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Competitiveness for Manufacturers Lies in Exporting
UNIVERSITY PARK, Pa. -- Smaller U.S. manufacturers can help offset the economic impacts of overseas competition by focusing on becoming more efficient product exporters according to one of several studies conducted by researchers at Penn State University on behalf of the National Institute of Standards and Technology.The institute, a division of the U.S. Department of Commerce, provided initial support of $400,000 to Penn State's Smeal College of Business for four studies on the performance of manufacturing firms with less than 500 employees, of which there are more than 350,000 in the nation.The findings will be used to help manufacturers compete in a sector that has lost more than three million jobs since 1998.Even though small- and medium-sized enterprises currently constitute 97% of all U.S. exporting companies, they export products to relatively few markets such as Canada and Mexico. This suggests great potential for entry into additional foreign markets, according to the report, which was compiled by Gerald Susman, a professor of management and director of Smeal's Center for the Management of Technological and Organizational Change; David Wilson, professor emeritus of marketing; and Anthony Warren, director of Smeal's Farrell Center for Corporate Innovation and Entrepreneurship.The report, which is based on interviews with more than 20 manufacturing firms from 10 states, notes that by competing with foreign firms on their own turf and overcoming obstacles such as training and intellectual property concerns, U.S. manufacturers can create additional revenue-growth opportunities."The barriers to becoming an exporter can be overcome simply by making the commitment to export, by entering a series of markets one at a time with limited risk, learning by doing, and taking advantage of the resources and advice that federal, state, and local agencies are willing to provide at minimal or no charge Patience in entering new markets is essential," the authors write. "It may take three to five years to break even in some markets."Researchers also identified the external drivers that could have the greatest influence on manufacturing in the future -- globalization, ecological awareness, demographic changes, and technological innovation -- and outlined steps manufacturers are taking in response such as shedding physical assets, bundling of goods and services, focusing on flexibility and mass customization, and developing e-collaboration strategies.Also evaluated was innovation in the manufacturing sector, which was identified it as a key for sustainable competitiveness. Success in innovation depends on factors such as the ability and desire to focus on core knowledge and markets with the intent to dominate a niche, avoidance of diversification, and clearly defined intellectual property and research and development strategies, the researchers found.The studies also investigated the impact of supply chain decisions on manufacturers. Because of increasing global price competitiveness, researchers suggest that U.S. manufacturers servicing the automotive industry would be best served by diversifying into other sectors, medical device manufacturers should seek ways to partner with each other, and all manufacturers should find ways to effectively partner to diversify product offerings and compete as networked suppliers. Additionally, because of China's continued reliance on importing specialized building materials hardware, manufacturers in this area should focus on bolstering exports.Founded in 1901, the National Institute of Standards and Technology is a non-regulatory federal agency within the U.S. Commerce Department. Visit the National Institute of Standards and Technology: www.nist.gov"