A Tipping Point for Made in America?

Could $1 billion save American manufacturing?

President Barack Obama believes so. He has earmarked that amount in his 2014 budget to create the National Network for Manufacturing Innovation (NNMI), a system of 15 manufacturing innovation institutes across the U.S.  The political focus on manufacturing and, perhaps more important, an increase in the frequency of companies announcing plans to manufacture in the United States suggest we may in fact be at a tipping point for Made in America.

Why now?  Interestingly enough, the story begins half a world away — in China.  In recent years, wages — and with them, costs — have gone up in the nation long known as the reigning king of global manufacturing.  As a result, buyers worldwide are looking to diversify their supply base beyond China.  They're looking everywhere and, in many cases, locations here in the U.S. are being given serious consideration.  So how do we ensure that America makes the most of this opportunity?

It starts with understanding where America is likely to succeed (and where it is not), so we can focus resources on areas where we have a shot at winning.  Realistically, we cannot make the U.S. a hub for large-scale, labor-intensive manufacturing in industries such as apparel or toys, and so manufacturing is not going to be the silver bullet that solves America's jobs problem.  But there is an opportunity to create sustainable competitive advantage and a lot of high-quality jobs in two specific areas:
  1. Rapid response manufacturing – The days of months-long lead times are going away.  With today's finicky consumers, speed counts — and sourcing close to home often makes a lot of sense.  By nature of its proximity to U.S. buyers — and their end consumers — stateside manufacturers have an undeniable leg up.  They can put product on shelves faster.  They can address unexpected high demand that has the potential to keep revenue growing and can do so very quickly.  This ability is U.S. manufacturers' biggest not-so-secret weapon.
  2. High-tech manufacturing – When products are complex and their specifications require precision, buyers need a level of technological aptitude that American manufacturers are best suited to provide.  Unlike lower-cost manufacturing hot spots, America has the highly-skilled workforce and robust technological capabilities necessary to implement high-tech manufacturing processes.
Initiatives to support the resurgence of American manufacturing — coming out of both the government and private sectors — should focus on these areas where we have the advantage.  The common thread is technology, and so investments should focus on technologies that enable rapid response capabilities, precision manufacturing technologies and, importantly, the technology skills of our labor force.

We also need to increase visibility into the manufacturing capabilities available in our back yard.  Amazingly enough, because there has been such a focus on manufacturing globally, there has not been nearly enough investment in collecting and disseminating information about the capabilities of U.S. suppliers. The data that does exist is fragmented, which makes it hard for buyers to know where to find the information and difficult for suppliers to know how to get word out about themselves.

Buyers, suppliers, government agencies, information providers and startups (Panjiva included) must work together to collect and make available information about suppliers in the U.S. Only through a collaborative effort can we help the world understand where America has best-in-class capabilities and also help buyers here at home identify where the rapid response capabilities can be found. 

Fortunately, these are all actions that are very much within our control. We can focus our energies on areas where America has a built-in or built-up advantage, and we can work together to provide transparency about the capabilities that exist here at home.  If we do so, we can ensure that this really is a tipping point for American manufacturing. 

Josh Green is co-founder and CEO of Panjiva, a B2B platform that connects global buyers and sellers.
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