The Leader Magazine

MAR 2017

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MARCH 2017 25 The rise of U.S. manufacturing Along with advances in technology have come changes in global economics. After decades of off-shoring production, many manufacturers now realize new business cases for manufacturing in the United States. The 2016 Global Manufacturing Competitiveness Index Report, prepared by Deloitte, surveyed over 550 senior manufacturing executives to gather input on countries with the most competitive landscape for manufacturing. The results show that the U.S., currently ranked #2 behind China, is projected to reach the #1 ranking by 2020. Manufacturers are now taking a fi rst or fresh look at the U.S. when considering possible locations for their operation. An available site or building is obviously a critical component to selecting a location for a manufacturing facility, but given this new perspective on operating requirements for today's production, other critical factors are outweighing available real estate. Skilled labor is paramount The most critical location factor for manufacturers today is access to labor and, in particular, skilled labor. Automated production lines and robotics have replaced much of the manual, labor-intensive work that initially sent companies offshore to low-cost labor countries like Mexico and China. Manufacturers today seek more people with skill sets to operate, maintain, repair and retool the new, automated equipment – especially those versed in the concept of lean manufacturing and comfortable with fl exible work environments. In the location-search process, many manufacturers are fi rst taking into account the types of skilled workers they need in their operations – looking for existing employers in an area with similar skill needs, and training programs educating more workers in desired skill sets. For example, Polaris recently selected Huntsville, Alabama, for a new state-of-the- art production facility for its all-terrain vehicles (ATVs). One of the reasons cited for the location selection was the region's skilled workforce and history of technology and innovation – both attributable to the history and concentration of the area's engineering and aerospace industry. Across the country, community colleges and technical schools are addressing new labor requirements with training programs tailored for specifi c skill sets needed in their respective regions. For example, in Greenville, South Carolina, home to BMW Manufacturing Co. and many suppliers, the Greenville Technical College offers programs in mechatronics and automotive engineering to serve the specifi c needs of the automotive manufacturing industry in the area. These types of customized training programs can be a key consideration for manufacturers seeking to ensure a steady fl ow of skilled labor. Power and infrastructure The shift to more reliance on automated equipment has increased focus on power costs and reliable service as key location factors; companies are now hunting for low-power-cost regions. Some utility providers are able to offer lower rates based on their generation cost and capacity. Others offer economic development "rider" rates, such as those offered by Duke Energy, which discounts electric rates to large power users over a period of time to attract business investment to their service territory. As more companies focus on incorporating sustainability into their production process, the mix of generation offered by an electric power provider can also be a location factor. Providers such as Tennessee Valley Authority (TVA), which offers a power mix of coal, nuclear, hydro, wind, solar, and natural gas, are continuing to grow their use of renewable forms of energy in their long-term planning. A manufacturer considering decreasing its carbon footprint may seek locations with more renewable energy opportunities to tap. As information-sharing in manufacturing systems grows, fi ber and other telecommunications infrastructure are becoming key location criteria for companies requiring connectivity to a regional and national grid.

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