Bringing Perspective to 2011 Manufacturing

American manufacturing companies will continue to face an uphill battle in 2011, although it looks like the slope is flattening out. The economy is expected to grow about 2.7 percent, and there are recent indications that seasonal consumer year end spending was up substantially.

However, the modest increases in growth and demand are causing most businesses to be cautious when it comes to hiring. Long-term unemployment of nearly 10 percent weighs on the economy. In an early December 2010 interview on CBS' "60 Minutes," Federal Reserve Chairman Ben Bernanke said, "it could be four or five years before we are back to a more normal unemployment rate, somewhere in the vicinity of say 5 percent or 6 percent."

"We've been through recessions before, but the length and depth of the current downturn is different this time," said John D. Littler, president & CEO, Littler Diecast Corporation, Albany, Ind. He acknowledged that unlike his grandparents' generation, it's tougher to wait for a recovering economy to right itself. "With today's global competition and global reach, hesitation could cost many manufacturing executives their businesses in 2011 as more aggressive companies take market share."

According to Littler, the global economy forces many U. S. manufacturers to confront problems unlike those faced by previous generations. These new realities include low-wage offshore suppliers, the rising cost of transportation, especially as oil prices remain in flux, and the availability of affordable raw materials as rapidly developing economies in the Asia-Pacific rim and Eastern Europe compete for supplies.

Many of these factors are obviously beyond the control of individual companies. Therefore, manufacturing companies should focus on the aspects of their business that they can affect. Improving on what have been shrinking margins is the number one concern for forward-looking industrials as they plot their strategies for 2011. With fewer resources available for re-investing in plant and equipment ­- and fewer marketing dollars available to leverage a smaller number of opportunities ­ today's companies cannot afford to make many mistakes either in plant improvements or wasted marketing and sales efforts.