Area manufacturer agrees with national study outlining threats to industry

A national study citing “critical threats” to U.S. manufacturing is on target, according to Michael Barr, president of the Fort Smith Area Manufacturing Executives Association and vice president of operations at Harry G. Barr Co. in Fort Smith.

The American Small Manufacturers Coalition issued a report Thursday (June 11) saying a “serious gap exists” between what U.S. manufacturers must do to remain globally competitive and what the manufacturers are doing.

More than 2,500 U.S. manufacturing firms participated in the Next Generation Manufacturing Study, a research effort coordinated by the coalition and Manufacturing Extension Partnership (MEP) centers. The study, according to the coalition, is the first step in a “long-term effort to help U.S. manufacturers survive the recession” and improve the competitive chances of American manufacturers.

NEXT GENERATION MANUFACTURERS
According to the Next Generation report, “Next Generation Manufacturers” typically have the following in common:
• They invest in strategy development, to include customer-focused innovation.
“Companies identifying themselves as world-class consistently dedicate more resources and people to its strategy implementation.”

• They work closer with organizations and companies “outside the walls of the firm” to push the goals of the firm. This includes having systems in place that recruit and retain the best talent.
“Higher performing manufacturers seek out and engage regional support services better than other manufacturers.”

• They measure results.
“World-class manufacturers are more likely to have measurement systems that are consistently reviewed at the highest levels of the company and shared throughout the organization.”

‘WAKEUP CALL’
Unfortunately, more than 25% of American manufacturers — more than 90,000 firms — are not at or near world-class performance levels in any of the next generation strategies, according to the coalition report.

“The results are a wakeup call,” Michael Klonsinski, ASMC board chair and executive director of the Wisconsin MEP, said in a statement. “The consequences of inaction could trigger even more job losses in manufacturing and ultimately a lower standard of living for all Americans.”

Other findings of the ASMC report includes:
• One third of respondents with less than $10 million in annual revenue are not at or near world-class in any strategy, in contrast to 14% of respondents with more than $100 million in revenue. “In a country where 282,000 small and midsize firms comprise the backbone of the industry, this is a significant threat to U.S. competitiveness and the viability of these companies.”

• Only 16% of respondents rank green/sustainability as highly important to their success over the next five years. Another 16% said it was not important.

• Only 28% of respondents believe global engagement is highly important despite a near-term future in which markets, talent, competitors and partner opportunities are growing faster outside the U.S. than within its borders.

• Measurement systems are inadequately deployed. Even in one of the most fundamental and easiest-to-measure areas – process improvement – 46% of the respondents had no or only ad hoc measurement systems.

FORT SMITH FRONT
Barr said the threats to manufacturers in the Fort Smith area are no different than those mentioned in the study. Primarily, Barr believes the ability to compete on a domestic and international level is a must for small and large manufacturers in the area who seek long-term success.

“It is overly simplistic to want to turn away from manufacturing jobs because of the competitiveness. Manufacturers must find ways to remain competitive. The strategies laid out in the study are spot on and smaller firms must make long term focus priority one if we are to successfully transform into faster and more flexible industries,” Barr explained.

A good network of highways, good workforce and support from the University of Arkansas at Fort Smith are an advantage for manufacturers in the Fort Smith region, according to Barr. Support from Arkansas Manufacturing Solutions and the UAFS “provide a wealth of opportunities to help companies develop the strategic leadership necessary” to acquire the traits of Next Generation Manufacturers, Barr added.

However, he does suggest the region can do more to help “by providing a talent pool and resources to stay at the forefront of innovation.”

Barr said the MEA was instrumental in creating the Workforce Leadership Program at UAFS, and the MEA has helped its membership receive more than $15,000 in state funds in recent months for workforce training.

Barr also offered the following insight:
• “The speed of innovation and development is not going to slow down. Firms must be proactive in positioning their businesses to be at the forefront of innovation, whether we are talking about product development or company infrastructure.”

• “One of the biggest differences between large and small manufacturers is resources and not simply monetary. Larger firms have time and talent to dedicate to long term planning and development. Smaller firms leaders usually have larger roles and responsibilities day to day, thus are generally not as prepared for the long term issues of succession, continuous improvement, and innovation.”

TRANSFORMATION
Klonsinski, the ASMC board chair and executive director of the Wisconsin MEP, said manufacturing is too important to the U.S. economy to ignore the challenges. The coalition says manufacturing employs 13 million Americans and drives job growth in logistics, marketing, transportation and business services.

“Manufactured goods represent two-thirds of U.S. exports and drive more net wealth creation than any other sector. Yet even before the recession, the nation’s manufacturers were facing intense international competition and a host of other challenges,” according to the coalition press release.

Klonsinski said there are signs that manufacturers are beginning to see the need to transform into a more flexible sector so that it can capture more of the global market share.

“The good news is that many manufacturers are already adopting next generation strategies and becoming stronger, more profitable firms as a result. The challenges we’re facing are real but not insurmountable,” Klonsinski said in the statement.