President's Column

Thursday, December 10

Manufacturing comeback still strong in Washington and nation

America’s manufacturing comeback isn’t over.

That’s one of the findings from the 2015 Manufacturing & Distribution Monitor Report, an annual survey of manufacturing firms conducted by RSM, formerly known as McGladrey.

After suffering through years of decline, the resurgence that began in 2010 — leading the country out of recession — is still going strong with roughly 800,000 new manufacturing jobs added to the economy since then, according to the survey.

Wendy Sancewich, a partner in RSM’s Seattle office, shared highlights from the survey during the Association of Washington Business’ Manufacturing Summit in November.

Nationwide, 35 percent of manufacturing companies say they are thriving and 73 percent report revenue growth. They are optimistic about the future, too, with predictions of healthy profit (an average 11 percent) and sales growth (average 12 percent) in the next year.

The numbers are similar here in Washington, with 37 percent of the manufacturers saying their business is thriving.

As good as those numbers sound, though, the survey has some good advice for manufacturers if they hope to remain competitive in an increasingly global marketplace.

First, they need to commit to innovation. Leaders of American companies have reached a “pivot point” where they must view innovation as a key component of their overall operation, not an “isolated research and development function,” the survey said.

Traditional manufacturing is going through a major change, the survey notes, and companies that haven’t already made innovation part of their culture must do so if they hope to compete with both foreign and domestic competitors.

We see that here in Washington where manufacturing companies have more in common with high-tech companies than the dirty shopfloors of the past.

Second, they need to invest more in information technology. Overall, U.S. companies are lagging behind foreign competitors in their use of information technology, the report found. The gap is across the board in everything from cloud computing and mobile technology to big data analytics and social media.
Third, U.S. manufacturers need to take data security more seriously. No company is immune to data breached, and yet the survey found too many manufacturing company leaders believe their company is an unlikely target because it’s too small or doesn’t have valuable data.

In Washington, just 37 percent of executives were very confident of their company’s ability to monitor and safeguard data.

Although most of the companies in the 2015 Monitor still do most of their business in the U.S., the importance of global trade can’t be over-stated, particularly here in trade-dependent Washington state.
And it goes both ways. Foreign markets represent big opportunities for U.S. companies, but the U.S. market is becoming increasingly attractive to foreign investors.

Overall, the results for U.S. manufacturers are positive. America is still the preferred destination for investment and growth.

But in order to stay competitive, U.S. manufacturers need to take a more global view of their operations, take into account global supply chains and continually invest in operations, particularly innovation.
There’s a lot riding on it. As Alan Mulally, the former Ford Motor Co. CEO reminded us during AWB’s Policy Summit in September, "No country has ever been prosperous for a long time if they didn't have a really strong innovation and research-and-development manufacturing economy."

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