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Manufacturing is on Its Way Back

The four reasons one manufacturing CEO is optimistic about the future of U.S. manufacturing.

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The following is a blog containing the observations and opinions of the author.

The landscape for manufacturing growth is rapidly changing. From shifts in trade deals to regulation rollbacks to anticipated tax reform, manufacturers and supply chain companies have every reason to anticipate growth across multiple industries.

We can expect to see more plants built, more jobs created, and an overall welcoming of more investment, ideas and innovation. Here are a few reasons why:

  1. Less regulation; more investment. Corporations are more wary of taking risks when there is a real uncertainty about regulation-expansion. For example, a company may want to open a new factory but not when additional and cumbersome government regulations could be waiting for them after the new facility is built. But now, when one new federal regulation is added it requires that two must be revoked. This will likely create an atmosphere in which companies will be more inclined to invest.
  2. Trade agreement changes. Withdrawing from TPP and plans to re-negotiate NAFTA will influence manufacturing decision-making and should generate more growth. Right now, due to certain import rules and restrictions, these agreements have made it more difficult for the U.S. to export goods to its trade partners, than it is for those partners to export goods to us. This puts us at a disadvantage. This should change when the trade rules become more balanced.
  3. Incentives and tax reforms. Right now, we have the highest corporate tax rate in the developed world. That makes no sense if we want to encourage expansion and growth, job creation, device innovation and more. This is why so many American companies have moved operations, except their executive offices, to locations outside of the U.S. A lower tax rate will open up so many possibilities for manufacturers because they will be motivated to conduct more aspects, if not all, of their business in the U.S.
  4. Nearshoring was already gaining momentum. One of the trends we’ve seen recently in manufacturing is nearshoring, which involves companies moving production processes back to the U.S. and creating new manufacturing jobs close to their distribution markets. This is especially prevalent in prototype and small-batch manufacturing, both of which have become far more popular thanks to advances in 3D printing. The above changes will only increase nearshoring’s momentum.

Manufacturing, product development, and idea innovation have all been bedrocks of our culture in both work and the economy. While some jobs may never come back due to advances in technology, the development and advances in automation, robotics, AI and VR will create another set of jobs and tech-educated workers. By creating an environment that lends itself to growth, we can expect the beginning of a major resurgence across the entire manufacturing industry.

Mark Dohnalek is President & CEO of Pivot International.

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