DVIRC Hosts Manufacturing Executives Annual Meeting

September 13, 2013

On August 20, DVIRC hosted its Manufacturing Executives Annual Meeting at White Manor Country Club in Malvern.  The event was an opportunity for regional manufacturing leaders to meet and network, while guest speakers presented information related to U.S. manufacturing trends and the Affordable Care Act.

Guest speakers included Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman & Co., and Mark Raschiatore, Partner at CliftonLarsonAllen.  Their presentations covered the current state of the U.S. manufacturing sector as it relates to the larger economy, as well as an update on the Affordable Care Act.

In a follow-up interview after the event, Chandler expanded a bit on his presentation, “Make Me: Update and Outlook of US Manufacturing.”

As seen in the recent Institute for Supply Management PMI reports, manufacturing has enjoyed measurable growth for much of the last four years.  Checking in at $1.87 trillion in 2012 (up from $1.73 trillion a year before), our manufacturing sector is nearly 12% of GDP and constitutes the 10th largest economy in the world.

What’s more, investments made in manufacturing offer a tantalizing return on investment: every dollar spent on manufacturing adds $1.48 to the economy, a higher multiplier than any other sector.  And with 25% of the world’s manufacturing taking place on U.S. soil, our share of the global whole is roughly equal to that of China, Brazil, Russia, and India combined.

With all of these impressive statistics, then, why do Americans have so much trouble recognizing domestic manufacturing as the opportunity it truly is?

“It’s a matter of confusing jobs with output,” Chandler says.  “People confuse employment in manufacturing with making things.  Only about one-third of those in manufacturing are producing goods.  We see the same issue with farming.  Before World War II, 50% of Americans drew their income from farms, compared to about 2% today.  We still produce a tremendous amount of food—American farmers are now feeding not only Americans but many others abroad.

“We see a similar situation in the steel industry,” he continues. “In 2012, U.S. steel makers produced 14% more steel than they did in 1980, and they did it with roughly one-quarter of the workforce.”

“The custodial engineer at GM still works ‘in manufacturing,’ but we consider that a service job now.  We’ve redefined it. Look at the number of jobs the manufacturing sector supports (17.2 million), compared to those directly employed in manufacturing (12 million).  The sector is punching above its weight because of the employment multiplier effect.”

When it comes to the issue of reshoring, and whether or not those jobs are coming back to stay, Chandler says it’s not that simple.

“I think we should be prepared for job market churn,” he says.  “In any given month there are hundreds of thousands of jobs created and lost.  We need to invest in skills that attract businesses to the U.S.

“We still have a highly skilled workforce (as measured by the percentage of students that go to college) and great schools (as determined by the percentage of students who come here from overseas).  Job insecurity as a result of this churn is a real strain on American families, though.  And it’s not just repetitive tasks.  Look at bank tellers.  That used to be a good, entry-level job.  Now ATMs speak multiple languages and can even sell you stamps.”

And as for preparing the next generation to succeed, Chandler says it’s a matter of managing the shifting needs of a world in the midst of significant transition.

“Consider the fact that General Motors recently hired 4,000 new IT workers, or that 80% of the new hires at Ford this year are technical professionals,” he says.  “Rather than focusing on the job you want, focus on the skillsets you want to develop.  Find those things that can’t be done by a robot.  Medium-term employment outlooks show that the market is likely to add software developers, project managers, and database experts.  We need workers who are creative and innovative.

“Over time, we will see education become more relevant to businesses,” Chandler continues.  “At NYU we had a specialization in Non-Governmental Organizations (NGOs).  Now it’s private sector initiatives.  Schools have to realign and reform.”

In keeping with those sweeping changes, Chandler expects manufacturing as a whole to look quite different in the years to come.

“Historically, we’ve gone from making things by hand to large-scale manufacturing, and then to manufacturing as a process,” he says.  “Now we look to things like Nike’s website, which enables you to design your own custom-made, mass-produced shoes.  The first aspect offers uniqueness, and the second offers low price.”

He points out, however, that the drive for increased demand must be balanced with regard to conservation.

“As goods cycles move faster—think about how many products are ‘old’ after about a year—there’s a need for constant replacement,” Chandler says.  “You have to weigh that against our resources and figure out ways to handle or reuse waste. Think about how there’s one car for every licensed driver in the U.S.  We don’t have the resources to meet that kind of demand in China and India.”

In summarizing the impact of our current manufacturing efforts, Chandler revealed some intriguing insights.  For one, manufacturing efforts receive 66% of research and development investment and generate fully 90% of the patents issued. Additionally, the vast majority of manufactured goods are exported, and the most significant threat to employment is technology, rather than foreign outsourcing.

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“DVIRC is committed to providing U.S. manufacturing leaders with the resources necessary to compete and grow,” says Mark Basla, DVIRC’s Vice President, Marketing & Business Development.  “Offering first-rate business presentations by industry thought leaders helps our clients and networking group members to make informed decisions and grow the value of their businesses. Our executive leadership groups offer many significant benefits specific to meeting the needs of advanced manufacturers.”

The Manufacturing Executives Annual Meeting—and the presentations offered at the August meeting—are just a few examples of the valuable information DVIRC delivers to its clients, as well as members of our Manufacturer’s Council, Executive Forum Group, and other networking groups.

You can download PDF copies of the Brown Brothers Harriman & Co. and CliftonLarsonAllen presentations from the August 20 annual event here.

 [MC1]Kelly to link to .pdf downloads, including photos of Marc and Mark

About BBH

Brown Brothers Harriman (BBH) was founded in 1818 and remains the oldest continuously operated partnership in the United States.  The firm is owned and managed by 41 general partners who assume unlimited liability for the obligations of the firm, and who are caretakers of a tradition of integrity, responsiveness, and superior execution that has lasted for almost 200 years.

About CliftonLarsonAllen

CliftonLarsonAllen is one of very few firms of our size and scope to focus solely on privately held businesses and their owners, public sector organizations, and individuals.  You can depend on CLA for several uncommon advantages, including: specialized industry practices, credibility, reputation, and resources of a top 10 firm without sacrificing the small-firm touch, and professionals who are personally invested in your success.