Bucking a 30-year trend, more and more small businesses are manufacturing in the U.S., and exporting products abroad. The New York area leads the way.
For
Lumitec, a lighting product company in Delray Beach, Florida, manufacturing in the U.S. is essential, but so is exporting to clients overseas.
Lumitec’s products, which are designed for extreme environments, require exact specifications that need frequent product monitoring. So the lag time to make changes typically associated with manufacturing thousands of miles away in China is not an option. To accommodate these needs, Lumitec’s headquarters are in a 10,000-square foot facility that can handle the customization and assembly that clients require.
Lumitec is like an increasing number of small companies that are manufacturing in the United States, and bucking a 30-year trend of outsourcing such production overseas.
These companies find increased control, quality, and production standards domestically that may cancel out the cost savings that could come with manufacturing overseas. They are also turning the table on recent history in other ways, by exploiting sales in international markets, and uncovering opportunities by selling their goods to other countries in addition to domestically. They find the ‘Made in the U.S.A.’ stamp brings them unexpected cachet.
“We attend trade shows outside of the U.S. and people are always pleasantly surprised that we manufacture in the U.S.,” says John Kujawa, chief executive of Lumitec, which exports its lighting products to more than 30 countries. “it is understood that many products manufactured in the U.S. are greater quality than those from certain other countries.”
Manufacturing businesses have added 500,000 jobs in the United States since 2009, though the sector has a lot of ground to make up, having lost 2.3 million jobs since the start of the recession. States that led the way were Michigan, Ohio, Indiana, Texas, and Illinois, which combined added a quarter of a million of those jobs over the same period.
“You see manufacturers do more with less, as the unit labor cost goes down…[and] lean manufacturing has improved our overall competitiveness,” says Chad Moutray, chief economist for the National Association of Manufacturers.
About 40% of manufacturers are looking toward export trade as one of their primary growth vehicles today, the manufacturing association says.
At the same time, costs of labor, tariffs, and shipping overseas have risen. On average, it is still 20% more expensive to manufacture in the U.S. than it is with major trading partners overseas, excluding the cost of labor, according to the association.
The New York metropolitan area led the nation for exporting, shipping $105 billion of goods in 2011, according to the most recent numbers from the
International Trade Administration, an increase of 25% from the prior year.
Alex Stadler is one of the entrepreneurs who has succumbed to the allure of New York’s manufacturing and exporting trade renaissance.
Stadler is the founder and sole proprietor of
Stadler-Kahn, a textile manufacturer and retail store in Philadelphia. He manufactures hand-designed, high-end scarves in New York and exports them to Italy, in addition to selling in the U.S.
Because Stadler’s runs are so small, generally on the order of several hundred pieces at a time, he couldn’t work with the manufacturers he researched in China, he says. At the same time, Stoll, a German knitting machine company just establishing a foothold in Manhattan, jumped at the opportunity to help Stadler when he approached them.
And, in addition to Stoll, Stadler has found a whole cluster of businesses in New York City’s Garment District to work with him, including a manufacturer for his garment labels, and a distributor of the Merino wool he uses. These companies are all within walking distance of each other, Stadler says, so he can keep a close eye on things.
If Stoll ever has a question on his prototypes, Stadler says he can make it up to New York from Philadelphia in two hours.
Though Stadler admits that if he had the volume to engage a factory in China, he could make his product at a third his current cost, he says his customers feel good knowing they are paying for his American craftsmanship, not for middlemen, and extra shipping costs.
“People love to hear a product is made in the U.S., and those little letters `NYC’ hold a lot of glamour for customers,” Stadler says.
The decision to manufacture domestically depends primarily on your particular product, how easily and cheaply you can rent or buy space, and your ability to either hire or temporarily staff employees to do the work.
One thing manufacturers like about assembling products overseas is the ease at which they can quickly ramp up or down without having to hire full-time employees. Some U.S. manufacturers like Brian Kline, chief executive of lighting company MSi SSL, have gotten around this hurdle by hiring temporary employees to do the work when they have it in the U.S.
MSi, based in Deerfield Beach, Florida, manufactures specialized LED bulbs for things like miners helmets, power lamps, and track lighting. While it uses a factory in China for 90% of its production, it also does 10% of its manufacturing in the U.S.
In situations when limited size orders have to be shipped to the customer on an extremely compressed time schedule that its Chinese factory can’t accommodate, it uses a team of temps to assemble the products in the small plant MSi has created above its office headquarters.
“Ramping up and ramping down is harder to manage here” with full-time workers, Kline says.
