The American view

It's easy to forget that the recent credit crunch and subsequent recession has affected just about every civilised nation on the planet.

In this special report, Douglas K Woods, the president of The Association for Manufacturing Technology (AMT) looks at life across the Atlantic as he speculates on the current health of US manufacturing.

It seems that our elected officials in Washington finally understand what the rest of the country has known all along – that a solid, sustainable economic recovery is directly tied to the health of the US manufacturing sector. Over the past two years, our manufacturers and their workers have struggled to survive one of the worst downturns in this country's history. Only now, as these businesses continue to struggle, unemployment persists, and the economy continues to lag, do our public policy makers recognise just how important a role manufacturing plays in America's future growth and prosperity.

It is clear that the credit and confidence obstacles are shifting attention away from where it should be – on innovation and creating the highly skilled, well paid jobs that naturally follow. The United States currently lags behind our trading partners in new fields we should be dominating and that's because we operate in a business and regulatory environment that thwarts our progress.

If we don't redirect our government policy and resources to focus on innovation and R&D, there will be more missed opportunities for American technological leadership and our citizens will ultimately suffer. A June 2010 report on manufacturing global competitiveness from Deloitte and the US Council on competitiveness ranks the United States as fourth in the world behind China, India and Korea and falling to fifth in five years surpassed by Brazil if the federal government doesn't act to level the global playing field.

Cautiously optimistic

There is reason to be cautiously optimistic however as AMT members report continued and solid improvement in the business environment. The Purchasing Managers' Index (PMI), a leading industry indicator, bottomed out in December 2008 and has been above 50 for the past nine months. A PMI greater than 50 suggests an expanding manufacturing sector. Additionally, the PMI has grown faster in the last four months than in the first four months after it broke 50.

Another key indicator, the capacity utilisation rate (the percent of industrial output currently in use) is less positive than the PMI but is showing a ‘slow change' for manufacturing technology with recovery to full health by May 2011, while signalling a growing trend for customer markets.

Finally, AMT's US Manufacturing Technology Consumption Report shows steady improvement in consumption over the last year. The latest report indicates that consumption is up 50% over last year, with the defence, aerospace, energy, medical and automotive sectors rebounding the quickest. Still, one must consider that consumption had fallen off more than 60% during the worst of the slowdown. While this data shows that we are indeed recovering, there is still a long way to go. 

Heart and soul

Here is some perspective. During the boom of the 1950s, manufacturing represented more than a quarter of the country's economy and about a third of employment. Today, manufacturing is only about 12% of the economy and less than 10% of employment. Considering that US companies operate at a 17% cost disadvantage versus their foreign competitors, it is amazing that US manufacturing continues to grow in absolute terms and remain a wellspring of innovation. These companies are truly the heart and soul of our nation.

We must do more to ensure our foundation of economic growth and national security survives and prospers. AMT members still report that limited access to credit, high taxes and burdensome regulations are hindering their ability to compete. Many of these obstacles come at the hands of our own federal government. Manufacturing needs the focused attention of our elected officials if high value jobs are to be created, if our trade deficit is to be reduced, and if we hope to generate the tax receipts to outweigh our spending. Now it is time to turn rhetoric into initiatives and action.

AMT believes that a national Manufacturing Mandate is necessary to cement this recovery and create a strong foundation for sustained economic growth. We are calling for a federal policy of collaboration between government, industry and academia that: incentivises innovation and R&D in new products and manufacturing technologies; assures the availability of capital; increases global competitiveness; minimises structural cost burdens; enhances collaboration between government, academia, and industry; and builds a better educated and trained workforce.

Positive moves

I am confident that it is possible for our government, industry, and academic communities to work together, utilising an infrastructure already in place, to revitalise our manufacturing sector and promote real economic growth. AMT is poised to work with the federal government to help implement a national manufacturing strategy – a Manufacturing Mandate that will establish America as the worldwide leader in next generation manufacturing technologies and the world class products and services they provide.

Congress and the Obama administration have taken some good first steps. Late last year, the administration released its “Manufacturing Framework for Revitalising American Manufacturing.” Since then, the president has focused on increasing exports; supporting R&D and a skilled workforce; and improving credit access as ways to boost manufacturing. Congress has also pledged to act to rebuild manufacturing, but with little time left before the November elections, it is unlikely any significant legislation can be enacted this year. AMT members are not waiting to find out what happens, because ultimately we have a major influence on our own destiny.

Rally cry

From 13-18 September an important industry event sponsored by AMT – the 28th edition of IMTS – The International Manufacturing Technology Show – will take place at Chicago's McCormick Place. IMTS is important because manufacturing is important, and it is unquestionably the largest manufacturing event in the Western Hemisphere. We hope IMTS will inspire manufacturers to put money to work through wise investment in technology.
AMT expects IMTS 2010 to be a real rally cry for the manufacturing technology industry and all of manufacturing – and that's why we are joining forces with the National Association of Manufacturers at IMTS to promote the importance of American manufacturing.

NAM President John Engler and I will share our perspectives on moving manufacturing to the forefront of the public agenda as we stress the importance of innovation to our global competitiveness and showcase the manufacturing technologies of the future that will put Americans back to work and produce the world class goods we need for a quality life. As we begin to see signs of recovery, it is the right time to invest in ourselves and our future and that is what we're hearing from the exhibitors and the thousands of manufacturing professionals registering to attend the show.

With commitment and hard work we believe that US manufacturing's brightest days are still to come, and AMT, our members and our industry partners will play a vital role. That's good news for the whole world.

AMT
www.AMTonline.org Douglas K Woods

Douglas K Woods became president of AMT – The Association for Manufacturing Technology in April 2009. Prior to that, he was president of Parlec Incorporated, an industry leader in precision toolholders, presetters, driven and static tools for multitasking machines, workholding, boring, and tapping products. Parlec operates facilities in Rochester, New York, Nanjing, China and Bristol, England.

After joining Parlec in 2006 as president of Parlec International, Mr Woods assumed responsibility for worldwide operations including the North American manufacturing and engineering operations as President of Parlec Inc. in 2008.

He was previously the president and CEO of Liberty Precision Industries, which he joined in 1990. Under his leadership Liberty grew from a $7 million tool and die company to a $40 million internationally recognised manufacturing company.

Mr Woods started his career as an apprentice toolmaker at Alliance Tool Corporation in 1975 and after receiving a BS in Business from Syracuse University went on to hold several key management positions at Alliance and its parent company Cross & Trecker. He was AMT's chairman of the board of directors in 2005/6 and served on its board of directors from 2000-2808.

He was also active in the Nation Tooling & Machining Association, where he has chaired the Global Marketing Committee and is past president of the Rochester Chapter of the NTMA. In 1994 he was the Upstate New York recipient of the Ernst & Young Entrepreneur of the Year award for Manufacturing Turnarounds.
 

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