20, December 2018
Understanding Manufacturer’s Challenges Entering the New Year
Over the last few months, the Manufacturing Extension Partnership (MEP) Program has been commemorating our 30th anniversary. The Program has enjoyed taking a step back to look at our beginnings, the reasons the Program came to be, and how we can continue to deliver on our mission to strengthen and empower U.S. manufacturers well into the future. But during our 30th anniversary, we’ve reached another milestone, as this fiscal year marks the 10th year we have asked clients about the challenges they are facing as part of our NIST MEP Client Survey. This important activity is one that helps us determine how we can navigate the future.
Over the last 10 years, the data we have gathered from the client challenges question has helped the MEP National NetworkTM get a peek at what is on the minds of CEOs. Understanding the business and economic factors that influence companies helps the Network remain flexible in responding to the problems clients are facing.
The prioritization of challenges has changed as the economic environment and the manufacturing landscape has changed. Some of the challenges have been consistent (such as continuous improvement and product development), while others have become increasingly important over time. The most significant changes to client responses focus on the issue of employee recruitment and retention. Over the past 10 years, the share of MEP clients reporting this as a challenge has nearly tripled and is now the second most frequently reported challenge companies are facing. Some other interesting shifts have also occurred including:
- Ongoing continuous improvement and cost reduction issues remain the most frequently cited challenge by MEP clients after 10 years, although the percentage of respondents reporting this challenge has dipped from 71.9% to 67.2%.
- Identifying growth opportunities was reported by less than half the companies in FY2018, which represents a drop of about 12 percentage points compared to FY2009. Helping companies grow is the third most common challenge cited in FY2018.
- Technology needs and managing partners and suppliers are two challenges that are now more frequently cited in FY2018 compared to FY2009. While both challenges are being reported by about 16% of clients, the change from FY2009 is significant. These shifts reflect the changing market conditions and competitive environment.
- In addition, innovation/product development has remained a consistent challenge for MEP clients. The share of clients citing innovation/product development declined by 4 percentage points between FY2009 and FY2018. About 41% of companies reported the challenge in FY2018, while 45% reported the challenge in FY2009.
- Financing and sustainability both fell as important challenges over time. They fell by more than 6 percentage points between FY2009 and FY2018. The financing shift may reflect the improving economic conditions nationally coming out of the recession, which would mean easier access to capital and financing.
- Exporting remains the least cited challenge and was reported by only 6% of respondents in FY2018 versus 8% of respondents in FY2009.
NIST MEP has a unique position in the Federal Government that allows us to collect and analyze feedback directly from clients served by the MEP National Network. This provides our Program with a wealth of information that helps guide our approaches to serving the U.S. manufacturing industry, both now and in the future. So, as we enter the new year, it is important to take a step back and look at what MEP Center clients are telling us. Being responsive to the needs of U.S. manufacturers and helping mitigate their challenges is one of the reasons our Program is around. Integrating this client feedback so that MEP Centers may help their clients proactively prepare for future challenges is important.
We realize that our challenges question is limited by not being customized to fit different manufacturing subsectors and having pre-selected answer choices, and that it is just a piece of the larger puzzle of manufacturer needs, so to speak. However, the more we can complete that puzzle, the better we will all be able to strengthen and empower U.S. manufacturers.
Please let us know of any thoughts that you have or topics you would like to see addressed in this blog.
The MEP National Network is a unique public-private partnership that helps small and medium-sized manufacturers generate business results and thrive in today’s technology-driven economy. The MEP National Network comprises the National Institute of Standards and Technology’s Manufacturing Extension Partnership (NIST MEP), the 51 MEP Centers located in all 50 states and Puerto Rico.