Similarly, there are a number of important things manufacturers need to keep in mind before they export. One of the first places you should probably turn to is the U.S. Commercial Service, a division of the U.S. Department of Commerce charged with helping U.S. entrepreneurs figure out the vicissitudes of exporting. (It recommends the federal site
export.gov.)
But the Commercial Service also has staff in 108 markets around the world that can help with things like identifying market opportunities and locating distribution partners. It offers free consultations and low rates for consulting work, which can includes finding suitable partners overseas. It also operates something called ExporTech, a pseudo university for entrepreneurs considering exporting, that helps develop international growth plans.
One of the most important things to consider about exporting, says Tom Moore, deputy assistant secretary for international operations at the Commercial Service, is making sure you have a robust market for your goods in another c
ountry
; that requires research and knowledge of competitors. It’s also critical to find an overseas partner you can depend on and trust. Working with someone you haven’t vetted properly can cost time and money.
Other best practices: research the rules and regulations of the market you’ll be selling into. That includes national product standards, certification requirements, electricity regulations, and packaging and recycling laws, as well as quality standards.
Knowledge of tariffs and other overseas taxes, as well as tariff codes is also essential, as entering the wrong tariff code can be a costly mistake, says Moore. For example, Moore says the Commercial Service worked with a globe manufacturer recently that had been entering a toy code instead of an educational code for its product. This cost the company an additional 20% in tariffs overseas.
“That can really impact your ability to sell into a [new] market,” Moore says.
'Made in the U.S.A.' Has Unexpected Cachet
in Uncategorized/by MAM TeamOctober 3, 2012
Lumitec’s products, which are designed for extreme environments, require exact specifications that need frequent product monitoring. So the lag time to make changes typically associated with manufacturing thousands of miles away in China is not an option. To accommodate these needs, Lumitec’s headquarters are in a 10,000-square foot facility that can handle the customization and assembly that clients require.
Lumitec is like an increasing number of small companies that are manufacturing in the United States, and bucking a 30-year trend of outsourcing such production overseas.
These companies find increased control, quality, and production standards domestically that may cancel out the cost savings that could come with manufacturing overseas. They are also turning the table on recent history in other ways, by exploiting sales in international markets, and uncovering opportunities by selling their goods to other countries in addition to domestically. They find the ‘Made in the U.S.A.’ stamp brings them unexpected cachet.
“We attend trade shows outside of the U.S. and people are always pleasantly surprised that we manufacture in the U.S.,” says John Kujawa, chief executive of Lumitec, which exports its lighting products to more than 30 countries. “it is understood that many products manufactured in the U.S. are greater quality than those from certain other countries.”
Manufacturing businesses have added 500,000 jobs in the United States since 2009, though the sector has a lot of ground to make up, having lost 2.3 million jobs since the start of the recession. States that led the way were Michigan, Ohio, Indiana, Texas, and Illinois, which combined added a quarter of a million of those jobs over the same period.
“You see manufacturers do more with less, as the unit labor cost goes down…[and] lean manufacturing has improved our overall competitiveness,” says Chad Moutray, chief economist for the National Association of Manufacturers.
About 40% of manufacturers are looking toward export trade as one of their primary growth vehicles today, the manufacturing association says.
At the same time, costs of labor, tariffs, and shipping overseas have risen. On average, it is still 20% more expensive to manufacture in the U.S. than it is with major trading partners overseas, excluding the cost of labor, according to the association.
The New York metropolitan area led the nation for exporting, shipping $105 billion of goods in 2011, according to the most recent numbers from the International Trade Administration, an increase of 25% from the prior year.
Alex Stadler is one of the entrepreneurs who has succumbed to the allure of New York’s manufacturing and exporting trade renaissance.
Stadler is the founder and sole proprietor of Stadler-Kahn, a textile manufacturer and retail store in Philadelphia. He manufactures hand-designed, high-end scarves in New York and exports them to Italy, in addition to selling in the U.S.
Because Stadler’s runs are so small, generally on the order of several hundred pieces at a time, he couldn’t work with the manufacturers he researched in China, he says. At the same time, Stoll, a German knitting machine company just establishing a foothold in Manhattan, jumped at the opportunity to help Stadler when he approached them.
And, in addition to Stoll, Stadler has found a whole cluster of businesses in New York City’s Garment District to work with him, including a manufacturer for his garment labels, and a distributor of the Merino wool he uses. These companies are all within walking distance of each other, Stadler says, so he can keep a close eye on things.
If Stoll ever has a question on his prototypes, Stadler says he can make it up to New York from Philadelphia in two hours.
Though Stadler admits that if he had the volume to engage a factory in China, he could make his product at a third his current cost, he says his customers feel good knowing they are paying for his American craftsmanship, not for middlemen, and extra shipping costs.
