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The Vital Role of the Supply Chain in 21st Century Manufacturing

June 29, 2015

For the past five years, U.S. manufacturing has been back on the rise. The U.S. Department of Commerce indicates that, since early 2010, manufacturers have added nearly 900,000 jobs, making this the first sustained growth manufacturers have seen since the 1990s. This resurgence is welcome news, both nationwide and here at home in Connecticut.

At the heart of this re-energized manufacturing sector is the supply chain, hundreds of thousands of smaller manufacturing businesses that provide parts and materials to larger manufacturers for their products. We have seen it nationally with the revitalized automotive industry, as well as here in Connecticut with the aerospace industry—the manufacturing supply chain is vital to the overall industry.

The rise in manufacturing jobs of all sizes over the past five years is welcome news, especially considering the slow erosion of jobs we saw in the prior decade. During those years, many companies chose to move increasing amounts of their work out of Connecticut or out of the country, work that used to be done domestically, due to rising costs. As these jobs now return to our shores, close attention must be paid to ensure the supply chain remains strong, both locally and nationally, in order for the industry to remain competitive for the next decade and beyond. Large and small, every manufacturer benefits when the work remains here, as does our economy.

We have seen the shift in how manufacturing is now done with our clients, many of whom are part of a manufacturing base that has finally started growing again in Connecticut, and this spotlights the value of a healthy supply chain for the overall industry. Whereas larger manufacturers once produced the majority of parts and materials in-house, the ratio has now shifted, and most of that work is now farmed out to smaller nearby businesses that possess the know-how and business efficiencies to satisfy production needs. The fact that more of these are now staying here at home is a positive development; however, companies must continue to invest in and embrace new technologies and business practices to keep them here.

Therein lies a major challenge in 21st century manufacturing, as well as a great opportunity. Large manufacturers that invest in the capabilities of the smaller companies can spur innovation and Research and Development opportunities. Often times the larger companies have the capital needed for investment, and the smaller companies have the specific, focused capabilities. By teaming up, this can stimulate innovation for the entire industry.

In Connecticut and throughout the country, we have seen significant improvements in American manufacturing since the darkest days of the recession, but we must continue to look forward, make the right investments and take the actions needed to spur industry growth. The public and private sectors should work together to continue to strengthen the vital supply chain through educational opportunities, workforce training initiatives and reinvestment in these companies.

More and more it is the small and mid-sized companies that are driving innovation and growth in manufacturing today. We all need to be mindful of this if progress is to continue.

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