Advanced manufacturing techniques have become an important and positive way for middle market manufacturers to get a competitive advantage, increase revenue, and secure better margins. For years, U.S. manufactures had a bad reputation as being overly dependent on overseas outsourcing to keep competitive in the world. The cost was domestic jobs.
But there's a change coming. Research by operations consultancy The Hackett Group says that reshoring from China has increased and has now balanced the offshoring of manufacturing jobs there. The reason? China's benefits of low labor costs and high volume are rapidly being offset by growing wages there and smarter manufacturing here. Companies can lower logistics costs, more quickly address market changes, and obtain higher quality products.
For example, contract manufacturer First American Plastic of South Beloit, Illinois, uses 3D printing to greatly speed prototyping. Instead of using three or four manufacturing processes to create a prototype, First American can run the job overnight on a 3D printer, meaning savings for the company and greater responsiveness to customers, which translates into a competitive advantage.
According to a survey and study by the National Center for the Middle Market and the National Association of Manufacturers, mid-sized companies are more likely to help lead a manufacturing renaissance because of their use of leading manufacturing technology.
Almost half of middle market manufacturers use advanced manufacturing techniques to improve profits without forcing people out of work. These companies reported a 20 percent increase in profitability in the past five years while growing headcount at about the same rate as other manufacturers. Because more than half of the manufacturers responding don't use such technology, there's a lot of improvement yet to be mined. Here are a few tips to get started.
Determine the right mix of advanced manufacturing techniques.
The techniques most commonly used by mid-market firms include automation; computer technologies like CAD, CAE or CAM; process technologies; and information technologies. Finding the right mix starts with research. Look at what the top companies in a given manufacturing sector use. Attend industry shows and read trade publications for more insights. Manufacturing consultancies can help middle market companies determine where they are likely to get the biggest return on their investments. The Hollings Manufacturing Extension Partnership of the U.S. Department of Commerce offers a "national network of 60 centers across the United States with thousands of specialists trained to serve the needs of small- and medium-sized manufacturing clients."
There are also state and federal programs that might provide incentives for a middle market manufacturer. The U.S. government has many incentive programs for businesses like the Sustainable Manufacturing Initiative. Many states have economic development zones and tax benefits for manufacturing companies.
Develop and train employees.
Whether your factory is full of advanced manufacturing equipment or you're just getting started, having a strategy to develop and train employees is critical. According to the report, about half of the respondents indicated a skills gap, whether among existing employees or new ones. Half of the companies had positions they needed to fill. To address these challenges, mid-market manufacturers need to shift recruitment strategies to focus on workers with STEM skills. The companies should also create or expand internal programs to continually retrain employees to leverage new technologies and collaborate with technical schools and community colleges to help close the skills gap.
Erik Sherman is an NCMM contributor and author whose work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, Newsweek, the Financial Times, Chief Executive, Inc., and Fortune. He also blogs for CBS MoneyWatch. Sherman has extensive experience in corporate communications consulting and is the author or co-author of 10 books. Follow him on Twitter.