“People love to hear a product is made in the U.S., and those little letters `NYC’ hold a lot of glamour for customers,” Stadler says.
The decision to manufacture domestically depends primarily on your particular product, how easily and cheaply you can rent or buy space, and your ability to either hire or temporarily staff employees to do the work.
One thing manufacturers like about assembling products overseas is the ease at which they can quickly ramp up or down without having to hire full-time employees. Some U.S. manufacturers like Brian Kline, chief executive of lighting company MSi SSL, have gotten around this hurdle by hiring temporary employees to do the work when they have it in the U.S.
MSi, based in Deerfield Beach, Florida, manufactures specialized LED bulbs for things like miners helmets, power lamps, and track lighting. While it uses a factory in China for 90% of its production, it also does 10% of its manufacturing in the U.S.
In situations when limited size orders have to be shipped to the customer on an extremely compressed time schedule that its Chinese factory can’t accommodate, it uses a team of temps to assemble the products in the small plant MSi has created above its office headquarters.
“Ramping up and ramping down is harder to manage here” with full-time workers, Kline says.
Similarly, there are a number of important things manufacturers need to keep in mind before they export. One of the first places you should probably turn to is the U.S. Commercial Service, a division of the U.S. Department of Commerce charged with helping U.S. entrepreneurs figure out the vicissitudes of exporting. (It recommends the federal site export.gov.)
But the Commercial Service also has staff in 108 markets around the world that can help with things like identifying market opportunities and locating distribution partners. It offers free consultations and low rates for consulting work, which can includes finding suitable partners overseas. It also operates something called ExporTech, a pseudo university for entrepreneurs considering exporting, that helps develop international growth plans.
One of the most important things to consider about exporting, says Tom Moore, deputy assistant secretary for international operations at the Commercial Service, is making sure you have a robust market for your goods in another c
ountry
; that requires research and knowledge of competitors. It’s also critical to find an overseas partner you can depend on and trust. Working with someone you haven’t vetted properly can cost time and money.
Other best practices: research the rules and regulations of the market you’ll be selling into. That includes national product standards, certification requirements, electricity regulations, and packaging and recycling laws, as well as quality standards.
Knowledge of tariffs and other overseas taxes, as well as tariff codes is also essential, as entering the wrong tariff code can be a costly mistake, says Moore. For example, Moore says the Commercial Service worked with a globe manufacturer recently that had been entering a toy code instead of an educational code for its product. This cost the company an additional 20% in tariffs overseas.
“That can really impact your ability to sell into a [new] market,” Moore says.
Igloo Adds Workers, 130 Items, Brings Rotomolding In-house
in Jobs/by MAM TeamOctober 2, 2012
The company — best known for its line of coolers — is also adding rotational molding to its in-house capabilities this year with five new manufacturing lines and 20 more employees in Katy, where it is based. Igloo currently has 85 percent of its products made in the U.S.
“Obviously, made in America is the right vibe to connect with a lot of consumers right now, but what we’ve also been able to prove is that if you have an efficient manufacturing base, you can not only build in America, you can build a product at a lower cost,” said Gary Kiedaisch, CEO and chairman, in a Sept. 17 telephone interview.
Igloo was already a familiar consumer name when private equity group JH Whitney & Co. of New Canaan, Conn., bought the firm in 2008 from Westar Capital of Costa Mesa, Calif.
The company estimates that 90 percent of U.S. homes have some kind of a cooler, and Igloo products make up 75-80 percent of them.
However, prior to the buyout, the company’s sales were flat, according to Kiedaisch. The new owners set out to change that through an emphasis on new and improved products.
While the privately owned company does not release specific sales data, official said sales were up by nearly 50 percent at the start of 2012. In 2011, workers in Katy made 19 million hard-sided coolers alone.
As those new products caught on, Kiedaisch said, Igloo needed more — and more-efficient — capacity in-house.
Executive Vice President David Thornhill has helped lead the improvements at Katy, with more-efficient equipment, better production layouts and vertical manufacturing. The company estimates its efficiency has climbed by 30 percent since 2008.
Igloo already had its own injection molding, blow molding and foam molding operations. Even more processes could come on line with the right business case, Thornhill said.
Igloo also has non-plastics operations such as cut-and-sew for soft-sided coolers and additional outdoor recreation items including chairs and tents.
Those investments in products and manufacturing came at the same time that costs were increasing outside the United States, which helped highlight the benefits of vertical manufacturing in-house
“When you look at our manufacturing strategy, it’s to bring as many processes as possible inside,” Kiedaisch said. “For us, the picture has been that near-shoring is much more favorable than it was even 18 months ago.”
