The recession has expanded the business advantages of Georgia manufacturers that compete on the basis of innovation in new or technologically improved products, processes, organizational structures or marketing practices. These innovative companies are more than twice as profitable as firms competing on the basis of low price.
That's one conclusion of the 2010 Georgia Manufacturing Survey, which also found that companies are preparing for post-recession growth, expanding export capabilities, addressing sustainability issues -- and still dealing with out-sourcing and in-sourcing. The survey, which included nearly 500 manufacturers, was conducted by Georgia Tech's Enterprise Innovation Institute, the Georgia Tech School of Public Policy, and Kennesaw State University, with support from the Georgia Department of Labor and accounting firm Habif, Arogeti & Wynne, LLP.
Georgia has approximately 10,000 manufacturers that provide nearly 350,000 jobs and account for 11 percent of the gross state product. Workers in manufacturing companies earn wages averaging nearly twice those of workers in retail companies.
The survey found a widening profitability gap between manufacturers that compete on the basis of innovation compared to those that use other competitive strategies. That gap has grown in each survey conducted since 2002.
"Companies that compete on the basis of innovation are much more profitable, pay higher wages and more likely to benefit from in-sourcing opportunities than firms that compete on low price," said Jan Youtie, the survey's director and a principal research associate in Georgia Tech's Enterprise Innovation Institute. "Adoption of an innovation strategy can be useful to manufacturers regardless of industrial segment, and is especially important during difficult economic times."
As part of the survey, companies were asked to rank six competitive strategies for their importance to winning sales. More than half of the respondents mentioned "high quality," while approximately 20 percent chose "low price" or "adapting to customer needs." Fewer than 10 percent reported "innovation/new technology" as a primary competitive strategy.
Across all six strategies, innovation was associated with the highest mean return on sales: 14 percent, compared to just six percent for the low-price strategy. And those financial benefits extended to workers, whose annual salaries averaged $10,000 per year more at innovative manufacturers than at other companies.
The top five innovative tactics reported by respondents were (1) working with customers to create or design a product, process or other innovation, (2) signing a confidentiality agreement to access a new product or process, (3) working with suppliers to create or design a product, process or other innovation, (4) purchasing new equipment, and (5) conducting research and development activities in-house.
While manufacturers of technology products are most often associated with the strategy, innovative companies can be found in all industrial segments, said Philip Shapira, co-director of the survey and professor in the Georgia Tech School of Public Policy.
"Many people think that innovation is something that has to be done in a lab, but our results show that innovation occurs more broadly, particularly as companies partner with customers and suppliers to take into account their needs for a new product or process," he explained. "While high technology companies tend to be innovative by their nature, innovation occurs across all segments, and every firm has opportunities to be innovative."
Companies often cite cost as a reason for not innovating, but Shapira noted that only 10 percent of companies take advantage of R&D tax credits; fewer still use investment tax credits. "While financial incentives can assist innovation, there is a greater need to build awareness and capabilities among more of the state's firms to undertake innovation," he said.
Though more than two-thirds of Georgia's manufacturers have cut jobs or lost sales in the recession, many of these companies are now looking toward the future with plans for locating new customers, boosting capital investment, expanding research and development and continuing to reduce costs.
"When we look at their plans, Georgia manufacturers are in an expansive mood, looking for new customers and getting ready for the next phase of economic growth," Youtie said.
The survey found that 70 percent of respondents were looking for new customers, 20 percent planned to expand capital investment, and 15 percent planned to increase expenditures on research and development. At the same time, 60 percent of respondents said they still planned to cut costs.
Another trend studied was growth in the number companies selling to international markets. More than half of the responding manufacturers said they were exporters -- and those manufacturers reported 50 percent higher profitability than non-exporters. Some 22 percent of respondents had increased their export sales since the last survey in 2008.
"We don't find much difference between exporting companies when comparing them by the amount they export," Youtie noted. "What seems to be important is the capability to export. We think there is some learning that takes place, and some capability that a company develops to become an exporter. That capability translates into improved performance across the board, in addition to creating new markets and different margins."
