Throughout the United States, considerable amounts of public and private funds are being directed towards the emerging semiconductor chip sector. Prompted by the bipartisan CHIPS and Science Act passed last year, both the industry and the government are collaborating closely to enhance domestic manufacturing. This effort aims to secure a foothold in a future-oriented industry and ensure a dependable domestic supply of these vital components, especially amidst escalating tensions with China and growing concerns about Taiwan's autonomy. Despite the substantial influx of public and private investments, challenges persist in establishing a homegrown semiconductor industry. These challenges encompass setbacks like regulatory delays, gaps in the labor market, and disruptions in the supply chain driven by geopolitical factors. The outcome of this industry's endeavors could yield extensive implications for American enterprises and individuals, influencing various aspects ranging from the technology job market and the availability of electronics to the economic trajectory of the emerging industrial region.

“The American Dream” had to come from somewhere, right? If you’re keen on American history, you’re aware of the blood, sweat, and tears that went into the creation of America’s “more to life” mindset. America’s founding fathers sought freedom from the status quo of the British regime. They wanted to live how they saw fit, even if their loyalist relatives and neighbors disagreed. So, they got to work creating a world around them that catered to their way of life, and eventually declared independence from the British crown altogether. In doing so, they created the nation that ultimately became the place where dreams turn into realities.

This land is your land, this land is my land.

We performed a survey of our current customer base and found that our customers are overwhelmingly producing and sourcing within the United States. This is a result of our focus on our core mission of revitalizing US manufacturing. We’re resonating with a significant portion of the supply chain that wants to localize production and is ready to innovate to make it happen.

Reshoring is a hot topic due to the shocks to the supply chain over the past few years. Maybe you’re considering reshoring, but aren’t sure if it will be worth the trouble. What are the benefits of reshoring which so many people are saying you should be doing?

Companies often ask us why we only focus on providing our on-demand labor marketplace for the manufacturing and logistics industries in the United States.

Back in early 2020, I published a couple articles aimed at encouraging US Manufacturers to stay the course and go on the offensive while global supply chains hemorrhaged amidst geopolitical turmoil. Now is the Time to Take it Back and Manufacturing Companies, Keep the Faith and Soldier On were calls to action during a time of great confusion and chaos – periods which have consistently proven to be the right time to rise above the noise and come out on the winning side.

US manufacturing has a problem. It’s not attracting enough workers, and its output lags behind where it needs to be if we are going to bring productive power back onto our shores en masse. What would otherwise be a simple equation has become muddled with variables and complexities that leave us worse off, as the global supply chain has shown us in the past year. US manufacturing is stuck in a giant Rube Goldberg machine, propped up by tinier complexities at the individual facility level.

Uncertainty is plaguing everyone’s world view now with how the past year has unfolded and how that will project forward into the future. One thing is for certain, top operations leaders share similar concerns as they evaluate their business driving into 2021. In this recent Supply Chain Dive opinion poll, executive leaders voted on their top concerns:  

US Manufacturing is lagging behind the overall economy in growth, according to the Institute for Supply Management’s Purchasing Managers Index (PMI). The sector is seeing limited growth, however, with a PMI above 60%. 

The US Department of Commerce's GDP analysis of manufacturing estimates the industry represents ~11% of the economy and has 1.4x multiplier effect for every dollar spent.  Those figures are already quite significant; however, this article outlines research from the MAPI showing that the US manufacturing sector’s economic contribution is actually 32% and has a multiplier effect of 3.6x for every dollar created. Suffice to say, US manufacturing creates significant economic contribution to our national economy as a whole, as well as local economies across the country.

US Manufacturing is resilient and has never been in a better position to reclaim what was previously given away, as discussed in Now is the Time to Take It Back.  Outsourcing inherently introduces significant risks to service and quality, and the calculations typically used to make the case to outsource are highly inaccurate and overstated; even a 20-30% miscalculation would single-handedly negate any potential savings.  Any remaining cost gaps can easily be solved for by leveraging lean methodology to eliminate waste.  This concept of Leanshoring is already happening around the country, led by those willing to do the work by aggressively and creatively finding lasting solutions that solve the real problem all businesses face: waste. 

