Did you know that small and mid-sized enterprises (SMEs) represent nearly 99% of manufacturing firms in the US? While doing a little research for west elm’s LOCAL program, we learned this amazing fact from the Manufacturing Extension Partnership (MEP), a nationwide network of local experts.
As shipping and production costs fluctuate overseas, working with American manufacturers offers many benefits. Some pluses—like job creation and savings on shipping—are obvious, while other benefits—like tax incentives and lower compliance risks—are more nuanced.
For a deeper dive into the issues, we asked MEP partners Elena Garuc (FuzeHub, New York) along with Gene Russell and Bill Browne (Manex, Northern California): What are the benefits attracting small businesses to the American-made movement?
1. Pride of Place
Elena: “It’s important to preserve your pride of place. Your product isn’t just Made in America, as important as that is. You’re also supporting local economies, jobs and communities.”
Gene & Bill: “There are a lot of factors to consider: risk, time to market, quality, consistency, skill, freight, site visits, inventory levels, responsiveness, compliances, regulations, taxes, innovation, etc. When you add them all up, made in the USA is often the best choice.”
2. Job Creation & Tax Incentives
Elena: “Small businesses can support Made in America manufacturing by hiring locally. This is especially in true in New York City, where under-represented workforces are seeking careers and good-paying jobs. You can bring unique skillsets into your business by hiring veterans or disabled workers, and those hires can also help manufacturers qualify for incentives and tax credits to contain costs.”
Gene & Bill: “Local tax incentives can sometimes make staying close to home a better decision than offshoring, not just for hiring staff but also for working with suppliers.”
3. Shorter Distances & Lead Times
Elena: “Distance is money. When a small business owner chooses a local or regional manufacturer, shipping costs are less. Lead times are, too. Shipping costs, especially when ocean transportation is required, add up. And if deadlines are missed, there’s the possibility of losing your customer.”
Gene & Bill: “If you manufacture your product in the US, you also have much lower site visit costs for meetings & inspections.”
4. Quality Control
Elena: “If a small business owner sends production overseas and doesn’t specify product requirements to the finest detail, the offshore manufacturer may fill in the blanks in a way that undermines quality and compliance. In turn, that increases costs.”
Gene & Bill: “Higher product quality and consistency are key. Smart companies help their suppliers establish quality systems in house to catch defects before they’re made and shipped.”
Elena: “American manufacturers are cost-effective rather than cost-prohibitive because of their expertise. By choosing a true manufacturing partner instead of just a parts provider, you can try new equipment or get help with tooling or part designs.”
Gene & Bill: “To draw on American expertise, MEP offers a Supplier Scouting service where we use our network of MEP Centers and partners to help identify qualified suppliers to meet a company’s specifications. We work with over 30,000 small manufacturers every year.”
6. Innovative Problem-Solving
Elena: “Small and medium-sized enterprises (SMEs) come to us with a lot of challenges. For example, in New York, property (especially land use and the redevelopment of industrial real estate) are key supply chain issues. In New York City, where property prices are higher, vertical manufacturing can offer a solution. Instead of building a large, wide, one-story facility, SMEs can occupy multiple floors in an existing building.”
Gene & Bill: “MEP Centers offer services that can also help small companies find technology solutions to problems (Tech Scouting). Technology-driven market intelligence helps people find new markets for their current or future products. So, it’s a focused approach to design and development rather than just hoping that someone will buy a product.”
7. Small-Batch Production
Elena: “American manufacturers are especially cost-competitive with small batch manufacturing. Specialty food items are a good example. For the small business owner who’s not sure how well a product will sell at first, low-volume production can make a lot of sense.”
Gene & Bill: “Since production is closer, lower inventory levels are required, so you get better turns (the number of times that your inventory turns over per year).”
8. Ease of Communication
Elena: “Communicating with a U.S. manufacturer is often easier. Literally and figuratively, the company speaks the same language as the small business owner. Both parties are never more than a few time zones away. This can mean the difference between getting an answer in hours instead of overnight (or even after several days).”
Gene & Bill: “Faster responsiveness to changing customer demands is another big benefit of making your product in America.”
9. Lower Compliance Risks
Elena: “There’s peace of mind in knowing that there’s a common rule of law that governs business transactions.”
Gene & Bill: “US manufacturing minimizes intellectual property and regulatory compliance risks. The MEP Center can teach small businesses the Total Cost of Ownership Calculator (TOC). When you’re making sourcing decisions, TOCs can help you consider all costs, including the less obvious ones such as risk.”
10. Resources & Help for American-Made Businesses
Elena: “Whenever possible, look for a hyper-local solution.”
Gene & Bill: “There are many sources of help for small manufacturers but most do not know of these:
• State, City and County Economic Development Agencies
• Chambers of Commerce
• Workforce Investment Boards
• State Office of Economic and Business Development
• Community College Continuing Educational Programs
And, of course, the best kept secret is that we highly recommend working with your local MEP Center.
Thanks, Elena, Gene & Bill! To learn more, visit nist.gov/mep.
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