The survey also found that out-sourcing of work has leveled off, with approximately 16 percent of manufacturers affected by the loss of business in 2010. At the same time, the percentage of firms benefitting from in-sourcing -- movement of work to Georgia -- has grown to nearly 15 percent.
"Out-sourcing isn't going away, but it has stabilized," Youtie said. "In-sourcing appears to be growing, which creates opportunities for good manufacturers to benefit from consolidation of production from other U.S. facilities or even from overseas."
The study also looked at sustainability issues, and found that 60 percent of companies recycle and attempt to reduce waste -- one form of sustainability. However, just 11 percent of respondents had inventoried their carbon footprints or emissions, and fewer than five percent were using renewable energy.
The bottom line for manufacturers?
"The results of our survey can point manufacturers to a way forward for getting ready for the next phase," said Youtie. "Companies can develop innovation capabilities; they can look into exporting and they can collaborate more with suppliers and customers."
-----
Community News You Can Use
Click to read MORE news:
www.GeorgiaFrontPage.com
Twitter: @gafrontpage & @TheGATable @HookedonHistory
www.ArtsAcrossGeorgia.com
Twitter: @artsacrossga, @softnblue, @RimbomboAAG
www.FayetteFrontPage.com
Twitter: @FayetteFP
Monday, October 18, 2010
Recession Makes Innovatin More Critical to Georgia Manufacturers
Saturday, August 21, 2010
First Quality Baby Products Announces Macon Modernization Project
Absorbent hygiene products manufacturer increasing Macon presence
Governor Sonny Perdue announced Friday that First Quality Baby Products, LLC, a Great Neck, New York-based manufacturer of absorbent hygiene products, will modernize and expand its manufacturing presence in Bibb County. The company plans to invest up to $200 million and bring its employee count to 375 over the coming years at the company’s Macon facilities.
“Since acquiring its manufacturing operation in Georgia in 2008, First Quality has played a significant role in the Macon business community, and in Georgia's ever-growing advanced manufacturing sector,” said Governor Perdue. “We are always excited to see our existing industries grow and thrive in Georgia.”
First Quality will construct a diaper manufacturing facility, with construction scheduled to begin during the fourth quarter of 2010. First Quality’s current manufacturing operation in Macon produces multiple configurations of private label baby diapers and training pants for major retailers. The company’s expanded Macon operation will serve markets throughout the Southeast.
“First Quality is very pleased to expand our relationship with Macon-Bibb County, Georgia, and we look forward to working together to create real opportunities here with all our partners, both in government and the private sector, that will benefit the entire community,” said Bob Schiek, director of manufacturing for First Quality. “The strength of our existing workforce as well as our confidence in the pool of skilled labor contributed to the decision for First Quality to commit to Macon-Bibb County. As important, however, is the pro-business environment that you have created here in Georgia, especially in Macon-Bibb County.”
The new First Quality diaper manufacturing plant in Macon will make use of high-tech manufacturing advancements utilized at the company’s other recently completed plant in Lewistown, Pennsylvania.
“First Quality’s culture is focused on producing high quality products in their market segments and on exceeding customer expectations,” said Sam Hart, Chairman of the Bibb County Commission. “Based on my visit to their facilities in Pennsylvania last fall I would say they excel in both areas. We are proud to partner with First Quality to both retain good jobs and generate new employment opportunities for the citizens of our community! We look forward to a long and productive relationship.”
“First Quality is a great fit for our community, and is a high performing, high quality organization with a proven track record since its founding more than 20 years ago,” said Robert Reichert, Mayor of the City of Macon. “I am proud that the company has chosen to expand its presence in our community!”
“First Quality’s new facility in Macon validates our efforts to recruit high-tech manufacturing operations to Bibb County,” said Clifford Whitby, Macon-Bibb County Industrial Authority chairman. “We are both pleased and honored that the owners of First Quality have chosen to make their latest investment in our community, and see this as the beginning of a long and productive relationship between First Quality and our community!”
Jennifer Nelson, Georgia Department of Economic Development deputy director of Existing Industry & Regional Recruitment, assisted the company and community with this project.
About First Quality Enterprises, Inc.
