Light Manufacturing

Light manufacturing might be defined as: A light industrial business where all processing, fabricating, assembly, or disassembly of items takes places wholly within an enclosed building. Typical items for processing, fabricating, assembly, or disassembly include but are not limited to apparel, home accessories, food, drapes, clothing accessories, bedspreads, decorations, artificial plants, jewelry, instruments, computers, and electronic devices.

The Light Manufacturing Environment

During the process of manufacture value is primarily added by the application of skill to physical or raw materials. Until recently such skill resided solely in the heads of specialized craftsmen. They understood all the complicated, precise, and sometimes delicate steps needed to produce the end product. They were blacksmiths, silversmiths, and coopers. With the advent of non-human power, e.g. water, electricity, wind, solar, and nuclear, each step in the manufacturing process could be broken down and performed by different people, each of whom had learned the skills required to perform one or more pieces of the overall process. Today this essential craft knowledge is most often contained in a computer program that runs a computerize machine tool. While much this can also be said of heavy manufacture, light manufacture is most often associated with batches or discrete production runs, whereas heavy manufacturing usually means continuous processing as in the assembly of automobiles or the manufacture of gasoline and petroleum bi-products.

In the US light manufacturing is under increasing pressure from foreign competition. Over the past 50 years heavy manufacturing including iron, steel, aluminum, chrome and many of the products that are made of these metals has moved first to Japan, then Korea, then India, and now China. At the same time technological advances in computerization and robotic fabricating equipment means that previously strong light manufacturing businesses such as furniture, auto and home accessories, hand tools, and a host of other light manufacture industries have been heavily pressured. This is particularly true where these light manufacturers have held the most profitable, highest volume segments of their industries. According to Industry Week magazine’s June 2003 issue, foreign companies invested $52 billion into China in 2002. Ultimately this investment will translate into lower US industrial production. Patents may provide some protection, but the cost of lawsuits, the difficulty of collecting from offshore companies, and the sheer market reach of offshore competitors makes patents less a barrier than they were when the US manufacturers enjoyed US market exclusivity.
The Keys to Success

With foreign manufacturers cherry picking the best and most profitable pieces of American light manufacturing business many are going out of business. How frustrating it must be to have the knowledge, the suppliers, the markets, the equipment, computers, and skilled employees and watch your business dissolve day by day. And what a shock it is to walk down the vanity cabinet and bookshelf isles of any Home Depot and realize that you cannot make these items yourself for what it would cost you to buy the materials right there in that same Home Depot. Last week I found a short sleeved shirt for $14. My gosh it dawned on me that I bought my first short sleeve shirt for $18, 40 years ago. And this story repeats over and over in almost every light manufacturing segment. Nevertheless the world is not necessarily over for them. They can still succeed in this new cruel world, but its going to require some serious strategic changes.

If you think about it, you’ll realize that that same free standing Home Depot, Malaysian made vanity will not fit in every bathroom. The door is still open to the custom cabinet maker who can build to fit the space available. Even if the Malaysians or their successors figure out the communications necessary to take custom orders, shipment times will make that end of the business impractical for a long time to come. So custom production or assembly runs provide one possible defense against annihilation by foreign competitors. In fact machine tool manufacturers, two and three man shops, are still doing a booming business creating single dies and custom specified parts. So too are the custom wooden louvered blind manufacturers, especially where they go into the home take window opening measurements and return to the shop to build them to fit.

The Malaysian vanity situation suggests another key: responsiveness. America’s light manufacturers are still closest to the end users. Where speed is important and sometimes it can be very important as when trying to respond to a fad, or a seasonal demand, the foreign competitors will have to think in terms of containers on ocean going ships and the month or two involved in oceanic transit. US light manufacturers who are willing to jump through hoops are going to get this type of business every time.

One arena that should not be overlooked is government business. The US Government is required to source through American manufacturers. State governments attempt to buy within states, counties and cities as well want to buy locally whenever possible. Getting up to speed on the governmental procurement processes is devilishly tedious, but well worth the investment in many cases. Here you are bidding again US or local competitors who have similar cost structures, laws, and regulations to deal with.

Finally there’s vertical integration. Typically, light manufacturers wholesale their products to retailers. Lately these retailers have been buying from foreign sources because there competitors buying form the foreigners. Let’s face, the average consumer does not care where the product is made or assembled, if he can get it for a hundred less, he’ll take it. But there’s some good profit sitting there between what the manufacturer now gets and what would be a good deal for the consumer. If the items are not too big or too heavy they can be shipped directly to the consumer via UPS. Even larger items that have to go by over-the-road freight, especially high value add items, can be economically crated and shipped in quantities of one. But how is the manufacturer to reach the consumer? Well the Internet provides one very practical and economical link to the consumer. The neat thing about marketing over the Internet is that advertising costs are still very minimal and that search engines provide a means for your customer to find you. Selling a physical product over the Internet has it’s drawbacks and challenges but it can be very rewarding.