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What is the future of manufacturing?


With an uncertain economy many are asking what is the future of manufacturing in the United States throughout the rest of this decade and into the next? Yet to hear some manufacturers tell it, a more accurate way of phrasing that question might be, "Is there a future for U.S. manufacturing?" Based on the responses to recent surveys manufacturers of all sizes, in all industry verticals, face mounting challenges on several fronts.These challenges include:

  • The ability to attract and keep skilled labor.

  • Highly intense, and some would say unfair, competition from low-cost countries.

  • Rising healthcare costs that show no sign of slowdown.

  • Environmental compliance and other regulatory demands.

Today in the manufacturing arena more and more manufacturers are operating under pressure since more and more production is being outsourced to China. Yet experts predict that should the cost differential change due to improved exchange rates, increased freight cost, higher wage rates in China, closer material costs, etc., then U.S. companies with manufacturing capacity should be able to make a comeback.

Others feel that we have missed the opportunity to convince our society of the importance of a production-based economy. Economic experts are afraid that the "service economy" model will provide us with the next "Great Depression" as early as the next decade or two.

In order to combat these factors many manufacturers are developing partnerships with local high schools and higher education. Area business leaders have realized the importance ofnow working together to communicate common goals and needs with economic development and higher education leaders in order to create curriculums that will meet the demands of the future workplace.

Manufacturers have also emphatically stated that small manufacturing is at a huge disadvantage because of our trade policies and the lack of a value-added tax on our borders, (like every other country has). Consider the fact that when importing a product into the U.S., you pay a 3.31% tariff. Other countries have a much higher tariff plus other taxes that could total 30%.This disparity leaves small manufacturing especially vulnerable to the inequality.

While all of these pressures threaten the long-term growth potential of United States manufacturers, by far the main market pressure has become the cost of raw materials.70% of all respondents to recent manufacturing surveys state this as their number one concern. While that pressure is expected to ease significantly over the next few years, many feel that it will still be the top market pressure for most manufacturers in virtually every industry.

It is also important to keep in mind that top market pressures will vary by firm size. For example, respondents from small manufacturing companies (which have less than $25 million in annual revenue) are more likely to be concerned with rising healthcare costs and competition from low-cost countries than the respondents from large manufacturers with $1 billion or more in annual revenue.

Undoubtedly there are several significant challenges facing the manufacturing industries.Those who own manufacturing firms will have to face daily challenges and come up with creative solutions to help them stay profitable in a changing market. Employers will have to understand the cost of gaining skilled labor and work to keep them happy.

Long-term employees are a cost-saving asset since a stable workforce will virtually eliminate the high costs of hiring and retraining staff. Manufacturers in the United States will also have to determine measures that will allow them to compete on a world stage while dealing with environmental compliance and other regulations.

And finally as employers everywhere deal with the same challenge manufacturers will have to determine how to best control rising health care costs.Only by facing all of these challenges will manufacturing have a more successful and profitable future.

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