Founded in 1990, First Quality Enterprises, Inc. and its affiliates are a closely-held diversified group of companies manufacturing, selling and distributing branded and private label absorbent hygiene, paper and non-woven products into the healthcare, retail and commercial channels. First Quality is dedicated to meeting the demands of the market by providing innovative and high-quality products manufactured utilizing state of the art technology. For more information please visit www.firstquality.com.
---
Community News You Can Use
Click to read MORE news:
www.GeorgiaFrontPage.com
Twitter: @gafrontpage
www.ReadMyLipstickNetwork.com
Twitter: @readmylipstick
www.ArtsAcrossGeorgia.com
Twitter: @artsacrossga
---
Also check out :
www.Hummingbird-Hollow.com
Twitter: @hhpotterystudio
www.HorizonsLTD.com
www.SoftCoolers.com
www.Chair-ity-Event.org
www.ClothesLessTraveled.org
---
Friday, November 21, 2008
Handgun Manufacturer GLOCK, Inc. Announces their Mid-Year Guidance Concerning the Sales Efforts
Handgun Manufacturer GLOCK, Inc. Announces their Mid-Year Guidance Concerning the Sales Efforts for U.S. Law Enforcement, Commercial and Federal/Military Markets
With more than half a year in the books, handgun manufacturer, GLOCK, Inc. announced today industry guidance on the firearms market and the success of the company for the fiscal year. Coming off of five years of record sales both in the Civilian, Law Enforcement and the Federal/Military segments of their business, the U.S. based manufacturer revealed that demand for their product has been unprecedented. With the downturned economy and the jump in sales activity for sport shooting and personal defense, the company is making plans to expand for future sales similar to the ones generated at the National Association of Sporting Goods Wholesalers (NASGW) show.
Despite GLOCK Inc.'s good fortune, other manufacturers are falling on hard times. "We are seeing that certain categories of the firearms industry are severely depressed, and the companies who lack sales in those specific categories are finding their bottom line adversely affected and are not maximizing owner profitability," commented Gary Fletcher, Vice President of Sales and Marketing. "Over the last couple of years we saw a certain amount of consolidation in the industry, yet we also witnessed more and more companies expand their product line on the weight of their brand and take on tremendous amounts of debt. And in certain cases we saw companies do both. As in any industry, companies that incurred massive debt, especially in the last few years, who are expanding based on their brand are now seeing that debt as an anchor. They fail to have the necessary capital to invest and make their product more valuable and it further impinges on their bottom line. And the folly of this management style is showing, as the competition has been forced to offer costly incentives, which are difficult to fulfill, so they can boost their unit sales at the expense of their bottom line. To further degrade their profit margin and brand, many of these same companies will take losses against their more popular and profitable products to gain market share based on price rather than product capabilities, which in turn forces them to record Unit Sale increases while taking Gross Margin decreases. All of this further weakens their economic viability in this tight credit market."
But as other companies struggle with incremental gains, GLOCK, Inc., with over 65% of Law Enforcement using their handguns featuring the highly regarded "Safe Action System" continues to set a blistering pace in agency conversions. More and more agencies are determining that rock solid reliability and world class customer service combined with an economical price tag win out over marketing and pricing schemes dreamed up to move excess inventory. In the last eighteen months GLOCK, Inc. has converted over eighty (80) agencies in the United States from a single competitor. This success has carried over to the conversions of agencies from other competitors as well.
Not to be outdone, the Federal Law Enforcement and Military segments continue to gain market share to put GLOCKs into the hands of U.S. Government forces serving domestically and overseas. Unlike some competitors, GLOCK, Inc.'s focus has been and will remain on those who go in harm's way to protect and serve. They use a bottom-up end user compared to a top-down business model. "This sales strategy is proving itself on a daily basis as GLOCK replaces other manufacturer's pistols as their respective pistol of choice," commented Joshua Dorsey, Vice President of Operations and Federal/Military Sales. "We have worked diligently with our contacts to make sure that the units that are outfitted with our product have the best equipment configured in the manner they specifically request. We stand ready to not only meet U.S. Government requirements, but to exceed them."
