While there will always be a certain degree of resentment towards manufacturing jobs migrating overseas, a different viewpoint is emerging that ties the rising number of exports and global expansion to a stronger U.S. manufacturing base.

Thomas J. Duesterberg, president and CEO of the Manufacturers Alliance/MAPI, this week paints a very positive outlook for manufacturers. Writing at IndustryWeek, he offers some compelling statistics on the expected population growth curve:

I think demographic, economic and political trends will continue in coming decades to provide a favorable outlook for U.S.-based manufacturing. The growth of the world population sets the stage for continued economic expansion. The United Nations predicts that world population will grow by 28 percent by 2030 and a total of 40 percent by 2050, when it reaches nearly 9.2 billion.

Fueling this economic expansion, or "dynamism" as Duesterberg phrases it, is the expanding middle class whose incomes hover between $6,000 and $30,000 in purchasing power. By 2030, researchers at Goldman Sachs estimate that two billion people will be added to the middle class, a majority residing in "emerging economic powers" like Brazil, South Africa, Vietnam, Russia and Indonesia.

Here's more:

As 70-80 million people are added to the rolls of the middle classes each year, the demand for manufactured goods will expand in tandem. The Goldman study, for example, puts the "sweet spot" for purchase of higher-end durables at about $8,000-$9,000 in annual income. U.S. manufacturers are highly competitive already in this category of goods, having seen over 30 percent growth in exports in the last three years.

Then there's the potential development of reverse globalization to help strengthen domestic manufacturing.

"The startling, and long-term, rise in global energy prices is raising transportation costs to the point that local production of goods will be favored," Duesterberg notes. "This is already apparent in commodity goods, but is affecting higher value added products like automobiles as well. Growing foreign direct investment in the United States is another indicator of this trend."

Indeed, a CIBC World Markets report a few months ago concluded that higher energy prices are affecting transportation costs at such an unprecedented rate, that they may actually reverse the impact of globalization.

"Exploding transport costs may soon remove the single most important brake on inflation over the last decade — wage arbitrage with China," Jeff Rubin, chief economist and chief strategist at CIBC World Markets, said. "Not that Chinese manufacturing wages won't still warrant arbitrage. But in today's world of triple-digit oil prices, distance costs money."

All of these factors and more are working in favor of enhancing domestic U.S. manufacturing over the coming decade or two, according to Duesterberg. "Maintaining the momentum will require continued deployment of America's ingenuity, capital investment and flexibility to meet the challenge of progressively sophisticated foreign competition," he states.

As rising energy and materials costs and the uncertain global economy have put massive pressures on manufacturers to reduce operating costs on each and every aspect of manufacturing operations, one way to get a jump on freeing up innovation resources is by focusing on reducing unnecessary operational complexities. This way, domestic businesses can compete better globally and meet the needs of, for instance, the rising middle class overseas.

"For manufacturers, this requires plants and factories to be available and running at peak performance and producing high quality products at the right time," according to a recent Aberdeen Group report. "To achieve these goals companies are developing multiple strategies for asset management at an enterprise level."

The June 2008 Aberdeen report suggests manufacturers should consider deploying an asset management strategy to help reduce operational costs, improve profitability and also competitive advantage.

The Aberdeen study, titled Enterprise Asset Management: Maximizing Return on Assets and Emerging Trends, shows best-in-class manufacturing companies are more likely to have implemented Enterprise Asset Management (EAM) systems and linked those EAM systems with their plant floor and Enterprise Resource Planning (ERP) systems.

The findings, culled from 160 manufacturing executives, showed these best-in-class manufacturers, on average, realize 97 percent plant throughput, 93 percent overall equipment effectiveness and 31 percent less asset downtime than other manufacturers.

Aberdeen also serves up the following asset management tips to consider:

• Improve visibility into production and asset performance across the enterprise through the use of asset analytics and dashboards;

• Invest in an EAM solution and establish real time interoperability between EAM and ERP; and

• Move from a break-fix maintenance approach to a more predictive approach by adopting advanced capabilities such as Reliability Centered Maintenance (RCM).

Obviously, this is just a microcosm of research and strategy in the increasingly complex world of efficiently meeting demand domestically and globally. Overseas growth, of course, is pivotal in securing manufacturing strength on domestic soil, as the latest trade numbers exemplify (via Bloomberg News yesterday):

Orders for U.S. durable goods unexpectedly increased in July, indicating that growing demand from abroad is still helping companies weather a slump in domestic spending. The 1.3 percent gain in bookings of goods meant to last several years matched the previous month's rise, which was larger than previously estimated, the Commerce Department said today in Washington. Excluding transportation equipment, orders rose 0.7 percent after a 2.4 percent increase a month earlier.

While other manufacturing sectors aren't faring as well, the news about durable goods seems to be a very positive sign. Growth in U.S. manufacturing might be led by exports, capital investment, growth abroad and improving operations in an increasingly complicated world.

Resources

The Competitive Edge -- Looking Ahead to Manufacturing's Future
by Thomas J. Duesterberg
IndustryWeek, Sept. 1, 2008

Will Soaring Transport Costs Reverse Globalization?
by Jeff Rubin and Benjamin Tal
CIBC World Markets Inc., May 27, 2008

Enterprise Asset Management: Maximizing Return on Assets and Emerging Trends
by Matthew Littlefield and Mehul Shah
Aberdeen Group, June 2008

Orders for Durable Goods in U.S. Unexpectedly Gain
by Timothy R. Homan
Bloomberg News, Aug. 27, 2008