one company’s co-owner put it, “Be in your customer’s lobby, be in your customer’s door, and handle it in a professional way that says ‘I’m here because I need to know what you need.’”
The idea is to focus more on value-added processes and procedures and, if necessary, find creative ways to add that value. But the added value can’t be based solely on what you think the customer needs, he said. It should only be developed after reaching out to your customer, listening to what they say they need, and doing due diligence to figure out how best to accommodate those needs.
“We actually have boots on the ground within that facility, learning their process, learning their procedures, taking what we do and learning how to synergize that with what our customer needs, what their pros and cons are, what their strengths are,” said Lee Norris, co-owner of Big Gun Robotics, a South Carolina-based supplier of large, precision-welded assemblies to manufacturers of heavy equipment. “We’re trying to help them increase their strengths while they help us by increasing our strengths.”
Well said, Lee.