What’s Next for US Manufacturing? The View from Pennsylvania

It’s been several decades of bad news for America’s manufacturers as they have faced intense international competition from first Japan and Germany, and more recently, China and other emerging economies.  But, the picture is not 100% gloomy.  Manufacturing still matters, and recent trends suggest that the US may be on the cusp of a new renaissance for American manufacturers.

A new study sponsored by Pennsylvania’s Industrial Resource Centers, Pennsylvania’s True Commonwealth, examines what’s happening with manufacturers in the Keystone State and points to many causes for optimism in Pennsylvania and across the US.   The first positive sign is that firms that have weathered the downturn are stronger and better managed.   As the report notes, these firms have discovered the “secret sauce” for enterprise transformation. 

What’s the recipe for the “secret sauce?”  Successful firms focus on a few core practices:

  • They develop and manage according to an objective strategic plan
  • They embrace lean production techniques and practices
  • They foster a culture of continuous improvement
  • They utilize “open book management” tools and share performance data across the company
  • They indentify defensible market niches, tied to an aggressive marketing and sales strategy

These battle-hardened firms may now face a somewhat more promising market environment.  As the the value of China’s currency rises, the competitive edge provided to Chinese manufacturers will erode.  Moreover, rising energy costs and repercussions from the Japanese earthquake/tsunami are leading some US firms to rethink their far-flung global supply chains and move more activities closer to home.   These global shifts create opportunities.  If they can be coupled with smart state and Federal policies, including corporate tax reform and new approaches to economic and workforce development, the potential for a manufacturing renaissance can be fulfilled.

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