FABTECH in Chicago represents some of the fastest growing segments in U.S. manufacturing today, including laser marking and automation. Attendees are the ultimate users of many of the technologies we work in: laser diodes, optical assemblies, laser steering systems, coating technology, and capital equipment. Yet many of these companies know little about the end application and the users’ needs.
Understanding the end customers’ concerns, goals, and drivers can help you to create value.
3 Top Challenges Facing American Manufacturers
Economic reports confirm what speakers and attendees voiced as challenges:
- Global competitive pressures
In the “State of the Industry” panel discussion, speakers Dr. Chris Kuehl, Managing Director for Armada Corporate Intelligence, and Chad Syverson, Professor of Economics with the University of Chicago Booth School of Business, shared their take on these concerns and what capital equipment and component companies can do to help address them.
Syverson suggests that we’re in the “lull between two waves” in productivity. Much like how the introduction of computers created some initial productivity uptick—and then a decade of slowdown before companies really rethought how they operated—automation, additive manufacturing, and AI are having a similar impact, resulting in a productivity growth rate cut by half since the 2000s. This slowdown translates to $10,000 per person in lost GDP. Manufacturers must pick and choose where and how to implement emerging technologies, and companies that can specifically address and achieve productivity gains will win the sale.
Kuehl and Syverson also noted the shift toward a domestically driven economy. The unit/wage gap between the U.S. and China closed by half in the last decade. More and more companies will be reshoring, especially for products with a high transport cost.
The U.S. is also exporting less and opening up to more imports. Thoughtful positioning will be crucial to combating “import prestige” and communicating value in the domestic market. Companies that focus on innovation and establishing a true differentiator will have the most success. Many companies, including those we work with, are winning customers by keeping precision manufacturing here.
What should manufacturers do?
Kuehl states, "Marketing is important. As an economist it pains me to say this. It's finding a way to communicate what you do and why it's important. It also is important in recruiting. The more people who know you and see you as innovators, the easier it will be for you to get talent." Kuehl argues that advanced manufacturers must look at the “totality of business” and tell a story that creates value for their customers.
Syverson says it’s up to them to "make value for America." Think holistically about your manufacturing; design it to be as valuable as possible to your customer. It involves a lot of interfacing with your customer and understanding their needs.
3 Top Opportunities for American Manufacturers
With 3% growth in the third quarter and 3.6% in second, economic growth is slow but steady. In particular, speakers believe we’ll see industry growth in:
- Automotive—the hurricanes alone will create demand for 4M new cars
- Boomer-driven industries, like assisted living and healthcare
Smaller manufacturers have a real opportunity; they’re nimble and able to differentiate on innovation. In an increasingly digital world, they’re able to establish themselves as thought leaders and create a brand without the traditional ad spend and budgets other marketing channels require.