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5 Big Problems Faced By Small-To-Medium US Manufacturers

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When people think of manufacturing in the US, they often imagine huge plants hiring thousands of workers. While this may be true for some industries, like automobile manufacturers, for example, most manufacturers in the US are small to medium sized enterprises.

This trend began in the early 1980s and gained considerable momentum in the early 1990s. Today, more than half of the US manufacturing sector has less than five hundred employees.

The smaller businesses include job shop manufacturers, commodity product manufacturers, and high-tech manufacturers. Job shop manufacturers focus on things like machining, commodity manufacturers on things like houseware products, and high-tech manufacturers on things like medical devices.

Here are some of the most common issues facing small-to-medium US manufacturers today:

1. Technical issues.

Manufacturing is a complex industrial activity that can often come to a complete standstill when there are unforeseen technical issues with machinery, mechanisms or processes. If these aren’t quickly resolved, they can result in business closures. Fortunately, in some cases, America’s penchant for innovation can sometimes save the day.

A classic example of how innovation can turn things around occurred last year.

In its first year in business, a Florida Rock Industries management team faced a huge problem at their rock plant in Newberry when the high moisture content of raw materials caused a processing flow problem. In addition to moisture levels between 11 and 13 percent, the raw feed mixture had high levels of clay and silica content.

The combination of high moisture with clay and silica often caused material to plug up and completely stop processing. As a result, the mill had to be shut down every eight or ten hours so that the maintenance team could work around the clock to clear out the plug. The management team decided to ask the AJ Weller Corporation, a 25-year old company from Shreveport, Louisiana, for help because it had a developed a sterling reputation for solving apparently intractable wear problems. As reported on ajweller.com, after researching the reasons for the plug up, engineers identified the constraining issues and resolved the problem by customizing their WellerCLAD HYPOL® product to rectify the Florida Rock company’s flow processing problem.

2. A small customer base.

Small manufacturers often have a small customer base because of their limited resources it takes to make a large number of products. Consequently, they are often dependent on each customer to ensure a steady revenue stream. If even one customer decides to discontinue the use of their services, this can create a serious cash-flow problem.

Since these are lean manufacturing companies, they have limited resources. They are often short of human resource personnel and engineers, struggle with marketing and don’t have enough legal protection. This makes them vulnerable to all sorts of problems ranging from failing to comply with workforce regulations to liability issues related to their products or services.

As SME’s, they often have to focus their capital on operations, which leaves them with insufficient funding for better equipment and facilities. In addition, they often don’t have a sophisticated marketing and sales process to grow their business.

3. Difficulty in Finding Good Employees.

There is often a huge lack of interest among high school students in working in the manufacturing industries. As a result, many people who join the manufacturing industries often graduated from high school without basic reading, writing, and mathematics skills required for the job.

This problem of a poorly educated workforce is due to two reasons:

The first is that vocational education training is on the decline in the US.

The second is that high schools often struggle with limited funding. Consequently, they often cut shop classes because these are more expensive because of safety and insurance costs. High schools find it much cheaper and convenient to invest in computer laboratories than in shop classes.

The lack of trained and well-educated production workers is one of the major problems facing small manufacturers.

Finding people with a good work ethic is also problematic.

In an article entitled Facing down the Biggest Challenges in Manufacturing Today, Tom Bonine, the President of National Metal Fabricators, explains:

“No doubt about it, the top problem facing manufacturing, especially traditional manufacturing, is finding good people for your shop. In fact, I’d go so far as to say that this has been the top challenge in manufacturing for more than the last 10 years. The sad part is that it is not necessarily a lack of educated or skilled workers (although that is an issue, too), but it’s mostly a matter of finding people who have a good work ethic.”

4. Insufficient investment funding for research and development.

Investor capital has moved more toward funding digital innovations over paying for research and development costs in the manufacturing industry. This is because costs are lower and returns higher when investing in high-tech industries.

5. Increased global competition.

Overseas manufacturers produce top level electronic, metal, and plastic commodities that are imported into the American marketplace. Since these are often sold at a cheaper price due to lower labor costs, it is difficult for American manufacturers to stay competitive. In addition, lower labor costs overseas also mean that many large corporations would rather work with overseas companies rather than local manufacturers to produce the parts they need for their business.

Although US manufacturers are struggling with unprecedented challenges, they can still overcome these through a resurgence of ingenuity, innovation, and improved manufacturing processes.

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Young Upstarts is a business and technology blog that champions new ideas, innovation and entrepreneurship. It focuses on highlighting young people and small businesses, celebrating their vision and role in changing the world with their ideas, products and services.

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