If you are buying a resurgence in U.S. manufacturing – and the numbers suggest you should be at least kicking the tires – access to skilled labor pool and access to transportation and logistics assets will be two factors that weigh heavily in how much manufacturing investment your community can capture.
The positive traction around manufacturing includes the addition of 500,000 factory jobs in the last two years, about 50,000 of them from reshored manufacturing that had been outsourced to lower-wage Asian markets, especially China.
At an International Economic Development Coumcil seminar last month in Houston, John Kaliski, a principal at Bsoton-based consulting firm Cambridge Systematics noted that U.S. manufacturing productivity has doubled since 2000, driving growth in “knowledge-based” manufacturing such as computers and electronics, biopharma, aerospace, industrial machinery and automotives.
Communities that want to position themselves to compete for manufacturing, says Kaliski, need to understand industry clusters and how their supply chains work, how logistics costs factor into overall cost competitiveness and where their logistics assets fit into those equations.
A number of U.S. ports are in the midst of major expansions and upgrades to take advantage of the expansion of the Panama Canal, which is expected to wrap up in time for the canal’s 100th anniversary in 2014.
That project, which involves widening and deepening sections of the canal and adding a new access channel, is expected to double capacity and bring more and larger Post-Panamax vessels from Asian markets to West Coast, Gulf Coast and East Coast ports in the United States.
The Boston-based nonprofit research and strategy organization organization Initiative for Competitve Inner Cities recently noted that many communities are making logistics assets a key component of their economic development initiatives.
In New Jersey, Port Newark, operated by the Port Authority of New York and New Jersey, is undergoing a $650 million upgrade. Newark’s economic development agencies have made the port – which accounts for 280,000 jobs in the region – a major focus of their efforts, which included identifying industrial sites near the port that could be revitalized. Tying those sites to tax incentive and financing programs has helped clsoe on more than 1 million square feet of industrial deals in the last two years.
Venerable site selection professional Mark Sweeney of McCallum Sweeney Consulting noted that transportation is a significant portion of the cost of a manufactured product, both in inbound raw materials and outbound finished product.
“How do you change transportation costs? You can negotiate a better deal with the railroads and truckers, or move somewhere,” Sweeney said.
What manufacturing is your community positioned to capture and what are your competitive advantages in that sector? How do logistics and transportation infrastructure factor into your recruitment and retention strategy for manufacturing? Share your thoughts.