Opening Shots: Making most of the "m" word
August 7, 2008
Most of you are probably thinking that I’m referring to marketing as the “m” word in the headline. And trust me, I’m usually one of the first to emphasize the importance of marketing in today’s highly competitive confectionery climate.
After all, the advent of engineered flexibility in confectionery processing equipment stems from the fact that sales and marketing – and not operations/engineering – dictate what’s produced on the plant floor.
Nevertheless, one still has to manufacture a product before you can sell it. And despite the perception that everything one purchases today isn’t made in the country you live in, that’s really not true.
Last month I had the opportunity to attend a Financial Times seminar regarding “Manufacturing for the Future” in downtown Chicago. Sponsored in conjunction with Machines Italia, a division of the Italian Trade Commission, the seminar featured several speakers expounding on what’s happened to manufacturing – and what we can expect.
Peter Marsh, the manufacturing editor for the Financial Times, acted as moderator for the half-day session. In his introductory remarks he pointed out some interesting factoids: First, that the value of manufacturing today is ten times greater than in all of history; second, that 70% of the world’s manufactured goods come from seven key countries – United States (25%), Japan (14%) and China (14%), Germany (7%) and Italy, Britain and France (each 3%).
Interestingly, despite the notion that manufacturing is leaving the United States as fast as illegals are entering, that’s not quite true. The United States’ share of global manufacturing output (25%) has remained virtually the same since 1982.
What has changed in the global manufacturing sector, not only in the United States but in Europe and Asia as well, is productivity. According to Kiplinger’s Personal Finance newsletter (January 2008), U.S. factory productivity grew by 94%, a rate that’s two and a half times faster than productivity in the service sector. That translates in manufacturing being able to produce more with less labor.
And while politicians often point to a loss of 3 million jobs (mostly between 2000 and 2003) as a rationale for manufacturing’s demise, it’s related more to efficiency and automation than Ross Perot’s infamous “great sucking sound” across the border.
Moreover, increased productivity tends to stimulate job creation in other sectors. Besides, how can one argue against investing in a better, and less costly method of production.
And it’s not just major multinationals that are investing in productivity. According to a recent study by the National Association of Manufacturers (NAM), “Small and medium manufacturers account for 40% of U.S. production value…”
Nevertheless, John Engler, NAM’s president and ceo, points out that such “manufacturers must collaborate closely with new domestic and overseas partners to survive and thrive in the global supply chain. In today’s economy small and medium manufacturers are more than just suppliers. They are helping to create the new technologies, products, services and business models that are vital for success, here and abroad. By connecting with outside resources – customers, government, academia – small and medium manufacturers can swiftly expand their core competencies and gain economies of scale.”
I’ve visited enough confectionery manufacturing facilities to appreciate the complexity and ingenuity involved in producing everything from truffles to taffy. I also understand the wisdom behind Engler’s advice: one has to broaden one’s contacts to continue success. It’s an ideal way to maximize the “m” word.