There’s an old adage, “fool me once, shame on you, fool me twice…shame on me”.   Side note, I can’t help but read that in George W Bush’s accent and chuckle.  Looking at the world around us, it’s safe to say industry and society were collectively taken by surprise.  The effects are evident across everything from the price of crude, to the number of jobless claims, to the visible impact on the supply chain.  Despite all of that, manufacturers and distributors are still being called on to answer the bell and produce and deliver goods with minimal disruption.  

Two weeks ago we published a blog called Now is the Time to Take it Back which serves as our overall call to action for manufacturers in 2020.  We exposed that the over-rotation on outsourcing to China over the last 40 years – particularly over the last 17 years – is responsible for the lack of supply chain resiliency we’re experiencing right now as well as the hollowing out of US manufacturing workers.  Automation is not the culprit and never will be.  The real culprit is bureaucratic complacency (and complicity) influenced by the invisible hand of central banks.  Neither of which is the fault of the American Company or the American Worker.

Supply Chain Resilience amidst the Coronavirus

Now is the time for US manufacturers to take back what’s been given away.  The current Coronavirus related global supply chain disruptions are exposing what we all already knew: we have drastically over-rotated on Chinese buy and left our supply chains vulnerable and unstable.  Every company I have spoken to in the last month is feeling the impact and currently scrambling to rebalance their spend – this is the time to reclaim volume and US manufacturers must rise to the occasion.  Put yourself out there and get that volume back.  Get aggressive and reassert yourself as the top supplier again.  You can do it.  A lot has changed in the last 20 years and now is the time to usher in that previously elusive US manufacturing renaissance.

The skills gap problem

The manufacturing industry is booming, and soon there will be more jobs than workers.   Where have all the workers gone?  They are retiring at an alarming rate, and the manufacturing industry has failed to appeal to the younger generations. Traditionally, manufacturers have looked to technical schools, unions or apprenticeship programs to provide skilled labor. The problem with these traditional models is they aren’t working for the new workforce.  The training and apprenticeship programs are too long, too expensive and have too much turnover.

The New Manufacturing Environment

At Veryable, we refer to it as "The Amazon Effect."  If you own or operate a manufacturing business today, you may not be familiar with this phrase but you are most likely experiencing its impact.  The Amazon Effect alludes to the rapid increase in customer expectations across all industries and sectors: short lead times, high on-time delivery, customized products and services, shorter product life cycles, and personalized customer service.  In short, having a custom product on your doorstep within days is the new bar for customer expectations.

On-demand labor gives small and medium sized businesses the flexibility needed to grow and manage costs.  No one feels the effects of capacity constraints more than small businesses.  Orders are often turned down or missed, costs are often inflated during lulls in demand, and administrative costs around hiring/firing put unnecessary burdens on an already challenging cost structure.  Veryable’s on-demand marketplace aims to address these core challenges for businesses.

There are so many reasons to love manufacturing. We thought it would be a good idea to share some of our favorite things we love about this industry:

The November jobs report released last week showed another step in the right direction for the U.S. economy as unemployment rate fell to 4.6%, the lowest level since 2007.  The economy added 178,000 jobs in November continuing the momentum that has kept unemployment rates steadily at or below 5% throughout 2016.  The primary factors behind the unemployment rate improvement in November: number of jobless workers decreased, number of people with jobs increased, and the total size of the labor force decreased.  Yes, that third point counts as a “good guy” in the calculation – that the size of the labor force decreased.

If you poll any CEO today and ask him or her “what keeps you up at night?” chances are you will get a response that relates to at least one of a small number of “global megatrends.”  These megatrends represent the large scale transformative developments that are currently reshaping the global economic and commercial landscape.

In the wake of the presidential election, there has been a lot of talk about the loss of U.S. manufacturing jobs and how to bring them back.  The issue is heavily politicized so it is nearly impossible to hear an honest and factual discussion from politicians or the media.  You will often hear these groups offer explanations referencing the effects trade deals, taxes, and automation – while these factors have had an impact, they are not the main culprit.

CNN produced a nice summary of the current state of U.S. manufacturing in light of some recent comments coming out of the presidential race.  The article succinctly points out that U.S. manufacturing sector is achieving record levels of output across many sectors, while at the same time, Donald Trump contends that “we don’t make our product anymore.”  Can they both be right?