Thornhill and Kiedaisch look to one of Igloo’s new products as an example of how its business outlook has developed since 2008 and is continuing to impact the company’s strategy.
Igloo introduced the Yukon Cold Locker cooler at the start of 2012. The high-end cooler is marketed at sports enthusiasts and professionals who will spend days — if not weeks — out in the woods or on a fishing expedition.
“These are the guys who will spend thousands of dollars on a gun or a thousand dollars on a scope,” Thornhill said.
The Yukon was designed with extra insulation, capable of retaining ice for up to 14 days, compared to seven for a typical cooler. That is the kind of performance needed to keep swordfish or elk fresh during a long fishing or hunting trip.
The hard plastic outer shell and heavy-duty latches and handles also stand up to rough usage. Thornhill boasts that in tests, a bear spent an hour trying to break in before it gave up.
The Yukon also sells at a premium price, retailing at more than $300 for a 50-quart container and more than $700 for the 250-quart model. By comparison, Igloo’s 50-quart MaxCold hard-sided cooler lists for $65.99
Yukon coolers are rotational molded, so when orders for the Yukon took off and tripled the expected production capacity, Igloo knew it was time to bring rotational molding in-house. It currently contracts for rotomolding from outside suppliers that use a combination of domestic and international production.
Igloo has cleared 15,000 square feet of space in Katy for rotomolding and Thornhill is looking at additional production that could use the process. There is also space for future growth, while adding rotational molding is now allowing the company to list the Yukon as “Made in America.”
“We’re tooling up for this in a big way,” Thornhill said. “We’re looking forward to getting that group up and running.”
Follow Igloo products on social media:
Facebook: Igloo Coolers
Twitter: @IglooProducts
'Insourcing' Jobs To U.S. Can Be Driven By Tax Incentives, Production Quality
in Uncategorized/by MAM TeamOctober 1, 2012
Princeton Tec, which has three factories in New Jersey, moved half of its manufacturing jobs to China five years ago to cut costs. While there were some savings, Princeton Tec executives grew uneasy with the lack of control regarding the production and delivery schedule. As a result, Princeton Tec started bring those jobs back to New Jersey, and now 90 percent of the 1 million flashlights and other portable light fixtures are once again made here.
“We need to bring back a renaissance in manufacturing — creating products that we can sell to compete with other countries and businesses abroad,” U.S. Secretary of Labor Hilda Solis said during a visit to Princeton Tec’s factory in Mansfield. “I just have to commend the owner of this plant for keeping the faith and making sure his product was made here.”
Federal officials recently announced an initiative dubbed “Make it in America” to provide tax incentives the help encourage more insourcing.
The return of jobs to the U.S. has led Princeton Tec to double its staff to 160 employees, and more hires are expected, company officials said.
“We’ve seen a small increase in profits since we got back. Nothing drastic,” Princeton Tec Vice President David Cozzone said. “I believe our quality got better, we could control output, and we kind of won people back. The ‘Made in USA’ thing is a big sell.”
As the U.S. continues to recharge its struggling economy, a resurgence of the “Made in the USA” commitment by consumers would help embolden companies like Princeton Tec to bring jobs back home. Federal and state tax incentives like those touted by Solis also provide a needed financial boost to companies that might otherwise opt to send jobs overseas.
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Obama Administration Announces $40 million Initiative to Challenge Businesses to 'Make it in America'
in Uncategorized/by MAM TeamPhone Number: (202) 693-6587
“More and more businesses are choosing to invest, create jobs and make things here in America, and this new initiative represents the latest effort by the Obama administration to build on that trend,” said acting Secretary of Commerce Rebecca Blank. “This administration’s top priority is creating American jobs, and through the Make it in AmericaChallenge, we will be supporting businesses’ efforts to expand here at home. By making competitive investments, the challenge will help communities across the U.S. accelerate economic growth, attract business investment and create jobs.”
“The modern global manufacturing landscape has changed the way companies do business, but it has also changed the way companies do training,” said Secretary of Labor Hilda L. Solis. “This initiative will provide comprehensive assistance to those companies and those communities committed to ‘make it in America’ through innovative training programs that lead to industry-recognized credentials and arm our workforce with the skills employers want to see from day one.”
Today’s announcement builds on the administration’s efforts to encourage companies — large and small, foreign and domestic, manufacturers and services firms — to increase investment in the United States. The president’s plan includes eliminating tax incentives for companies that ship jobs overseas and providing tax credits for companies that bring jobs back, investing in American workers to ensure they have the skills they need, modernizing our infrastructure and taking action to ensure that American businesses and workers are competing on a level playing field.
