No one is content with current state of the U.S. economy, but there is a bright spot we shouldn't miss: U.S. manufacturing is gaining strength and companies are re-shoring their production. Here are just a couple of data points to set the stage -- taken from the pages of IndustryWeek.
- Research by the Boston Consulting Group suggests lower costs for labor, natural gas and electricity may are winning back manufacturing from Europe and Japan.
- In research by Capital Business Credit with global manufacturers and importers, almost half said they're considering moving manufacturing away from China and a quarter are taking the step, with the U.S. named most frequently as the choice, garnering over 30% of the votes.
- The Council of Supply Chain Management Professionals' research finds that 40% of manufacturing companies see a move home from counties like China and India, also citing energy, labor and transportation costs, as well as political instability, product quality and protection of intellectual property.
As theses various reports suggest, there are a number the factors favoring a manufacturing move back to America, but let me name my top three for nano-companies:
- Protecting intellectual property.
- Protecting intellectual property.
- Protecting intellectual property.
Like location when it comes to real estate, intellectual property is the difference between winning and losing with nano-products and other advanced manufacturing. I think domestic manufacturing is the smart move for commercializing -- and expanding -- a product line dependent on proprietary intellectual property.
Why? American patent law has always been complex and certainly had its flaws, but as we've incorporated international patent standards, protection has become increasingly more difficult and less certain.
My triple statement of the problem, used above, is for more just for emphasis. There are three different -- though interlinked -- ways on-shore manufacturing helps companies retain the benefits and profits of their proprietary ideas.
Three Ways On-Shoring Protects Intellectual Property
1. U.S. manufacturing protects intellectual property from global poachers. I always think this one is obvious, but a recent story reminded me otherwise. I was told by a colleague about an entrepreneur who'd developed a new personal care device. When asked if it was patented, the entrepreneur said no and handed my friend a packaged prototype with "made in China" stamped on the back. The truth is, it's too late to worry about a patent now. How long before a copycat product will be on its way to our shores?
Of course, even a patent may not offer much protection. That's why many companies have simply switched from patents to trade secrets to protect ideas. Like my company, they decided filing with the patent office just gives poachers a do-it-yourself guide for copying an idea. And that brings me to my second point.
2. U.S. manufacturing protects intellectual property of small emerging innovators in a big, litigious world. Innovation is so often the domain of a few committed people with a great idea. Protecting patents or trade secrets in the uncertainty of the international patent law can require a small army of lawyers and not-so-small fortune in legal fees. Not many small companies can afford the fight, and big pirates know it. Keeping production where you can keep an eye on it protects it.
3. U.S. manufacturing protects intellectual property for honest collaboration. There's no denying that the arithmetic of partnerships can be 1+1=3. Yet, concerns about idea theft can trigger paranoia about joint projects. Keeping control of the manufacturing -- even when the collaboration is with a foreign partner -- can add assurance to the alliance.
Am I suggesting eliminating off-shore manufacturing? Of course not. The world is flat and companies need a global approach to production. Nanofilm has -- and will continue to have -- manufacturing far beyond America's borders. What I am saying is this: protecting and capitalizing on your most valuable intellectual property may be best served by keeping manufacturing close to home. Add to that the other emerging indicators of energy, labor and transportation savings to be realized in the U.S., and the argument is even more compelling.
My advice? Now is the time to turn your focus and investment to your own backyard.
