New Technology: Create Jobs in the US and Opportunity for Manufacturers

Job creation is one of the biggest topics of domestic politics and economics. A sluggish economy has yet to produce the full-time, well-paying jobs that the entire country depends upon. But new technology in manufacturing could be a boon, and middle market companies could benefit from the stimulation efforts.

The drive for so-called re-shoring — bringing jobs back from overseas outsourcing and reestablishing them in the United States — has become strong. Even Wal-Mart, one of the big drivers for outsourcing in the past, has begun to promote efforts to source products here. The retail giant said that it would buy an additional $250 billion annually in American products. That is supposed to include increasing purchases from US manufacturers, source new products domestically, and re-shore the manufacturing of goods by "facilitating and accelerating efforts of our suppliers." Wal-Mart can exert a lot of pressure if it wishes.

A look at recent news stories — labor unrest and claims of poor working conditions in China, or factory disasters and worker deaths in Bangladesh — helps explain the shift. Offshoring has become a PR liability, and the economic benefits of outsourcing have fallen.

But wanting manufacturing jobs to return to the United States is not enough to make it happen. Whether making products for consumers or other businesses, companies still need to be price competitive. Adoption of new technology could make the difference.

According to a study from the NCMM and the National Association of Manufacturers, manufacturers that adopt advanced manufacturing techniques such as custom manufacturing, advanced robotics, automation, high precision, or even emerging areas like 3D printing reported an average 20 percent profit increase. Extra profit means more flexibility on pricing to win larger bids with the volume that can drive business expansion.

Companies that can provide the imprimatur of a "made in America" label will be the ones that attract Wal-Mart and other companies that need to burnish their image. Middle market companies are in a good position to compete for such business, given that many large companies have effectively lost their ability to manufacture products themselves anywhere.

An additional benefit is that, as middle market manufacturers focus on improving their use of technology, they can draw upon government resources designed to spur job growth. For example:

• The Ohio Development Services Agency has a number of programs to stimulate adoption and implementation of new technology.
• California has tax credits for hiring qualified employees and purchasing types of equipment, including manufacturing.
• Chicago has a sales tax exemption (6.25 percent) on purchases of equipment for manufacturing, assembly, or pollution control equipment.
• The US Department of Commerce has its Sustainable Manufacturing Initiative.
• The Investing in Manufacturing Communities Partnership initiative has development programs for communities trying to create well-paying jobs.

Not only can middle market companies improve profits and obtain new business, but they can also qualify for help in acquiring the equipment and new technology necessary to transform their business processes. It's a two-for-one benefit program.

Erik Sherman is an NCMM contributor and author whose work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, Newsweek, the Financial Times, Chief Executive, Inc., and Fortune. He also blogs for CBS MoneyWatch. Sherman has extensive experience in corporate communications consulting and is the author or co-author of 10 books. Follow him on Twitter.