The national competition announced today will help provide the critical infrastructure, strategic planning, capacity building, technical assistance and workforce skills training necessary for American communities to be the desired home for more businesses.
The challenge is expected to give out approximately 15 awards, depending on the number of eligible applications.
To be eligible for an award, projects must encourage insourcing through onshoring of productive activity by U.S. firms, fostering increased foreign direct investment or incentivizing U.S. companies to keep their businesses and jobs here at home, as well as train local workers to meet the needs of those businesses.
A federal funding opportunity will be published by early 2013, which will provide detailed guidelines for submitting an application, including the deadline.
Obama Blocks Chinese Wind Farms Purchase Near Navy Base
in Uncategorized/by MAM Team9/28/2012
Obama’s decision was likely to be another irritant in the increasingly tense economic relationship between the U.S. and China. It also comes against an election-year backdrop of intense criticism from Republican presidential challenger Mitt Romney, who accuses Obama of not being tough enough with China.
In his decision, Obama ordered Ralls Corp., a company owned by Chinese nationals, to divest its interest in the wind farms it purchased earlier this year near the Naval Weapons Systems Training Facility in Boardman, Ore.
The case reached the president’s desk after the Committee on Foreign Investments in the United States, known as CFIUS, determined there was no way to address the national security risks posed by the Chinese company’s purchases. Only the president has final authority to prohibit a transaction.
The administration would not say what risks the wind farm purchases presented. The Treasury Department said CFIUS made its recommendation to Obama after receiving an analysis of the potential threats from the Office of the Director of National Intelligence.
The military has acknowledged that it used the Oregon Naval facility to test unmanned drones and the EA-18G “Growler.” The electronic warfare aircraft accompanies U.S. fighter bombers on missions and protectively jams enemy radar, destroying them with missiles along the way.
At the Oregon site, the planes fly as low as 200 feet and nearly 300 miles per hour.
The last time a president used the law to block a transaction was 1990, when President George H.W. Bush voided the sale of Mamco Manufacturing to a Chinese agency.
In 2006, President George W. Bush approved a CFIUS case involving the merger of Alcatel and Lucent Technologies.
The Treasury Department said in a statement that Obama’s decision is specific to this transaction and does not set a precedent for other foreign direct investment in the U.S. by China or any other country.
China’s trade advantage over the U.S. has emerged as a key issue in the final weeks of the presidential campaign. Romney accuses Obama of failing to stand up to Beijing, while the president criticizes the GOP nominee for investing part of his personal fortune in China and outsourcing jobs there while he ran the private equity firm Bain Capital.
Both campaigns are running ads on China in battleground states, especially Ohio, where workers in the manufacturing industry have been hard-hit by outsourcing.
Obama, in an interview Wednesday with The Plain Dealer of Cleveland, said the U.S. must push hard against Beijing but “not go out of our way to embarrass” China.
“We’re not interested in triggering an all-out trade war that would damage both economies,” Obama said.
The president has the power to void foreign transactions under the Defense Production Act. It authorizes the president to suspend or prohibit certain acquisitions of U.S. businesses if there is credible evidence that the foreign purchaser might take action that threatens to impair national security.
CFIUS is chaired by the treasury secretary. The secretaries of state, defense, commerce, energy and homeland security are also on the committee. The director of national intelligence is a non-voting member.
Earlier this month, Ralls sued the national security panel, alleging CFIUS exceeded its authority when it ordered the company to cease operations and withdraw from the wind-farm developments it bought. Ralls asked for a restraining order and a preliminary injunction to allow construction at the wind farms to continue. The firm said it would lose the chance for a $25 million investment tax if the farms were not operable by Dec. 31.
But Ralls dropped the lawsuit this week after CFIUS allowed the firm to resume some pre-construction work.
Ralls’ legal team includes Paul Clement and Viet Dinh, two top law veterans of President George W. Bush’s administration. Both men were key players in Bush’s aggressive national security operation.
Clement, who was solicitor-general and argued administration positions before the Supreme Court, has since opposed the Obama administration’s health care plan and defended the Defense of Marriage Act before the top court.
Dinh, a former assistant attorney general who was the main architect of the Bush administration’s anti-terror USA Patriot Act, has lately served as a director and legal adviser to Rupert Murdoch’s News Corporation.
A second Chinese firm stymied by CFIUS urged U.S. authorizes this week to investigate their firm to quell fears of ties to China’s military. Huawei Technologies Ltd. announced in early September that it would unwind its purchase of U.S.-based computer firm 3Leaf Systems after the deal was rejected by CFIUS.
