Growing a Manufacturing Business
Focus on customers, innovation, best practices for success
While it may seem that manufacturing is fleeing the United States to Asia and Mexico, the truth is that manufacturing is growing in the U.S. What's changing is what is manufactured and how it is done:- Low-cost, low-complexity manufacturing is moving offshore. Products with high complexity and intellectual property content still command a high enough price to be manufactured profitably in the United States.
- Increasingly, manufacturers can't compete on price. Their advantage comes from solving customers' problems.
- Technology is moving so quickly that you can plan on your products being obsolete very soon after they hit the market. Have a product-development process in place so that new products are rolling out quickly.
Build a network of support
Government and trade associations can connect you with expert advice and networking opportunities.
Try: The federal-state Manufacturing Extension Partnership offers consulting and training to small manufacturers.Members of the National Association of Manufacturers can get advice from the Peer Resource Network.
Study the leaders
Look to large, successful manufacturers for inspiration. Toyota Motor Corp. pioneered lean manufacturing and just-in-time delivery.
Try: Read The Toyota Way by Jeffery Liker or research from The Lean Enterprise Institute.
Be Prepared For Growth
One of the biggest pitfalls for small manufacturers is not having enough capacity when demand soars. This means lost profits and customers. Consider making agreements in advance with contract manufacturers for when demand spikes or to use idle capacity at a non-competitive plant.
Try: Nypro, a plastics specialist, is one of the biggest contract manufacturers. Pivot International provides contract manufacturing and other services.
- It's dangerous to rely on one or two major customers for most of your business, particularly if they are public companies whose fortunes can change quickly.
- Metals producers have found new customers in the energy market because metal tubing is being used to tap idle oil and gas wells. Keep an eye out for new applications for existing products.
- Chances are, your products will be sold overseas. In terms of product liability, materials compliance, etc., go with the most stringent global standard. That way, you can respond quickly to new market opportunities without reengineering your products.
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