A recent report on MarketWatch
highlighted what manufacturing thought leaders already knew: Efforts by politicians and the public sector
to save American manufacturing haven’t worked. In the late 1990s, American
factories were responsible for a quarter of all global manufacturing. Today, U.S.
manufacturers produce just 17% of the world’s manufacturing output.
If nothing changes, that number
is likely to decline even further. The “China Shock” domestic manufacturers
experienced two decades ago will soon expand its footprint. While labor costs
in Asia are still lower than they are in the United States, Africa and other
developing regions are also becoming hubs of low-cost production. China itself
has made significant investments in African infrastructure and manufacturing.
How big? From 2003 to 2019, China’s annual investment in Africa grew from $75M (USD) to $2.7B (USD).
Across the world, labor costs are equalizing, the developing
world is catching up, and U.S. manufacturers face a future defined by an even
more competitive and globalized economy—and it isn’t just investors and plant
owners that should care. Katy George, the author of the MarketWatch piece and
global co-leader of McKinsey & Company’s operations practice, argues that
manufacturing plays a critical role in establishing a healthy, functioning
society.
“The case to strengthen U.S.
manufacturing is simple. Making things matters—to fortify resilience, heighten
competitiveness, and improve standards of living,” said George. “A competitive
and diversified manufacturing sector not only fuels the economy in good times
but helps to keep it functioning during a crisis.” [Read the full McKinsey op-ed]
Even though it is done with the
best of intentions, policymakers have hampered an entire industry’s ability to
remain competitive by investing in preserving antiquated business models,
technology, and training.
America’s manufacturers already know they don’t need the government to solve their problems. But they also know they need to be more competitive. They need manufacturing intelligence that drives actual results. They need accurate data so their operators and managers can make better decisions.
They know genuine change comes from the bottom up.
It comes from an empowered and
engaged operator who can take action to make her machine more efficient, her
plant more profitable, and her community more economically resilient. Even if
she isn’t aware that’s what she is doing. Transformation begins when you invest
in technology that enables you to compete against any competitor in any
part of the world.
The experts at McKinsey say that it is “now or never” for U.S.
manufacturing. If that really is true—if it really is “now or never”—then
domestic producers must do what they have always done: invest in their team, their
plant, and their community.
It’s the best way to ensure that for you and your team, “now” never becomes “never.”