Huawei, one of the world’s largest producers of computer network switching gear, has repeatedly struggled to convince U.S. authorities that they can be trusted to oversee sensitive technology sometimes used in national security work.
Not Without My American Car
in Uncategorized/by MAM TeamHearing all of this was a buzz kill for me, because while the car size and color were important to my wife, having an American-made car was important to me. This is primarily due to three main factors.
First, American cars were quite popular while I was growing up in Dubai in the late ’80s. They were everywhere and almost everyone was talking about the ‘muscle’ cars that were coming in from America. (Ok, they love their Benz too.) So I grew up coveting American-made cars and goods.
Second, I have made frequent trips to Michigan, to the city of Dearborn particularly, and I know how prideful Arab-Americans are about their American made cars. Everyone in that town loves to talk about Ford and how it was the reason many immigrants ended up there working in the car industry and building American engines. Many Lebanese flocked to the area in the early 1900’s seeking jobs at Henry Ford’s Model T plant, as the pioneering automobile entrepreneur was offering a whopping $5 a day. That kind of pride left an imprint on me. I have had dinner at the home of an engineer who works for Ford and was part of the team that worked on the Sync technology. You cannot match this kind of pride, not even in Japan. Notable Arab Americans have played significant roles in the car industry, like Jacques Nasser, who was formerly the president and CEO of Ford Motor Company. Another Arab American is credited with creating “the ‘revolutionary’ 1949 Ford car design, a design that some credit with saving the company.” You have Richard Caleal to thank for that.
Third, I live in the States, a place that has given me a refuge — a home away from home. I went to school here and work here. I live here and I know that in these tough economic times, people need to stick together. We cannot always look for what’s best for ourselves, like better car mileage, and ignore the ghost towns around the county. This was the same mentality of an Arab American physician that limited himself to buying only American cars. The same sentiments were echoed by my good friend Sarah — a native of Michigan who got on my case until I finally bought our car. It might be loyalty, or some might call it patriotism, but either way it’s a choice people here are free to make.
My wife and I settled for a Chevy Aveo LS — a nice compact car that meets our needs. My wife Roa has even given it a name after her own mother. She loves the little car. We have learned that American-made cars tend to have cheaper parts and there is no shortage of mechanics who are well-versed in American cars. One doesn’t need to hop in a time machine to find good American-made cars.
I once worked for a former member of Congress, a native of Cleveland, and she told me that she will only drive American cars to show support to the hard working men and women working in local car plants.
But the cynics and skeptics are not all bad. In fact I think those who criticize the American car industry do it a huge a favor; they pressure automakers to innovate and make better cars. We cannot all take whatever the car industry makes — they have to be responsive to their customer base. This is what makes a free market and this certainly makes better cars. If all customers were content with mediocre cars, then no one wins.
The Return of 'Made in USA'
in Uncategorized/by MAM TeamSeptember 25, 2012
Dave Schiff, chief creative officer at Made Movement, a website that markets and sells only American-made products, said the trend is beginning to spread, and that it could be a major influence on the success of American manufacturing companies.
Earning that iconic tag, however, is no easy feat. The Federal Trade Commission has drafted a 44-page book that discusses exactly what it takes to gain “Made in USA” status.
The timing may be just right for us manufacturers to boast their American factories, considering Robert McCutcheon, the U.S. industrial products leader of PwC, recently wrote in Forbes that there are a number of signs that domestic manufacturing could soon surge again.
'Made in The USA' Can Save Manufacturing Costs
in Uncategorized/by MAM TeamSeptember 28, 2012
With clients shopping online and in stores, it’s important to manage inventory wisely and be able to quickly increase or pull the plug on certain products. When a product isn’t selling well, a management team doesn’t want to be stuck with a massive amount of inventory that has yet to be shipped from across the globe. When production facilities are located in the U.S., it’s easier for businesses to move through the product quickly and make room for goods that will sell well.
While a product can arrive in days, or even hours, from across the country, it can take weeks for products to be shipped from overseas. Asking clients to wait a day before receiving their item is easier than asking them to wait three weeks while it is shipped from Asia. Managing inventory and stock is much easier when a company doesn’t have to worry about shipping time, complicated logistics and miscommunications that can lead to serious delays.
Trend forecasting
When your products are made at home, it’s easy to take advantage of local trends. When certain goods become more popular, it’s easy to have them made quickly and ready to sell in no time. Consumer demand may rise sharply if a product becomes particularly popular, and it’s much easier to manage production levels when a company’s manufacturing is close by. It’s easy to predict a trend when a business owner is local, and an L.A. company may be able to determine what they need before their supplier in China does.
