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R. L. Polk & Co.’s Ask the Industry Looks at the Future of U.S. Manufacturing

While the reasons the U.S. manufacturing landscape have changed over the past few years are numerous, a few reasons stand out like bright red flags, causing concern for the future of manufacturing in the United States. Among those red flags are the increasing pricing pressures automotive suppliers are experiencing and the increasing presence, and increasing quality, of offshore product — two issues currently putting a serious squeeze on the U.S. manufacturing base. here exactly is U.S. manufacturing headed? Are we destined to become a nation of merely packagers, marketers and retailers?

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by Amy Antenora
Managing Editor, aftermarketNews.com

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AKRON, OHIO — While the reasons the U.S. manufacturing landscape have changed over the past few years are numerous, a few reasons stand out like bright red flags, causing concern for the future of manufacturing in the United States.

Among those red flags are the increasing pricing pressures automotive suppliers are experiencing and the increasing presence, and increasing quality, of offshore product — two issues currently putting a serious squeeze on the U.S. manufacturing base.

Where exactly is U.S. manufacturing headed? Are we destined to become a nation of merely packagers, marketers and retailers?

While U.S. manufacturers are hesitant to speak up about these issues because of their relationships with employees, unions and customers, we look to others involved in the process for their insight. First up, we talked with Gary Kremer, senior vice president for Uni-Select USA. We asked Kremer whether is matters to distributors and jobbers where a part is made.

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“No, as long as the customer is satisfied with the quality and performance of the part,” he said.

The importance of “Made in the USA” is far less influential than it was five years ago, said Kremer. “There are customers, right or wrong, who still do take a position on that, but it’s not influencing decisions about products to be stocked,” he said. “The fundamental driver is the customer and his or her satisfaction with the quality.

“I think people have come to grips with the reality that parts come from everywhere,” said Kremer. “The brand helps you understand who you are going to go to for support, but I don’t think people equate brand to a specific point of manufacturing anymore,” said Kremer.

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While the origin of a part doesn’t seem to matter to distributors and jobbers selling parts, U.S. manufacturers are having to adapt to a changing marketplace that is placing more focus on globalization.

As former Vice President of International Operations & Marketing for Cleveland, Ohio-based Actron Manufacturing Co, William Sinn could speak firsthand about the impacts that offshore product and pricing pressures are having on the U.S. manufacturing base. Yet, he can offer an even more unique perspective from his current position as founder of consulting firm Sinn & Co., which helps small to mid-sized companies successfully take advantage of China as a purchasing resource, manufacturing base and marketing destination.

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According to Sinn, U.S. manufacturers are hesitant to get involved in foreign markets for a number of reasons.

“They worry about the physical distance, the time difference, the language barrier and also the cultural differences,” he said. “I think this is usually what stops a CEO from making the decision sooner to go offshore,” said Sinn. “They tend to drag their feet until the last minute. The problem is, when they finally do make a decision, they have a really short time frame before they start losing either customers or jobs and projects.”

However, Sinn said, U.S. manufacturers are eventually going to have no choice but to become international players if they want to survive. Typically companies look to expand into foreign markets like China, to do business more efficiently and make better profits, after they have tried other options like lean manufacturing.

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“China is like a low cost machine that is available for everybody to use,” said Sinn. “It’s really up to us to go use it.”

While he typically works with companies for at least a year, Sinn said, in his experience, companies he works with are normally ready to start placing orders within six months of setting up business in China.

While on paper it can sound rather clean and simple to utilize foreign markets to increase competitiveness, there is still the lingering concern for U.S. jobs. With all this in mind, what is the future of U.S. manufacturing? According to Sinn, U.S. manufacturers will need to reinvent themselves.

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“Most of the jobs to be lost, are lost already. The major [job loss] period is over, in my opinion,” said Sinn. “There are lower valued jobs lost but we will gain a lot of higher valued jobs, such as in the information and service areas. We need to be innovating.”

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