Given the negative business news that everyone’s faced during the past year, it’s not unusual to be drawn to a headline such as “Manufacturing Can Be Competitive in the United States.” Unlike many of the countless e-mails I receive daily, this one didn’t get deleted automatically. I opened the file, scanned the attachment and then saved the article for future perusal.
Written by business consultants John Kemp and Charles Mouranie, the article notes that of the $580 billion received in business tax revenues in 2008, $90 billion comes from the manufacturing sector.
As the two scribes state, “That’s more than the tax revenues from the retail and communications industries combined.”
The reference here wasn’t to rant about government taxation -- there’s plenty of that already out there. Rather, it was to point out that the manufacturing sector is a critical cog of the economy.Faced with higher labor and healthcare costs, stricter environmental and regulatory mandates -- and, in the confectionery sector, higher ingredient costs -- many manufacturers have been forced to go “offshore” to expand production capacity while trying to stay profitable.
As much as we all might profess to buy American, we actually prefer to buy “cheap.” Hey, it’s human nature.
What Messieurs Kemp and Mouranie say, however, is that “manufacturers who wish to stay at home and succeed here have the tools to do so.
“An increasing number of domestic manufacturers are countering the notion that one must turn to cheaper labor to reduce their expenses,” they write. “Instead, they have turned to lean manufacturing, which has increased their productivity, strengthened customer relationships and, most importantly, kept jobs at home. To top it off, they don’t have to worry about paying the skyrocketing transportation costs that come with shipping those foreign-made parts back to the United States.”
The two gentlemen go on to cite two non-confectionery examples that underscore the success of a lean manufacturing program -- one that emphasizes continuous improvement on the plant and warehouse floors as well as throughout the entire distribution chain.
During my travels to various large and midsized confectionery manufacturing companies, I’ve come across quite a few who’ve embraced this philosophy: Mars, Just Born, Jelly Belly, Farley’s & Sathers, and Spangler Candy Co., to name a few.
As globalization enters a more complicated phase, one whereby labor unrest and sustainability issues cloud the economics of offshoring, U.S. companies are being to rethink the paradigm. As a result, onshoring, or the movement to bring manufacturing back to the United States, has surfaced.
As Kris Maher explained in a March 12 Wall Street Journal article, “After a decade of rapid globalization, economists say companies are seeing disadvantages of offshore production, including shipping costs, complicated logistics and quality issues. Political unrest and theft of intellectual property pose additional risks.”
I don’t think anyone should interpret this as a rush by companies to pull up stakes and return to the homeland. There are legitimate reasons for having offshore manufacturing sites.
What Maher, Kemp and Mouraine are saying is that “made in the USA” need not be an anomaly. With inspired leadership, system-wide lean manufacturing practices, inbred quality and safety standards, employee buying and cooperative supplier partnerships, U.S. manufacturing can indeed return to prominence.
In many instances, it’s already happening within the confectionery industry. And that’s good news.