MFG.com Releases MFGWatch 2016 Report and Forecast
Buyers’ and suppliers’ insights bring manufacturing industry trends into focus.
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MFG.com, an online manufacturing marketplace, has released the MFGWatch 2016 Report and Forecast, a source of insights into the current status of North American manufacturing and key emerging trends.
Based on survey results reflecting the perspectives of both sourcing professionals and contract manufacturers, the report outlines major issues shaping the state of U.S. manufacturing today. According to the results, both U.S. buyers and manufacturers see 2016 as a year of growth for their firms. This shared optimism is fueling investments in the workforce, technology and new manufacturing processes to increase competitive advantage. Interestingly, sourcing professionals intend to focus on maintaining or growing their supply base in 2016. Contract manufacturers, on the other hand, see product quality compliance as a pressing concern to be addressed through the certification process.
Among U.S.-based contract manufacturers, which of the following best describes your company’s intentions for hiring and technology investment in 2016?
In its sixth year, the report indicates the lowest-ever rate of reshoring to the United States, with just 13% of sourcing professionals reporting they moved any portion of sourcing into North America from a low-cost country. However, there was a significant movement of manufacturing away from China to Eastern Europe and North African countries. Anecdotally, wage rises in some sectors of China saw increases of 10-15% each six months to keep people because or extreme competition.
“In the late 2000s we saw manufacturers flock to China as way to get products cheaper, but for many that move didn’t return the results they were looking for,” said Bo Hagler, chief executive officer, MFG.com. “China’s wages are rising, the quality might not be ideal, and logistics costs are increasing. It looked like good news for the United States and just as people thought the pendulum was swinging back, someone took a right turn and ended up in Europe, so it was not such good news for the U.S. as some once thought.”
Hagler explained that buyers need different solutions for different parts, and those with any amount of complexity are more likely to stay in or return to the U.S. where there is better confidence in and access to suppliers. If it is not complex and quality and timeliness are not as critical, there is still a need for a low-cost solution, he said. As Eastern Europe advances, Hagler said many companies are finding a well-educated workforce that speaks good English and is still less expensive.
“Buyers that need to source parts overseas are becoming more savvy,” Hagler said. “They a doing their homework when it comes to doing business abroad and have a better understanding of whether it makes more sense for parts and products to be made here, there, or somewhere else.”
Hagler also noted that 57% of U.S. contract manufacturers reported that websites were a key method for attracting new leads globally, trumping all other marketing efforts including direct sales (55%).
What marketing methods did you use to attract new leads in 2015?
“The market is still learning how to pair companies and clients in this space,” Hagler said. “It’s an area for growth and increasing sophistication, even between U.S. companies. If you have done business in the Northeast, how do you find someone in Arizona who might be a good match?”
MFG.com deployed two 13-question online surveys, with one tool designed for sourcing professionals and the other for manufacturers. MFG.com limited the survey pool to companies that had used its Global Contract Manufacturing Marketplace. In total, more than 76,000 surveys were sent. The response rate was approximately 1% for buyers and 3% for manufacturers. Notably, respondents represented the aerospace, automotive, medical, defense, consumer product, machinery, electronics, energy and communications verticals.
Click here to download a free PDF version of the complete report.
About the AuthorJosh Bond, Senior Editor Josh Bond is Senior Editor for Modern, and was formerly Modern’s lift truck columnist and associate editor. He has a degree in Journalism from Keene State College and has studied business management at Franklin Pierce University.
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