In a recent interview on Bloomberg Business, Marlin Steel’s CEO, Drew Greenblatt, was asked about the state of manufacturing and how it was affecting Marlin Steel’s business.
How did Marlin’s CEO respond?
Drew Greenblatt responded to the question posed by Bloomberg’s newscasters with optimism and a declaration that the “American manufacturing renaissance is real.”
Why is Marlin Steel so bullish and optimistic about manufacturing? What are some of the challenges that manufacturers will still have to overcome?
Here are some highlights from the Bloomberg Business spotlight that help to explain why Marlin Steel and other American manufacturers are positioned to benefit from recent changes in the economy, and what still needs to be done to keep jobs and the American economy growing:
Trade Deals with Pacific and Atlantic Nations
While the American population is over 300 million strong, 95% of the world’s consumers live in countries outside of the U.S. To keep growing and adding jobs, U.S. manufacturers need to gain access to new clients and markets.
In the interview, Marlin Steel’s CEO noted that the President of the United States has recently begun an aggressive pursuit of trade agreements with foreign nations throughout the Pacific and Atlantic regions. If completed, the Trans-Pacific Partnership (TPP) will eliminate obstacles between American manufacturers and foreign markets.
Opening trade with countries such as China and reducing the duties, taxes, and other fees associated with overseas trade will give American manufacturers unprecedented access to these markets. As noted in the interview, “what’s going to happen is, we’re going to have to hire more talent, in America, in our factories to sell to these wonderful new customers.”
Competing with foreign manufacturers in their home territory will pose a whole new set of challenges for U.S.-based companies, but it will also create a whole new world of business opportunities to build sales and promote growth.
Will the Increase in Manufacturing Business Really Create More Jobs?
In order to meet the increase in demand that comes with opening new markets, many manufacturers will have to add new workers, growing American jobs. Or will they?
During the interview, the show’s hosts brought up the possibility that the creation of more demand for American goods might not translate into new jobs in the manufacturing industry. One point that was brought up was the introduction of factory automation to the American manufacturing process. The concern was that factory automation would eliminate more jobs than increased demand would add.
Thankfully, however, this is not the case. Even a heavily automated manufacturing process still needs people to oversee and maintain the equipment. Assembly tasks need to be set up, robots need to be programmed, and designs still need to be created by a human before the manufacturing robots can start work.
The addition of manufacturing automation moves workers away from the most dangerous manufacturing tasks and allows them to do more rewarding and cerebral work. Additionally, individual workers who use factory automation equipment are many times more efficient than purely manual laborers.
Because these workers are more efficient, manufacturers can afford to pay them more than a less-efficient worker. This means that not only will jobs be added to the manufacturing sector, these jobs will be ones that can pay a living wage which employees can support a family on, not minimum-wage jobs than can’t even pay for a single-room apartment.
Reduced Energy Costs
Another factor that is helping contribute to the American manufacturing renaissance is the current availability of cheap energy generation. With lower energy costs, the overhead expenses of manufacturers based in the U.S. drops as well, allowing them to sell products for less without compromising profit margins.
By creating products for less, manufacturers will be more competitive in overseas markets. This creates opportunities to gain customers in foreign markets and grow business.
Creating a foothold with lower-cost goods may prove critical in creating long-term success and building brand recognition among foreign consumers.
This has been offset somewhat by the strong American dollar, which makes goods more expensive for foreign consumers even when prices are the same as they were before.
The American manufacturing renaissance is here, and the time to take advantage of it is now. Learn how you can improve the efficiency of your manufacturing process to be more competitive in a global market by checking out the free guide at the link below: