Americans believe manufacturing as the most important industry for economic prosperity. It is perceived as the backbone of the economy and the one that contributes the most to the United States' economic success.

In Deloitte LLP and The Manufacturing Institute's new Public Viewpoint on Manufacturing survey, released this month, 82 percent of respondents agree that America's manufacturing base is key to the country's economic prosperity. The majority of respondents (71 percent) also view manufacturing as a national priority and 59 percent believe that U.S. manufacturing competes effectively on a global scale.

This should come as little surprise to most, considering the manufacturing sector employs 13 million Americans and drives job growth in industries such as logistics, marketing, transportation and business services, the American Small Manufacturers Coalition (ASMC) said in an announcement of its own new findings. Moreover, manufactured goods represent two-thirds of U.S. exports and drive more net-wealth creation than any other industry.

However, the ASMC has found that more than a quarter of American manufacturers — about 90,000 firms — are at risk of not being able to compete on the global stage.

The ASMC asked manufacturers where they stood within the "next-generation manufacturing" framework of competitiveness strategies, which include: 1) customer-focused innovation, 2) systemic continuous improvement, 3) advanced talent management, 4) global engagement, 5) extended enterprise management and 6) having sustainable products and processes.

Based on the study's findings, a serious gap exists between the strategies U.S. manufacturers believe to be critical to success and their progress in implementing those strategies. Small and mid-sized manufacturers are especially at risk. One-third of respondents who had annual revenues less than $10 million are neither at nor near "world-class" in any strategy, according to the research. Of those with more than $100 million in revenue, merely 14 percent are under-performing.

"In a country where 282,000 small and mid-sized firms comprise the backbone of the industry, this is a significant threat to U.S. competitiveness and the viability of these companies," according to the study.

The results are "a wake-up call," ASMC Board Chair Michael Klonsinski said. "The consequences of inaction could trigger more job losses in manufacturing and ultimately a lower standard of living for all Americans."

Likewise, the public viewpoint survey found that 81 percent of respondents believe the manufacturing industry significantly impacts their standard of living and 74 percent say that the U.S. should further invest in manufacturing industries.

While the ASMC survey puts the responsibility to succeed in the hands of the manufacturers, it sees further improvements to the manufacturing base as the key to success as well.

Currently, the ASMC findings show that only 28 percent of respondents believe global engagement is highly important to success, "despite a near-term future in which markets, talent, competitors and partner opportunities are growing faster outside the U.S. than within its borders."

Furthermore, sustainability strategies rank low in manufacturers' priorities, with only 16 percent stating green as important to their success in the next five years. Other key "threats" include leadership loss, inadequately deployed measurement systems and ineffective partnerships among employees, suppliers and support organizations.

There is also "a wide perception gap" between "the public's highly positive views of manufacturing's contributions to America's economic success and their negative views about pursuing a career in manufacturing." In the Deloitte/Manufacturing Institute report, only 17 percent name manufacturing in the top two career choices while only 30 percent of parents say they would encourage their children to work in the manufacturing industry.

"The reality is that manufacturers offer high-paying jobs and rewarding careers for American working men and women," Emily DeRocco, president of The Manufacturing Institute, the research and education arm of the National Association of Manufacturers, said in a statement. "Our job is to close the gap between perception and reality, which will help fuel the industry's growth and prosperity."

Closing the gap between where manufacturers are today and where they need to be to succeed in the years to come is also a challenge — but "it's not too late," the ASMC made clear. American manufacturers still have an advantage in leadership, innovation and support infrastructure, among others.

"The solution is not to shift away from manufacturing, but to transform our manufacturing base into a faster, more flexible industry capable of capturing global market share," according to Klonsinski. "The good news is that many manufacturers are already adopting next-generation strategies and becoming stronger, more profitable firms as a result.

"The challenges we're facing are real but not insurmountable," Klonsinski said.

Resources

Next Generation Manufacturing Study Overview and Findings
American Small Manufacturers Coalition, June 11, 2009

National Study Finds Critical Threats to U.S. Manufacturing...
American Small Manufacturers Coalition, June 11, 2009

Public Viewpoint on Manufacturing
Deloitte LLP and The Manufacturing Institute, June 9, 2009

Manufacturing Ranked No. 1 Industry for Economic Prosperity
Deloitte LLP, June 9, 2009