The American manufacturing industry has experienced resurgence in recent years – but it’s too soon to breathe a sigh of relief.
Numbers from the Institute for Supply Management show the manufacturing index hit a six-year high in August. This is a sure indication that business conditions in the United States are steadily improving, securing our status as a powerful global competitor in the manufacturing industry.
Much of the credit for this upward growth is owed to innovations like automation technology, which is increasing productivity while reducing labor costs, and the use of natural gas, an inexpensive substitute for oil that’s cutting energy and transportation expenses.
As an industry, we’ve made leaps and bounds in the right direction, but we cannot become complacent. American manufacturers remain in danger of losing manufacturing work due to foreign competitors. Countries like Mexico, China, and India remain major beneficiaries of outsourced American manufacturing jobs. Overseas, companies are able to achieve greater productivity at a lower cost, as foreign labor is more affordable.
One factor that’s exacerbating that issue and driving more American companies toward offshoring is the hotly debated topic of minimum wage. Ever-changing federal and state minimum wage requirements are making it more difficult for companies to maintain manufacturing jobs. Employers are forced to relocate their operations overseas, costing hard-working Americans their livelihoods, limiting the possibilities of U.S. manufacturing.
However, labor costs have recently been rising in countries like China. The timing has never been better for the U.S. to take back control and align itself for success by implementing a reasonable minimum wage that’s manageable for manufacturing companies and fair to employees. If the federal government were to increase the federal minimum wage, it would prevent large disparity and competition between state minimum wages, and allow the country to work together as a collective unit to create level competition. A set federal and state minimum wage will bolster domestic manufacturing by increasing production and decreasing costs, and ultimately, will keep American jobs here at home.
Regulating the cost of domestic labor is critical for the United States to continue its recent progress and success in the manufacturing industry. Although reaching an agreement and signing a reasonable minimum wage into law will be a feat for state and local government, the benefits American manufacturing would experience as a result are boundless.
Joe Morgan is president of Square Deal Machining Inc., which began as a one-room machine shop in Marathon, N.Y., and has grown into a 300,000 square-foot facility that offers full-service fabrication, machining and welding capabilities. There are three additional SDMI facilities, all located in the heart of New York state. The company employs more than 300 hard-working Americans.