Cutting costs
Moving production back to the U.S. doesn’t just help with inventory management and make it easier to change orders quickly. It’s also saving companies money on their production.
Many countries in Asia used to be known for their cheap labor and inexpensive supplies, which made it common for business to move their manufacturing facilities there. In the past few years, the cost of doing business in these traditionally inexpensive countries has been rising. This has made the U.S. a more attractive place to do business, and companies are noting the decreased costs and slowly moving their production back to the U.S.
Cities Leading An American Manufacturing Revival
in Uncategorized/by MAM Team5/24/2012
Certainly how long this expansion can last is an open question, particularly given weakness in Europe and the slowdown in formerly fast-growing developing countries. But one thing is clear: the industrial resurgence is reshaping the economic and employment map in often unexpected ways.
Now rather than being pulled down by manufacturing, our Best Cities For Jobs survey, conducted by Pepperdine University’s Michael Shires, found that many industrial regions are benefiting from their prowess.
From 2010 through March, manufacturers added 470,000 jobs and enjoyed a rate of job growth 10% faster than the rest of the private economy. In the past many areas suffered from having too many industrial workers. Now it looks like we will have too few skilled ones, even in hard-hit sectors like the auto industry. In 2011 there were 50,000 unfilled U.S. job openings in industrial engineering, welding, and computer-controlled machine tool operating, according to the forecasting firm EMSI. If the revival continues, this shortage could worsen.
To determine the cities that are leading the manufacturing revival, we assessed manufacturing employment growth in the 65 largest metropolitan statistical areas. Rankings are based on recent growth trends, as well as job growth over the past five and 10 years, and the MSAs’ momentum.
Where Technology Meets Manufacturing
In an era of excitement over the Internet, it is often forgotten that a majority of the country’s scientists and engineers work for manufacturers, and that industrial companies account for 68% of business R&D spending, which in turn accounts for about 70% of total R&D spending.
Nowhere is this linkage between technology and industry more evident than in the Seattle-Bellevue-Everett area, which ranks first on our list of the metropolitan areas leading the manufacturing revival. Over the past year the region was No. 2 in the nation in manufacturing growth, with employment expanding 7.9%. The aerospace sector, led by Boeing, accounted for roughly half this expansion.
The growth in aerospace and high-tech employment creates precisely the kinds of high-wage jobs, including for blue-collar workers, that are lacking in many parts of the country. In 2010 the average factory wage in the area was $64,925, up 9% from 2007. Most critically, manufacturing activity drives growth in other sectors of the economy. About one in six of all private-sector jobs depend on the manufacturing sector, and every dollar of sales of manufactured products generates $1.40 in output from other sectors, the highest of any industry.
As manufacturing employment overall has dropped, the percentage of higher-wage, skilled industrial jobs has been climbing over the last decades, particularly in high-technology related fields Overall, according to EMSI data, the average American factory worker earned $73,000 in 2011, $20,000 more than the average job.
Seattle is not alone in creating high-tech-oriented industrial jobs. Over the past two years Salt Lake City, Utah, which ranks third on our list, has seen significant growth in both electronics and aerospace employment, including a new Northrop Grumman facility. Firms connected to the medical device industry such as Biomerics are also expanding in the area.
Manufacturing is also rebounding in Austin-Round Rock-San Marcos, Texas, which ranks eighth on our list and No. 1 on our overall list of Best Big Cities For Jobs. Last year industrial employment in the Texas state capital area jumped 5%. Semiconductor firms are a big force, employing over 10,000 workers. Although more known for its high-tech electronics, Austin has also enjoyed an expansion in automobile-related employment as well as medical devices.
Energy Capitals
The largest grouping of manufacturing stars have emerged from the Texas-Oklahoma energy belt. With the shale drilling boom unlocking ample supplies of natural gas and lowering prices, petrochemical companies have undertaken major expansions. The rise in drilling and exploration has also sparked greater demand for industrial products such as pipes, drill rigs and other machinery. No surprise that the biggest backers of shale gas exploration are prominent CEOs of industrial firms. A recent study by PwC suggests that shale gas could lead to the development of 1 million industrial jobs.
The shale drilling revolution is making an impact across the country, in places like North Dakota and Youngstown, Ohio, but the epicenter of this boom remains firmly in the oil patch. The Thunder you hear in Oklahoma City is not just on the basketball court — energy growth has propelled a 1,500 person jump in manufacturing employment, a 6.1% increase, with another 1,000 new jobs expected this year. Oklahoma City ranks second on our list.
