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The Comeback Kid: Manufacturing’s U.S. Renaissance

Not only can innovative, green process improvements lower lead times and overproduction, but they also can lead to smarter, more timely purchasing decisions.

By ADAM BECKERMAN, Partner, Habif, Arogeti & Wynne LLP

The U.S. manufacturing renaissance is off and running, there is no denying that, as more and more manufacturing jobs are being brought back to the U.S., and companies are ramping up innovation by incubating new products, services and internal processes. As a matter of fact, in the 2010 Georgia Manufacturing Survey, a bi-annual measure of manufacturing trends, 50 percent of Georgia companies introduced a new or significantly improved product.

Change breeds opportunity and is a constant in this dynamic industry. For example, over the last several years, the cost benefits of manufacturing products overseas has diminished, and overseas companies have seen a cut in their profits, as those countries that were once “developing” are now “developed,” meaning rising wages for workers. Many manufacturers today say they see greater productivity from their U.S. plants over those based overseas. This finding can be attributed to a number of factors, including language barriers, varying time zones, and high rates of turnover and training costs, and the introduction of greater innovation and green practices into the U.S. manufacturing market.

Today, innovation truly is taking the forefront in U.S. manufacturing, as manufacturers look to new, leaner and greener practices to drive their business. A survey conducted by Next Generation Manufacturing found that more than 50 percent of respondents stated that innovation was one of their company’s top three priorities for 2012. In addition, the survey found that, even during the height of the recession, 75 percent of those surveyed had been developing new products over the past three years, while 87 percent indicated they had developed new processes over the past three years. The high percentage of survey respondents who indicated that they are innovating while developing new processes shows that, today, companies are getting rid of inefficiencies and the resulting time waste.

The question remains, however: Are these “green” practices and processes? As consumer demand for green products and practices continues to grow, 66 percent of Next Generation Manufacturing’s survey respondents stated they, too, consider sustainability and green practices as a priority for their company, yet, only 50 percent noted that sustainability and green practices are currently being used in their companies, and 16 percent of respondents noted they were unsure of whether green practices were currently in effect within their company.

In the midst of manufacturing’s sea-change, the increased use of sustainable and green practices is critical as more manufacturing jobs stay in the U.S. and others are re-shored. Not only can innovative, green process improvements lower lead times and overproduction, but they also can lead to smarter, more timely purchasing decisions. During Next Generation Manufacturing’s inaugural event in October 2011, Bill Strang, senior vice president of operations for Toto USA said, “We need to look at every opportunity of taking cost out of the process.”

Overall, it is critical that the push for innovation in manufacturing companies come from the top. Survey results indicate that 63 percent of respondents agree that innovation within their company was being driven by their CEO.

There are no signs that innovation in manufacturing will slow throughout 2012 and into 2013, as 83 percent of c-level executives surveyed indicated their company will invest in new technology in 2012. These investments in technology will then propel innovation into 2013.

We expect manufacturing to continue making a comeback, as more and more manufacturing companies realize the cost savings and tax credits that exist for those companies that chose to keep production in the U.S. or bring back production from abroad.

All survey results were collected among c-level executives at Georgia manufacturing companies, and were collected during Next Generation Manufacturing’s inaugural event in 2011 and during sponsored webinars in January and February of 2012. For more information about Next Generation Manufacturing, please contact Regina Maddox, executive director, at [email protected] or call 404.431.6612, or please visit