What is the future of manufacturing in the United States throughout the rest of this decade and into the next? 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 the "Future of Manufacturing" survey undertaken by
IndustryWeek and consulting firm Crowe Horwath, manufacturers of all sizes, in all industry verticals, face mounting challenges on several fronts: The ability to attract and keep skilled labor. 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.
Manufacturing Under Pressure
"In our industry, more and more production is being outsourced to China. 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."-- corporate executive at a steel furniture manufacturer in the Southeast with revenues between $50-$100 million
"We missed the opportunity to convince our society of the importance of a production-based economy. The 'service economy' model will provide us with the next 'Great Depression' in the next decade or two."-- corporate executive with a maker of plastics/rubber products in the Southeast with revenues under $25 million
"We are developing partnerships with local high schools and higher education. Area business leaders are now working together to communicate common goals and needs with economic development and higher education leaders to create curriculums that will meet the demands of the future workplace." -- director of manufacturing with an aerospace company in the Midwest with revenues between $500 million-$1 billion
"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. When importing a product into the U.S., you pay a 3.31% tariff. Other countries have a higher tariff plus a VAT, that could total 30%." -- corporate executive with a maker of plastics/rubber products in the Midwest with revenues under $25 million
All of these pressures threaten the long-term growth potential of U.S. manufacturers, but by far the main market pressure in 2008 is the cost of raw materials, according to 70% of all respondents. While that pressure is expected to ease significantly over the next three years, it will still be the top market pressure in 2011, say 55% of respondents.
Top market pressures vary by firm size. For example, respondents from small manufacturing companies (less than $25 million in annual revenue) are more likely to be concerned with rising healthcare costs (48%) and competition from low-cost countries (50%) than are respondents from large manufacturers with $1 billion or more in annual revenue (26% and 38%, respectively).
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