By Andrew K. Reese
By the time this issue of Supply & Demand Chain Executive finds its way into your inbox, the U.S. presidential inauguration will be mere weeks away. The swearing in ceremony for Barack Obama will mark the finale of a lengthy — some might say interminable — election process. But it also will mark just the start of the new administration's efforts to deal with a host of pressing challenges. With a sputtering domestic economy, festering regional conflicts and ongoing global terrorist threats, perhaps the most important question that the Obama administration must ask itself on that first day in office is, where to begin?
Tom Brunell has a suggestion: Start with U.S. industry. Brunell has four decades of experience working in and around manufacturing in the United States, and today he runs the supply chain for Actronix, a Flippin, Ark.-based manufacturer specializing in custom cable assemblies and wire harnesses for high-mix, low volume products in a variety of industries. Brunell's message for Washington: Focus policies on helping U.S. manufacturers become more competitive.
"The leadership in the United States has failed to come to grips with what must be done to save our manufacturing industry," he says. Brunell believes that where the federal government has come up with good ideas — such as the Manufacturing Extension Partnership (MEP) program run by the National Institute of Standards and Technology (NIST) to provide business consulting services to U.S. manufacturers on a nonprofit basis — these programs have been poorly funded and executed.
"Our small and medium manufacturers can ill afford to pay for services no matter how reasonable the costs," Brunell says. "The United States must find a way to connect these struggling businesses — which are the lifeblood of our economy — with experts from both industry and academia in order to drive innovation. Without substantive innovation, our precious manufacturing jobs will continue to flow out of our country."
Made in America?
Innovation will be critical as globalization and the "flattening" world inevitably mean that U.S. manufacturing will not be able to compete in certain product categories. The good news is that U.S. manufacturers continue to lead in innovation as measured by patents, technical papers and similar metrics, according to a recent report from consulting firm Deloitte. However, the report, "Made in America," prepared in conjunction with the National Association of Manufacturers and the Canadian Manufacturers & Exporters (CME) association, points out that innovation may be at risk in the United States as production capacity shifts abroad.
"Traditionally, the ability to closely integrate product development and production has allowed companies to explore advances in product design and production efficiency, thus pushing the envelope in terms of innovation and productivity," the report notes. "If the production portion of the value chain loses its luster in North America, it remains to be seen whether manufacturers in the region can hold on to their lead in global innovation and continue to march up the value chain to higher value-added, and more profitable, products and services."
The role of free trade agreements like NAFTA, covering North America, in helping or hurting U.S. manufacturers has been controversial, to say the least. "NAFTA seems to be a political magnet, with the focus on the perception that it has created job loss," acknowledges Tim Hanley, vice chairman and U.S. Process & Industrial Products Sector leader with Deloitte & Touche, as well as a contributor to the "Made in America" report. But Hanley also points out that nearly half (49 percent) of the 321 manufacturing executives surveyed for the report said that NAFTA has overall had a positive impact on their business, and only 10 percent reported a negative impact. "Our survey would suggest that NAFTA has been very good for business," Hanley says.