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Insular US producers face bleak future
The beleaguered US manufacturing sector is in danger of suffering another blow, with nearly one in three companies at risk of going out of business unless they engage more with the global economy, the sector's trade body will warn today. By Hal Weitzman in Chicago and Francesco Guerrera in New,York, Financial Times. Published: Dec 19, 2007
A survey of small and medium-sized US manufacturers - co-sponsored by the National Association of Manufacturers and RSM McGladrey, the consultants - found that about 30 per cent reported no sales outside the US and do not purchase any materials or components internationally.
More than 60 per cent said less than 10 per cent of their sales or their components came from abroad.
"These manufacturers are at risk," said John Engler, president of Nam. "If they don't get into the international marketplace, they'll find it increasingly difficult to survive."
Small and medium-sized com-panies, those employing fewer than 2,000 workers, account for 40 per cent of all US manufacturing production and make up 99 per cent of US manufacturing com-panies, according to Nam.
Over the past 15 years, US manufacturers have lost thousands of jobs and millions of dollars in sales to rivals from low-cost developing countries. Large manufacturers such as General Electric, Caterpillar and Deere have offset falling sales at home by increasing their market share internationally, driven by growth in emerging economies and the weak dollar. The report suggests smaller companies are failing to keep up.
"Small and medium-sized manufacturers in Europe are much more export-oriented than American firms," said Frank Vargo, Nam's vice-president for international economic affairs.
The organisation will also urge manufacturers to take advantage of recent concerns about Chinese products to stress the quality of their goods and processes.
The report will suggest immediate action to exploit this sentiment. "As regulators take harder looks at imports, particularly from China, SMMs (small and medium manufacturers) need to strike now - and offer competitively priced products with the service and support levels that -customers can't get from manufacturers in low-cost regions," it says.
Tony Raimondo, who turned Behlen Manufacturing, an agricultural equipment-maker in Nebraska that employs 1,100 people, from a loss-making company into a profitable venture by refocusing on global opportunities, said he is not surprised at the sector's lack of global engagement.
"If you're a small manufacturer your day-to-day challenges tend to be overwhelming," he said. "That makes it hard to say: 'On top of all this I need to go overseas and do things that I don't have any idea how to do.'
