Contract Manufacturing: The Key To More Jobs And Higher Wages!

American’s manufacturingAs I shared in my past article manufacturing is the key to a nation’s strength as well as high paying jobs for its workers. There is no better way to ensure that both skilled and unskilled personnel can easily provide for their families than by safeguarding and building a country’s manufacturing base.

Unfortunately, American’s manufacturing base has been dwindling over the past few decades. There have been decent initiatives, such as the manufacturing incubator on Chicago’s Near West Side, which was created in 1980 with only $2.6 million in federal grants. It was the first of its kind in the nation and currently houses 138 businesses including energy bar maker Element Bars.

Additionally, President Obama’s Digital Manufacturing initiative is a step in the right direction. However, a lot more needs to be done. For example, even if a company wants to use an American contract manufacturer to produce their goods and services, there are very few to choose from.

Contract manufacturers make products for other companies that want to focus on the R&D, scientific, engineering, technical and marketing aspects. Unfortunately, there are few contract manufacturers still left in the U.S. and those that do exist generally make parts instead of finished goods! For example, Gateway Manufacturing Inc. still employs 37 people in Mount Sterling, Kentucky to make assorted products such as wooden crates and dog-care items for other companies. However, they do not produce consumer goods such as electronics. For those needs, U.S. companies have to travel to China, where a search for contract manufacturers yields more than 2,000 entries!

contract manufacturer in Shenzhen, ChinaIn China, you can find a specialist to make any product for you. For example, if you wanted to have someone manufacture a new toaster oven for you, there are more than a dozen such contract manufacturers to choose from. Additionally, Chinese contract manufacturers are very flexible in their terms and demands. For example, one of my executive recruiting clients needed a small order of plastic injection molded products. He found a contract manufacturer in Shenzhen, China who was willing to produce a minuscule run of only 500 pieces!

Though most economists and technical recruiters both agree that it doesn’t make much economic sense for the U.S. to try and manufacture everything for everyone, it will help our economy and jobs landscape immensely if we could concentrate on a few select areas of contract manufacturing. This will boost the economic growth for our country and create a lot more high paying jobs for our citizens. It would also reduce our $723 billion trade deficit because we would be buying more American made products instead of sending our dollars overseas to contract manufacturers in China. To that end, our government should focus on incentives to attract U.S. companies towards contract manufacturing.

What are your thoughts?