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Study: Opportunities and Challenges for Small, Midsized Manufacturing Businesses

May 07, 2015, 07:02 AM
Filed Under: Manufacturing

Bank of the West announced the publication of "Made Here: The Business Outlook for U.S. Manufacturing," a paper by the Bank's Chief Economist Dr. Scott Anderson, which highlights the bright economic outlook for small to midsized U.S. manufacturers, the unique challenges they face, and how their proximity to U.S. customers provides a strong competitive advantage over overseas manufacturers and is fueling the American manufacturing revival.

Various economic factors have contributed to a resurgence in U.S. manufacturing, including greater access to credit, rising labor costs overseas and productivity improvements in the US.  The result is that manufacturing output per U.S. employee hour has more than doubled over the past two decades. The manufacturing  sector now has a strong long-term outlook with a rapidly shrinking cost differential between overseas manufacturers such as China, a chief competitor.

The manufacturing sector currently faces key short term economic challenges; the strong U.S. dollar, the plunge in crude oil prices, and a hard winter drove a modest manufacturing slowdown. U.S. manufacturers  also face safety and environment regulations, high corporate tax rates and a talent crunch versus overseas competitors. However, despite the relatively high costs associated with regulations, taxes, and labor, the U.S. manufacturing sector is showing healthy growth. Seven years after the economic crisis, U.S. manufacturers are now out-performing the economy overall.

"Proximity to U.S. customers provides a competitive advantage by enabling small to midsized American manufacturers to provide customized products, value-added inventory management and quick delivery—things U.S. customers value highly.  And this is helping fuel a manufacturing revival in the U.S.," said Scott Anderson, Ph.D., Senior Vice President and Chief Economist for Bank of the West.

Bank of the West's small and midsized manufacturing clients were interviewed to understand specifically how U.S. manufacturers' close proximity to their customers positively impacts their businesses.

To read the full whitepaper, Made Here: The Business Outlook for U.S. Manufacturing, click here.

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