Earlier this week, the Institute for Supply Management’s factory index rose to 55.7 — the highest level in more than two years and further proof that U.S. manufacturing is on the rise. The increase actually came as a surprise to many forecasters. Spurred by automotive and construction materials, it appears as though August was the best month yet for U.S. manufacturing. As optimists, however, we still believe that the best is yet to come. According to a recent study, 48 percent of large manufacturers plan to return production to the U.S. from offshore, and if recent trends are any indication, this number is likely to climb steadily.
But it’s not all easy sailing from here on. The manufacturing industry’s share of GDP still stands at just 11.5 percent – it was 28 percent in the 1950s. And today, manufacturing employs half of the employees it did in the 1980s. While some big names in manufacturing such as General Electric, Ford, and Whirlpool have announced plans to “reshore” over the next decade, this is merely a drop in the bucket. We believe that the lion’s share of the lifting must come from smaller manufacturers, wholesalers and distributors, many of whom have survived to this point on thin margins and crippling cost cutting.
According to the recent 2012 MIT FORUM FOR SUPPLY CHAIN INNOVATION RESHORING STUDY, the top five reasons businesses are seeking to reshore are time-to-market (73.7%), cost reductions (63.9%), product quality (62.2%), more control (56.8%) and hidden supply chain management costs, all things a business of any size, even a sole proprietorship, can improve/influence dramatically in short order. But to participate, you must anticipate, and it’s time for businesses of all sizes to prepare for the opportunities ahead. That means focusing on hiring, technology, infrastructure, government policy and all the business drivers that will make this next decade your decade for growth.
Are you investing/preparing? Are you bullish or bearish?
Steve Leavitt, GM of U.S. Cloud Solutions for Exact