Much Improvement Needed for Manufacturers to be Competitive by 2015

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Kentucky manufacturers participated in a national study sponsored by Kentucky Manufacturing Assistance Center to explore progress toward adopting world-class management practices. Some progress is being made but the study revealed a gap between what is being done and what needs to be done for the state's manufacturers to compete nationally and internationally in 2015.

Progress toward world class performance is 20 - 30 percent lower among smaller firms

A report released today by a public-private manufacturing coalition reveals a significant gap between what Kentucky manufacturers are doing today and what they need to do to position themselves to be successful in 2015.

The study uses six Next Generation Manufacturing (NGM) strategies as key indicators of future manufacturing competitiveness. Performance that is world class today will likely be standard practice in 2015 study sponsor Kentucky Manufacturing Assistance Center's Lynn Witten said.

With fewer than 50 percent of Kentucky manufacturers indicating they are making good progress toward achieving world class performance on any one NGM strategy, Witten said the study should serve as a call-to-action for policymakers, legislators and manufacturers.

"How quickly our state's private and public sectors begin to apply this information will determine future success," she said. "With support from the state, we can help close the awareness and performance gaps revealed through this study."

Witten said the state's manufacturing glass can be seen as half full or nearly empty, depending on which strategies are considered.

"Customer-Focused Innovation is tied with Systemic Continuous Improvement for the top spot with 64 percent of manufacturers rating these strategies as highly important to their success over the next five years," Witten said. "Forty-five percent of Kentucky manufacturers report making good progress toward achieving world class performance in Customer-Focused Innovation, however, only 14 percent of firms meet the world-class threshold of investing more than 10 percent of sales revenue into new product development."

On the other end of the spectrum, only 17 percent rated Sustainable Product and Process Development as highly important and fewer than 13 percent met the world class standard of having 100 percent of their products being completely recyclable/reusable.

Of particular concern to Witten is the lower performance found among smaller firms.

"Progress toward world class performance is 20 - 30 percent lower among smaller firms," Witten said. "This performance gap is especially troubling because 76 percent of the state's manufacturers are small - with fewer than 50 employees."

Witten believes the study offers a wealth of information and can serve as a road map to future economic development success, which is crucial for a state that depends on manufacturing for more than 255,000 well-paying jobs and $29 billion in Gross State Product.

"This study has shown us the current state of manufacturing in Kentucky," she said. "Now, we need to adopt a continuous improvement mindset and use this study as a tool for improving the future state of manufacturing in Kentucky."

One of KMAC's first steps will be convening a group of manufacturing leaders, policy makers, economic development organizations and service providers to work on a comprehensive strategy for Next Generation Manufacturing in Kentucky.

"We also will organize discussions among groups providing manufacturing assistance in Kentucky to improve coordination and development of market-driven services and use the data to create new service offerings and outreach strategies," Witten said. "This is just the beginning of the process."

KMAC provides training and implementation of manufacturing best practices for small and mid-size manufacturers. It is the Kentucky affiliate of the U.S. National Institute of Standards and Technology Manufacturing Extension Partnership (NIST/MEP) program.

The Kentucky study was part of a national research project conducted by the Manufacturing Performance Institute, a Cleveland-based global research company led by John Brandt, former editor-in-chief of Industry Week Magazine, and organized by the American Small Manufacturers Coalition. The Kentucky Chamber of Commerce, E.ON U.S. and the Tennessee Valley Authority worked with KMAC to encourage Kentucky manufacturers to participate in the NGM survey process. Sixty-six manufacturers participated.

For a copy of the report or other information visit Kentucky Manufacturing Assistance Center or call 859-252-7801.

About KMAC
Kentucky Manufacturing Assistance Center (KMAC), a private, not-for-profit corporation, has helped Kentucky manufacturers improve their production methods, advance their technical capabilities, and adopt best business practices since 1995.

KMAC leads on-site training and implementation of manufacturing best practices that deliver dramatic bottom-line results. Last year, clients reported $16 in cost savings for every $1 they invested in KMAC services and $19 million in increased sales as a result of KMAC's help.

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Lynn Witten

Nancy Wiser

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