Manufacturing is America’s core industry. No one can argue its weight, especially now as the country observes the plight of at-risk Americans as the health care community scrambles to provide flu vaccines. The scarcity of flu vaccines is a manufacturing question – an issue related to manufacturing, said Bill Canis, the executive director of the research and education arm of The Manufacturing Institute.
In addition to processing flu vaccines, manufacturing is instrumental in this country in many ways. The Manufacturing Institute says manufacturing’s share of the gross domestic product is 76 percent larger than retail, 10 percent more than professional and business services and 50 percent greater than agriculture, mining, utilities and construction combined. The institute also reported that manufacturing employees earned almost 22 percent more than the national average salary, with the average U.S. full-time worker’s total compensation package at $51,000.
In 2003, manufacturers paid $54 billion in taxes on corporate profits, second only to the finance industry. Manufacturing alone contributes 62 percent to the country’s innovation and research and development.
Yet, taxes, health benefits, litigation, regulations and rising energy prices add about 22 percent to manufacturing productivity costs in the United States, Canis said. And manufacturing has seen the largest decline in jobs (25 percent) in 50 years, he said. “There are four pillars to manufacturing: economic growth – manufacturing is the engine of growth, productivity, total compensation and innovation,” Canis said. “If manufacturing is sick, the rest of the economy cannot be healthy.”
Canis was the keynote luncheon speaker at the Oct. 14 Colorado Springs Manufacturers Task Force workshop, held at the Fine Arts Center. This was the task force’s first workshop and networking opportunity for area manufacturers. The task force was launched in January 2003 to bring awareness to the community about the importance of manufacturing’s presence and to bring synergy to the manufacturing community after local and statewide devastating job and plant losses.
Colorado Springs has lost more than 5,000 manufacturing jobs, exclusive of the 4,000 jobs lost in high-tech, and a total of 50,000 jobs in the state over the last four years. Task force leader Jo Ann Miabella Galvin, a former manufacturing executive, said the task force is driven by local businesses. And many of those businesses were in attendance at the workshop.
Local manufacturers, like Magnum Tool, Pikes Peak Plastics, F&L Finishes, Springs Fabrication, Sanmina-SCI and Qualtek Manufacturing, pioneered the workshop. More than 60 manufacturers were represented at the workshop, which kicked off with facilitator Tom Daschbach, local business leader icon, and Rocky Scott, president and chief executive officer of the Greater Colorado Springs Office of Economic Development.
Scott told the audience that manufacturing cannot be written off in this country, even though its common enemy is “what we are seeing overseas.” He congratulated the task force for its efforts in pulling together and “setting a national example” for the industry as a whole.
Other workshop speakers included Phil Tollefson, the chief executive officer of the Colorado Springs Utilities Department, who presented an overview of the state of his department. Ken Hildebrand, a Georgia-based manager of Lockheed Martin, talked about Lockheed Martin’s place in the manufacturing world, with 130,000 employees worldwide and 2003 annual sales of $31.8 billion.
Mike Hubbell, the plant controller for Sanmina-SCI, a company with $10-billion to-$12 billion in sales, 45,000 employees and 100 international locations, told his fellow manufacturers that “outsourcing is directly related to customer demand for low cost and quality.” He said the best way to survive in a global economy is to “position your company to partner with and maintain alliances in the supply chain.”
Dave Jackson joked with attendees and asked if they knew the difference between the beginning words of a southern and northern fairy tale. “The northern people say ‘once upon a time’ and the southern folks say ‘this ain’t no lie.'” Jackson is the program manager for the U.S. Air Force Manufacturers Technical Assistance Production Program, and he said manufacturers need to change their focus if they want to stay competitive.
The workshop also offered two 35-minute breakout educational sessions including a feedback roundtable session.
Canis reiterated Scott’s words and applauded the task force for its investment in the local manufacturing industry. “U.S. manufacturers are continuing to make more ‘stuff’ than at any other time in the entire history of this country,” he said. While things are generally improving, Canis said, especially related to the growth of business investments, European markets have increased their exports.
The Manufacturing Institute reported that all four top U.S. trade partners – China, Mexico, South Korea and Taiwan – have been increasing their U.S. trade share since 1990. And those countries are directing their efforts toward industrial machinery, telecom equipment and office machines and transportation equipment.
“We are different,” Canis said. “Manufacturing is not the same as other businesses. We have challenges that other businesses don’t. We have no pricing power, and we have cost pressures that we can’t pass on to the consumer, and other businesses aren’t competing internationally like we are.” As production moves overseas, so does the market for the product. Outsourced companies are selling 85-to-90 percent of their products in the markets where they are located, Canis said. “Just 15 percent of those products are being sold in the United States.”
As the baby boomers age, the work force gap is another hurdle to manufacturing. “The media has not portrayed this industry very well,” Canis said. “People don’t want anything to do with this industry.” The institute is establishing pilot programs throughout the country to change that attitude. School-based programs to entice students into the field and national ad campaigns are two ways the industry hopes to enhance its presence in every community.
Communities that embrace manufacturing and provide tax-friendly incentives, a solid infrastructure, an accessible airport and good school systems are those most likely to become manufacturing powerhouses, Canis said.
“The single biggest thing people can do to get on board with manufacturing is to be proactive,” he said. “Reach out to legislators and form collaborations with other manufacturers and other manufacturing groups.”
Daschbach agreed as he thanked workshop lead coordinators Galvin and Darl Hartnett and concluded the day’s program. “It’s the age of collaboration,” Daschbach said. And Galvin said, alongside expanding business opportunities for manufacturers and encouraging cooperative brand marketing efforts, the task force’s theme is “collaborate to compete.”