Advanced manufacturing techniques drive growth, profitability for middle-market manufacturers

July 24, 2013

The nation's 33,000 middle-market manufacturing companies are increasingly leveraging advanced manufacturing techniques to generate increased revenue and productivity growth. A new report released by the National Center for the Middle Market (NCMM), Columbus, Ohio, and the National Association of Manufacturers (NAM), Washington, D.C., indicates that the 47 percent of mid-market manufacturers currently using advanced manufacturing techniques have experienced a 20 percent profitability increase over the last five years. These companies are most frequently leveraging automation, computer technologies, process technologies, and information technologies.

In the past year, mid-market manufacturers using advanced manufacturing techniques reported a 3.4 percent increase in job growth and project employment growth at 4.7 percent in the next 12 months. According to the research, advanced techniques are most commonly leveraged by middle-market companies with annual revenues between $100 million and $1 billion. The report also highlights that vast opportunities to generate further growth remain. According to the 53 percent of companies that have not yet adopted advanced manufacturing techniques, 78 percent indicate they plan to do so in the next three to five years.

The NCMM, a partnership of GE Capital and The Ohio State University's Fisher College of Business, defines the U.S. middle market as companies with annual revenues between $10 million and $1 billion. This sector encompasses nearly 200,000 companies and accounts for nearly one-third of U.S. GDP.

While widespread adoption of new advanced manufacturing techniques is a positive indicator of economic growth, the report also reveals a startling skills gap in the American workforce to fill these jobs. Ninety-five percent of companies using advanced manufacturing techniques reported that innovation has changed recruitment and training methods, and 81 percent of users said demand for skilled manufacturing is significantly higher now than in the past.

Among users, 93 percent reported a skills deficiency, and 74 percent reported deficiencies in science, technology, engineering, and math. Users identified inadequate technology and computer skills, lack of technical skills, and inadequate math skills as top recruitment challenges.

"Through a renewed focus on training and collaboration with education institutions, more mid-market manufacturers may be able to break past this skills gap, but there must be a concerted effort to close this void in order to fully reap the benefits that advanced manufacturing has to offer," said Dr. Anil Makhija, national director for NCMM.

According to Chad Moutray, chief economist for NAM, "Mid-market manufacturing growth reflects the new manufacturing — a sleek, technology-driven sector with exponential power to drive the economy. However, these positive steps have made a skilled workforce more important than ever."

Moutray said that 600,000 manufacturing jobs remain unfilled because employers can't find skilled workers. He believes improving STEM education and enacting comprehensive immigration reform are essential to closing the skills gap.

NCMM, founded in partnership with GE Capital, serves as a source of research on the U.S. middle-market economy. NAM represents small and large manufacturers in every industrial sector in all 50 states.

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