Other energy capitals are also thriving on the industrial front, including Houston (fourth place), San Antonio (seventh) and Ft. Worth-Arlington (ninth). Although energy is the main driver, manufacturing has been on the rise in a broad array of areas, including aerospace, biomedical and food processing. The surging export economy — Texas is easily the nation’s number one export
er —
has further bolstered this growth.
Rustbelt Rebounders
The high-tech and energy economies may be fast-breaking in terms of industrial growth, but manufacturing’s comeback has put some new bounce in the step of many long forlorn parts of the nation’s “rustbelt.” Warren-Troy-Farmington Hills, Mich., epitomizes this trend. Unlike Detroit, which has suffered mass disinvestment, this more suburban area a half hour drive away has become the epicenter of a new, more tech-oriented auto industry.
The Warren-Troy area’s rich concentration of skilled tradespeople and industrial engineers has been described as America’s “automation alley.” It continues to attract high-industrial firms from abroad such as Brose, a German car parts manufacturer, which has recently announced a $60 million investment in the area. Even housing is on the rebound, with rents rising at the fourth highest clip in the country, just behind such standouts as San Francisco and Miami.
Nor is the Midwest manufacturing rebound limited to Michigan. Over the past year sixth-ranked Cincinnati enjoyed 5.4% growth in industrial employment. Manufacturing growth was also strong in Milwaukee-Waukesha-West Allis, Wisc., a center for the production of machine tools and other precision equipment that ranks 10th on our list.
Who’s Falling Behind
Of course not all regions have benefited from the industrial resurgence. For example, the nation’s largest industrial area, Los Angeles, ranks a miserable 49th. The area lost some 20% of its industrial jobs since 2006, and the losses continued over the past year. This goes a long way to explain the area’s continued underperformance before, during and, now, in the early days of recovery from the financial crisis.
Some other large regions did even worse, including such one-time industrial powerhouses as Philadelphia (55th) and New York (59th). Some may argue that these, and other areas, which have been losing manufacturing jobs for decades, no longer need to engage in the messy business of making stuff. But that long fashionable way thinking may be outdated itself, as seen by the improving fortunes of our industrial top 10.
Full List: The 10 Cities Leading The U.S. Manufacturing Revival
Hershey Invests $300 Million In Future Of American Manufacturing… And Consumption
in Uncategorized/by MAM Team9/25/2012
I talked with JP Bilbrey, President and CEO and Terry O’Day, SVP of Global Operations about the investment. Both say that the plant is an homage the company’s roots and founder, which is a warm, nice thought. More tangibly, what it does is reaffirm Pennsylvania’s role in the company’s chocolate manufacturing for North America. The plant employs technology never before seen in candy manufacturing, O’Day says, including highly automated IT systems designed to keep Hershey’s Kisses rolling off the lines 24 hours a day.
And while automation means fewer workers in the plant,(Hershey is training 700 of its 4,800 Pennsylvanian employees to run it) the company estimates that it will still produce $1 billion in economic gains for Pennsylvania over the course of five years — coming in the form of supplier contracts, payroll and related spending.
It may be cheaper to manufacture in other countries — and Hershey does, its playing a big game in emerging markets like India, China and Brazil — but when it comes to making chocolate there are other things to consider. For Hershey, that means access to fresh milk. Their West Hershey plant consumes between 300,000 and 350,000 gallons of milk a day — mostly from a 90-mile radius surrounding the plants. And they want short commutes for products to retailers.
The new plant isn’t the only way Hershey is employing technology. Come candy seasons (Valentine’s Day, Halloween, Christmas) they now use a proprietary system to place orders for retailers — so they know how much of each Hershey’s product they should purchase. This alone would be unremarkable, but retailers have come to trust the system so thoroughly that Hershey now uses the system to order competitors’ products for retailers too. The combination of trust and efficiency has reaped the company serious rewards — their market cap that has doubled in the past five years, growing 20% in the past 12 months.
Bilbrey affirms that 80-90% of Hershey products consumed in the US are made in the US, and the company boasts more than a 40% share of the American chocolate market. In that sense, the new plant is part of Hershey’s broader strategy — to maintain, if not grow, share in the US, where it already has a prominent presence, while more or less ignoring another behemoth established market — Western Europe, where they see low growth, established competitors, loyal customers and high price of entry.
“We have outperformed our peer group in North America,” Bilbrey says. “And we see North America as a growth story. We worry about a lot of things, but we are optimistic about what is possible.”
That includes upping advertising, Bilbrey says that Hershey spends as much on advertising now as their entire category did in 2008 — Hershey now reinvests about 7% of net sales into advertising. More proof, he says, that the company believes that brighter days lie ahead for America and that Americans will be spending more of their disposable income on candy.