I have been involved in complex manufacturing for more than 30 years. During my career, I have had the opportunity to visit and collaborate with complex manufacturers around the world. Recently, I am frequently asked my thoughts on what U.S. manufacturers can do to escape from the current worldwide recession.

Manufacturing’s Current State
First a bit of background on this issue; it has been a very dismal two years for U.S. manufacturers. The combining of the slumping economy, the continued housing crisis, the collapse on Wall Street, the increasing U.S. national debt and the decline of the automotive sector has placed the U.S. manufacturing industry in dire straits. By the end of 2008, several leading indicators placed U.S. manufacturing activity at a 26-year low. As of this writing, the manufacturing unemployment rate, as reported by the Bureau of Labor Statistics (BLS), is at 11.8%, up from 5.7% as of August 2008. Recent statistics place manufacturing at less than 12% of U.S. Gross Domestic Product (GDP). This represents a 25% reduction over the past 10 years. Consider the fact that government spending in 2008, at $1.8 trillion, is currently more than 10% higher than what we consider the foundation of our country, our manufacturing industries.

No New Jobs Yet
Yet, in spite of these alarming statistics, there is beginning to be reason for optimism for U.S. manufacturers. Yes, it is true the overall U.S. economy may currently be inching up, ever so slowly, and a slow recovery for manufacturing is forming, but I don’t expect to see much improvement on the manufacturing jobs front anytime soon.

Companies were quick to institute layoffs during this downturn in order to save their businesses but they’re not likely to be nearly as fast about hiring people back, especially since productivity is so high right now. The Labor Department reported that non-farm productivity grew at a 6.4% annual rate in the second quarter, the largest gain in many years. As companies need to ramp up capacity as the economy slowly recovers, they’re more likely to add hours to current workers’ schedules than add new jobs.

Infrastructure Investment Will Ramp Up
The good news for U.S. manufacturing companies with this increase in productivity is that improved earnings should translate into a willingness to invest in the manufacturing infrastructure for the future growth and improved profitability of their businesses. However, there will continue to be an aversion to risk and the high cost of many large investment projects. There simply has to be a significant and definable business value and high return on investment (ROI) resulting from these investments. U.S. manufacturing companies will continue to make investments in plant and equipment, enterprise resource planning (ERP) and other manufacturing systems used within the four walls of the manufacturing facility; but at this time, the more significant leverage for them is in efficient sales systems to grow their top lines.

Sales Systems “Hottest” Investment
Sales systems help complex manufacturers with their engineer-to-order, made-to-order, and design-to-order products. They are designed to improve quotation and proposals speed and accuracy, as well as help with guided selling and product configuration. Studies by industry analysts, Gartner and AMR, report that 70% to 80% of the new business will go to the company easiest to do business with. Of course price matters, but if you can’t provide the product the customer needs and you can’t get the product accurately configured then the customer will not be satisfied and future new orders will go to your competition.

All companies have a greater urgency than ever before for capturing orders right the first time, giving their sales channels the necessary applications and insights to sell with confidence, and become trusted advisors for both their channel partners and customers. There’s a lot of questioning going on whether the approaches that worked in the past will scale into the future and much more of a recognition that making themselves easier to do business with, easier to trust, is much more important than ever before.

Top-Line Growth = Job Growth
Our focus, as manufacturers, should be on continually improving our solutions and software to make sure we stay in step with our customers and can help them get to their goals. The most critical question about any new application or service is whether it will get companies closer to their customers and their goals of top line growth. Only then will we be able to make a significant improvement in the key issue facing our country and its manufacturing industry; “Job Growth.”

The economy has shed 6.5 million jobs since the start of the recession, many of those in traditional manufacturing. It remains to be seen how many of those jobs will come back in the near future without significant top-line growth. The key to the U.S. economic recovery is a significant improvement in the effectiveness of our manufacturing selling systems so that we can get our unemployment rate on a downward trend.

Image: Industrial Manufacturing by cincompr via Flickr.com.