Bring It Home, an article that appeared in the September 2007 issue of Entrepreneur, included research data that indicates that domestic entrepreneurship in the manufacturing area is up even as total manufacturing employment in the US continues to decline. The article provides a few tips on launching and maintaining a successful US manufacturing business even as foreign firms in China and elsewhere continue to use their low-cost labor advantages to erase the smokestacks that drove US economic growth in the late 19th Century and through most of the 20th Century. Interestingly, while manufacturing skills are obviously important, the winners are likely to be those firms that are able to package and market some of the specific advantages of using an onshore production partner.
Since many schools are focusing on training service-oriented graduates, recruiting skilled production workers and manufacturing managers can be challenging; however, the flip side is that since there are fewer domestic firms looking for such employees the competition in the labor market is less intense. The key is to focus in on schools that continue to offer manufacturing-related training programs. As for managers, companies should explore bringing in experienced hands from larger firms that have decided to shut down US operations in deference to foreign competition.
With larger manufacturing firms shutting down, smaller new companies often find there is little or no domestic competition in their particular geographic area or industry sector. As such, these companies can offers themselves as a unique, local alternative to distant foreign manufacturers and focus on building personal relationships with the customer.
By being “local,” US manufacturers can quickly learn the specific requirements of their customers and position themselves as being the best solution for customized items and quickly implementing new designs. The ability to provide quick turnaround, in relation to foreign manufacturers, is a tremendous value proposition for US companies that often can win the business at higher prices that customers are willing to pay for responsiveness.
Fledgling manufacturers would do well to focus on niche markets that the competition prefers to ignore. For example, the best strategy may be to concentrate on small- to medium-sized customers that require customization and avoid markets where cost is the primary factor or larger customers that require high volumes that would exceed the relatively modest production capabilities of an emerging US manufacturer.
US manufacturers can add value, and enhance their profit margins, by importing raw and semi-finished materials from low-cost foreign suppliers and then integrating them into the customized finished products that they sell for their US customers. The customers will be willing to pay a premium for having someone else deal with the uncertainties of working with foreign vendors.
In order to convince US customers to “buy USA,” domestic manufacturers need to create and execute a solid marketing program that communicates the specific advantages of working with a local firm. As noted above, building and maintaining strong relationships with key customers is essential and clearly distinguishes the domestic firm from a foreign competitor that is rarely seen in person. Post-sale support and strong warranty service are also important “value adds” that can win a bid and seal a long-term business partnership.