Marlin Steel Featured in GrayWay for Protecting Manufacturing’s Core

In American Manufacturing

Marlin Steel on December 1, 2017

Manufacturing is skilled work that supports the American economy.What many industry outsiders don’t know about manufacturing is just how many manufacturers are actually small- to medium-size businesses (SMBs) with less than 20 employees. When the average person thinks about manufacturing, they picture the well-known giants; companies like Ford, General Electric, and Boeing, among others.

However, the reality is that the vast majority of manufacturers in America are SMBs, not super-giants. In a recent article on GrayWay featuring Marlin Steel and other manufacturers, it was pointed out that “out of the roughly 251,000 manufacturers in America, about 221,000 of them are considered ‘small- to medium-sized.’”

Why SMB Manufacturers Are Important

Small- to medium-sized manufacturers form the backbone of the American manufacturing industry, completing the supply chains that keep other businesses going and providing jobs to millions of Americans across the country. As the GrayWay article states:

“They are the driving force behind research and development, spending an enormous amount of time and resources on innovating the parts and products of tomorrow… Recent data shows that manufacturing contributed $2.17 trillion to the U.S. economy, representing 12.1 percent of our country’s gross domestic product. This simply would not be possible without the contributions of small-to-medium manufacturers, who constitute nearly 90 percent of the industry.”

Collectively, small manufacturers make enormous contributions to America’s GDP while also providing jobs that pay a living wage—allowing employees to actually pursue the American dream and build a family. This makes the small- and mid-sized manufacturers the core of manufacturing in America.

Protecting Manufacturing’s Core

SMB manufacturing companies face numerous difficulties that make it harder and harder for them to keep their doors open, including:

  • Increased Foreign Competition. American manufacturers have to compete with foreign companies that enjoy many advantages—including unbalanced trade agreements, government subsidies, and considerably fewer regulatory requirements than their American counterparts.
  • Heavy Tax Burdens. As Drew Greenblatt points out in the GrayWay article, “We’re paying taxes at around 40 percent, and that doesn’t include health insurance.” Most SMB manufacturers don’t have access to the same resources that may let them minimize this burden the way larger companies can.
  • Enormous Piles of Paperwork. Regulations are a vital part of protecting workers and the environment. However, too much regulation can strangle productivity and create new costs without doing anything to protect workers or the environment. One example in the GrayWay article that Greenblatt mentions is that “my bank is forced to require that I do a physical inventory audit, which costs me $8,000 a year… They take the audit paperwork, email it to a regulator, who then puts it on a shelf, only to prove that they have done it.” This extraneous inventory does nothing to reduce environmental impacts—in fact, more trees are cut down to generate the paperwork—it’s just spending thousands of dollars to tick a checkbox.
  • Shortages of Skilled Labor. Another concern raised by a manufacturer in the article, Deanna Nelson, was that “we can’t seem to find the skilled labor who want to work in manufacturing.” Fewer and fewer students are being given practical education in shop skills and aren’t being shown what modern manufacturing has to offer. This means fewer high school grads with skills manufacturers would find desirable, and fewer still who think of manufacturing as a good career path.

Reducing Tax and Regulatory Burdens

Regulatory and tax burdens are especially heavy on SMB manufacturers. According to one report featured on the National Association of Manufacturers’ (NAM) website, manufacturers face 297,696 regulatory restrictions!

Merely sifting through this list of regulatory burdens would require a full team of legal experts—and most SMBs cannot afford to retain a large team of experts. This makes it all too easy to miss some minor point from paragraph B of subsection 15A on page 36 of Regulation 100,000 that ends up costing thousands of dollars because of a missing signature.

Many of these regulations are also redundant, effectively covering the same points as existing regulations, while creating new paperwork to fill out. This redundant paperwork wastes time, money, and resources that could be better spent elsewhere.

Worst of all, this high regulatory burden creates an enormous barrier to entry for any entrepreneurs looking to get into the manufacturing industry. Anyone thinking about opening a new factory because they have a passion for building things is going to have serious second thoughts after seeing the Everest-sized mountain of red tape and paperwork attached to running a manufacturing business. This prevents the growth of new companies and the jobs they could bring.

Addressing the Skills Gap

Alleviating the tax and regulatory burdens on SMB manufacturers is the first step in protecting manufacturing’s core, but it isn’t the only thing that needs to be done.

Aside from eliminating burdens, manufacturers need to have access to a pool of qualified talent to grow their workforces and replace retiring workers. The skilled labor shortage in America’s manufacturing industry is keeping manufacturers from filling critical jobs.

To combat this, several things need to happen:

First, the industry as a whole needs to work on updating the image of manufacturing in the 21st century. The outdated image of manufacturing in America is often based on tales of foreign sweatshops and the state of manufacturing at the time of the industrial revolution—not what actual modern factories look like. By having students tour modern factories and discussing the benefits of a manufacturing career with them, manufacturers can help dismiss the outdated image of manufacturing and make it more attractive as a career option.

Second, education programs need to start promoting the skills that help students succeed in a manufacturing career so they can be prepared to take such careers. Shop, computer science, engineering, and the like, are all part of a strong foundation in manufacturing skills that can help students in their real lives. Manufacturers can help students pick up these skills by working with schools to offer after-class programs.

Third, many manufacturers can help close the skills gap by actively working to increase the skills of their existing employees. Marlin Steel invests a significant portion of its payroll budget in offering employees learning opportunities that give them new skills. There’s even a skills matrix chart that everyone in the Marlin factory can look over and see who has what skills, and which skills are the most in demand.

By improving the image of manufacturing, working to get future generations prepared for manufacturing careers, and developing the skills of their current employees, manufacturers can close the skills gap and protect against an ever-uncertain future.

We can all work together to protect manufacturing’s core and, in the process, help the American economy and people grow even stronger.

Contact Marlin Steel

Author: Marlin Steel
Marlin Steel
Marlin Steel is a leading manufacturer of custom‐engineered products from steel wire and sheet metal. Its industrial material handling containers serve many industries including aerospace, defense, medical and automotive.

Search Blog Articles

Recent Posts

Subscribe to Email Updates

Caterpillar