Manufacturing Continues to Play Revitalizing Role in U.S. Economy

Source: ControlDesign.com

By Edward Youdell, President and CEO Fabricators & Manufacturers Association, International

Jan 09, 2012

This decade is shaping up to be one of the most exciting periods in recent memory for the metal fabricating and forming industry. Reasons include the role manufacturing continues to play in revitalizing the U.S. economy and its influence in pulling the U.S. out of a recession. In addition, there is the burst of new technologies now seen in fabrication shops as well as the surge in green manufacturing practices. Conversely, we face serious challenges in convincing young people to make this high tech sector their career choice.

Numerous economists have cited manufacturing as the sector that has pulled the U.S. out of a recession. To illustrate, in 2010 there were more jobs added in manufacturing than were lost – 130,000 – the first time this has happened since 1997. We will continue to see the sector grow thanks to the need to rebuild inventory and the strength of expanded exports.

The latter is particularly pertinent. According to FMA's economic analyst Dr. Chris Kuehl, as recently as 10 or 15 years ago, the majority of small and medium manufacturers did no business at all overseas. But the average company now does about 30 percent of its business in global markets, and some have much higher rates.

The evolution applies to small and medium-sized fabricators who are increasingly exporting goods to international buyers. The outsourcing of work, one of the economic maladies that plagued the U.S. economy for years, is starting to fade due to logistics, costs and quality issues. Rapidly increasing labor rates in developing economies, fuel and transportation costs and raw material prices, are starting to diminish the benefits of outsourcing, so work is coming back to the U.S. in a movement called nearshoring.

Deadlines are another factor. If a U.S. customer has a quality issue with a foreign supplier who says it can be remedied in, say, six weeks, that's not good enough any more.

Another explanation for manufacturing's bright future is the way the sector has aggressively adapted to new business environments. One strategy is to develop and launch new product lines to access new markets.

Manufacturers are much more capital intensive and rely more on technology to stay competitive. Technology enables them to produce quality products with significantly more efficiency. Even though workforce numbers have dropped over the last few decades, productivity numbers have risen every year.

Workers are now required to be experts and operate the most advanced, automated, sophisticated equipment in the world. They can cut steel with laser lights, water jets and plasma cutters, and program robots to paint, weld, package and palletize products.

There's a greater use of sophisticated control technologies and design software. There are fiber lasers and advanced press brake controls. Critical supply chain management procedures are becoming a science as well.

Manufacturers need workers with the necessary skills to operate this new, sophisticated machinery, and the shortage of such skilled personnel is one of the industry's greatest challenges.

What's happened in manufacturing is that many workers are approaching the end of their careers and we've not done a good job in finding or developing people with the necessary skills and desire to replace them. Several factors contributed to this dilemma. Without question, manufacturing has had an image problem among young people. Also, U.S. education priorities did not position manufacturing as a preferred career choice.

What's encouraging is that this landscape is dramatically changing. Educational systems are starting to realize the need to offer a vocational or technical educational track – even if it means a collaborative program, and more companies today are reviving apprenticeships and in-house training programs. We hope that these efforts will convince young people that manufacturing jobs are rewarding and fulfilling.

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