Manufacturing by Small Businesses - Opportunity for Growth?

Source: Meiklejonh - Freedigitalphotos.net
Source: Meiklejonh - Freedigitalphotos.net

Business magazines and new channels often (but not always) paint a bad picture of the declining state of manufacturing industries in the USA. Even writing this article, it clear that Fed Chairperson Ben Bernanke has stated the US economy is still fragile and not much should expected about its recovery soon. There is nothing wrong with hoping for the best, but the trouble is this statistics quoted many times to draw a conclusion that manufacturing in the USA is in steep, almost irreversible decline. In this article, we make the case that many industries are growing and worth watching them whether for investments or expanding your business interests.

Manufacturing is Growing

In a report published by the Institute of Supply Management, manufacturing has recorded growth for 34 months consecutively as measured by the Purchasing Managers’ Index (PMI). This is a strong signal that manufacturing is growing at a healthy pace. As well as the PMI, Production and Employment Indices also grew with the former registering 58.3% and the later reaching 56.1%. Out of the 18 industries, 15 (listed below) reported growth in March.

* Apparel, Leather & Allied Products

* Nonmetallic Mineral Products

* Primary Metals

* Petroleum & Coal Products

* Paper Products

* Plastics and Rubber Products

* Machinery

* Food, Drink & Tobacco Products

* Miscellaneous Manufacturing

* Printing & Related Support

* Wood Products

* Furniture & Related Products

* Transport Equipment

* Fabricated Metal Products

* Electrical Equipment, Appliances and Components

Several reasons for this growth could be traced to increased demand, stability in the raw material price, and improved consumer confidence. New orders combined with declining inventories have been fueling this growth. Selling prices have also remained stable suggesting there is no to engage in distress selling and liquidation of excess inventories.

Benefits to Small Business Owners

Why is this relevant to small business owners? Small business owners in the USA are benefiting from manufacturing returning from China (read this report). One reason cited is that manufacturing in China is becoming expensive. More importantly, small businesses are able to control their inventories and costs better by using domestic manufacturers.

The United States still holds the lead in the manufacture of niche parts and the confidence in the quality of products produced by small businesses. Perhaps the most compelling arguments made in this report is the shift taking place in the American manufacturing industry. Stung by overseas competition, US manufacturing has moved toward decentralizing itself to a network of specialized firms shedding their size-image. Finally, the concerns on emission, carbon footprints, and global warming have prompted small business owners to migrate towards a greener, sustainable business models.

All these issues have contributed to an upward trajectory in the revival and growth of manufacturing in America. Small businesses are the backbone of America and the road to recovery may well start with the manufacturing.

Resources

Here are a few articles that provide deeper insights into the topic of manufacturing trends in America:

Kavilanz, Parija. “Dumping China for American Job Shops.” CNNMoney. (2/13/12.) http://money.cnn.com/2012/02/13/smallbusiness/American_manufacturing/index.htm?iid=SF_SB_Lead.

Norris, Floyd. “Manufacturing Is Surprising Bright Spot in U.S. Economy.” New York Times. 1/5/12. (2/13/12.) http://www.nytimes.com/2012/01/06/business/us-manufacturing-is-a-bright-spot-for-the-economy.html.

Small Business Labs. “The Rise of Small and Micro Manufacturing.” Emergent Research. 2/7/12. (2/13/12.) http://www.smallbizlabs.com/manufacturing/.

Join the Discussion

If you have experiences, thoughts, or comments about this story? Please tell us! Here are a few questions to start the conversation:

What are your thought about the role government in supporting manufacturing in America? Where can small business owners go to find the expansion capital needed to capitalize on this growing opportunity? What are some tools small businesses can use to augment their resources?

Author

This article is for information purposes only. All trademarks, if any, are acknowledged. The content in this article are the copyright of SCH & Co. © 2012. All rights reserved.

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