The 4 Changes Facing Modern Manufacturing
The last decade has brought about a multitude of challenges for US manufacturing. In this rapidly changing climate, companies must adapt or be left behind by more limber competitors both here and overseas. Here are the four big challenges facing modern manufacturers:
1. The New Competition
Technology and globalization have evened the global playing field, giving manufacturers previously limited by size or location a chance to compete in the global marketplace. Manufacturing in the developing world is able to offer pricing that isn’t sustainable in a developed country like the US (this is why China is currently ranked as the world’s most competitive manufacturer).
2. The New Financial Reality
The US is still not out of the recession, and with the wind-up of government stimulus programs this year, the economy is likely to face stunted growth for foreseeable future. In addition, because of the difficulties in competing with industry in developing countries like China, the US has been moving closer and closer to service-based industry, with manufacturing’s share of the GDP falling by 27% since 1998.
The global trends, combined with the Great Recession, have led many manufacturers to close their doors.
3. The New Customer
The Internet Age has brought about a new, more discerning customer. Customers today not only expect quality, well-designed product, but also demand prompt customer service and sustainably manufactured goods.
73% of Americans have higher expectations of businesses in 2013 than they did in the past, and 43% of US consumers believe that American companies are not doing enough to keep their business.
Customers are also more intricately linked than ever before. This means that one customer’s experience now has the power to influence the opinions of many others through the use of Internet review sites, personal blogs, and social media.
4. The New Employee
US Manufacturing has to meet two challenges on this front. One is the lack of skilled workers who are able to operate today’s modern machinery. The other is that due to this labor shortage, skilled workers are able to be more demanding of their employers. The average age of a high-skilled worker today is 56, leaving manufacturers in a permanent shortage of qualified workers.
To tackle these 4 challenges, US manufacturers have to start to think more strategically in order to have a chance the global marketplace. They need to cut overhead costs to remain competitive, while focusing on branding to keep their customers engaged and actively trying to recruit skilled labor. Energy costs are some of the easiest to reduce, which is why we recommend manufacturers start there. Ask us for a consultation today to get started.