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New manufacturing report shares good news, bad news

June 1, 2010
A new whitepaper from the Hollings Manufacturing Extension Partnership Advisory Board takes a close look at the present state of U.S. manufacturing and

A new whitepaper from the Hollings Manufacturing Extension Partnership Advisory Board takes a close look at the present state of U.S. manufacturing and its future prospects. Innovation and Product Development in the 21st Century points out several challenges facing U.S. manufacturers, but also focuses on opportunities in today's interwoven global supply chain.

The good news, according to report authors, is that manufacturing is still a significant part of the U.S. economy, generating $1.64 trillion worth of goods in 2008. However, the U.S. trade deficit for high-tech products in 2007 was $54 billion, almost double the $29 billion deficit of 2000. Perhaps not surprisingly, jobs in manufacturing as a share of total U.S. employment decreased from about one in three in 1950 to one in 10 jobs today, according to the study. The 44-page report (see is well worth reading by anyone interested in the future of U.S. competitiveness. Two things I like: It's not all doom and gloom and it offers practical suggestions for several audiences, including policymakers, manufacturers, small business owners, and others connected to the global supply chain.

The topic hits close to home, as this magazine is based in Cleveland — an old manufacturing city still struggling to find its place in the 21st Century. A recent business saga illustrates the global-economy complexities: The City of Cleveland plans to purchase many millions of dollars worth of new LED street lighting from Sunpu-Opto Semiconductor Ltd., a Chinese LED manufacturer. This has angered one of the city's longstanding corporate citizens — GE Lighting — not asked to bid on the 10-year contract. At first glance, this may seem outrageous. However, the contract requires that Sunpu-Opto build its U.S. headquarters and manufacturing facility in Cleveland, bringing along 350 sorely needed manufacturing jobs. GE, on the other hand, doesn't make the type of lighting Cleveland wants to buy, according to Mayor Frank Jackson. Further, GE has off-shored all of its high-efficiency lighting plants to China, according to news reports, moving thousands of manufacturing jobs overseas during the past few years.

This lighting dilemma resembles the automotive debate: Is it better to buy an “American” car brand manufactured in Mexico, or a “foreign” brand built in the U.S.? Reasonable minds disagree here, and it's a moot point anyway. A more sensible question: How can companies thrive and engage American communities?

One way, suggests the Hollings report, is collaboration — often called a cluster strategy — “where networks of companies related by common suppliers, shared markets, labor pools, or infrastructure leverage interactions to their mutual advantage.” Two examples include a semiconductor cluster in Austin and a medical-devices cluster in Minneapolis. This power-in-numbers strategy could help with anything from sourcing raw materials to finding talented workers in any number of industries.

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