The Commercial segment remains GLOCK Inc.'s focal point as made evident at NASGW. Having been the past recipient of the 2005 Manufacturer of the Year and the 2006 Chairman's Award, the highest award given at the show, GLOCK, Inc. once again took high honors in 2008 with its second Chairman's Award. "The NASGW award system is based upon certain criteria that wholesalers in the Sporting Goods industry define as crucial," stated Craig Dutton, Director of Commercial and Law Enforcement Sales. "Being the recipient of this award is a culmination of the hard work and effort of the entire organization. Our employees are honored to be the recipient of this award that is voted on, and presented by, our customers."
The Firearms Industry expects that economic uncertainty will remain for some time and GLOCK, Inc. is prepared for growth. Being privately owned, and with no debt on their books, GLOCK, Inc. will soon break ground and expand its manufacturing capabilities beyond its current state. As businesses flourish and flounder, the survivors will be those companies that practice sound, conservative business practices, leveraging their ability to delight customers beyond their desired expectations. GLOCK, Inc. has been perfecting that practice for the past 22 years and envisions even better days ahead.
-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Sunday, July 6, 2008
Georgia Manufacturers Guide Reports State Industrial Jobs Down 2.3%
PRNewswire/ -- /Manufacturers' News, Inc./ -- Industrial employment in Georgia dropped another 2.3% over the past 12 months according to the 2009 Georgia Manufacturers Register, a compilation of state industry published annually by Manufacturers' News, Inc. (MNI) Evanston, IL. The directory reports Georgia lost 12,838 industrial jobs from April 2007 to April 2008, nearly identical to the 2.2% drop MNI reported for the state over the 2006-2007 period.
According to earlier MNI reports, Georgia's industrial employment held steady between April 2005 and April 2006, and then dropped by 12,771 jobs over the 2006-2007 survey period. Georgia's losses were comparable to neighboring states, with Florida down 2% and Alabama down 2.2%, and to declines felt throughout the Southeast over the past year, with MNI reporting losses for every state in the region.
"Even though manufacturing activity is at a record high, outsourcing, consolidation and increased technology have contributed to industrial employment declines across the nation," says Tom Dubin, President of Manufacturers' News, which has been surveying U.S. industry since 1912.
Manufacturers' News reports Georgia is home to 11,408 manufacturers employing 556,770 workers. Georgia now ranks 12th in the nation for number of manufacturing jobs. MNI profiles manufacturers of all sizes, including small, start-up companies with just a few employees.
According to the 2009 industrial guide, Georgia's textiles and apparel sector took the largest hit over the year, losing 5,258 related jobs or 6%, and currently accounts for 15% of the state's industrial employment, or 81,878 jobs. MNI reported a similar 7% loss for this sector from April 2006-April 2007. Food products manufacturing accounts for 71,463 industrial jobs, down 1.2% over the past 12 months. Industrial machinery and equipment, Georgia's third largest sector, accounts for 48,134 jobs, and was one of the few to increase employment, up 2.9% over the year.
The Register reports Georgia's lumber and wood sector experienced a 5.7% decrease in employment after companies such as Norcross-based Ply Mart saw sales drop due to slowing demand for home building supplies. Other sectors losing employment include paper and allied products, down 1.3%; chemicals, down 2.9%; rubber and miscellaneous plastics, down 2.2%; fabricated metal products, down 1.9%; and electronics down 2.4%. Transportation equipment was down 3.3%, due largely to layoffs at GM's Doraville assembly plant in preparation of the plant's closing later this year. MNI reports employment remained steady in the primary metals sector, and increases were see in furniture/fixtures, up 1.3% and printing/publishing, up 1.5%.
According to MNI, Northwest Georgia accounts for the most industrial employment in the state, with 329,615 jobs, or 60%, down 2.9% or 9,722 jobs over the past 12 months. Northeast Georgia represents 85,453 of the state's jobs, down 2% or 1,723 jobs. South Central Georgia is home to 56,858 of the state's workers, down 3.7% or 2,167 jobs, while the Southeast accounts for 42,070 manufacturing employees, down 2.8% or 1,172 jobs over the year. Southwest Georgia represents 42,774 of the state's jobs, down 788 or 1.8% over the past twelve months.
MNI's city data shows Atlanta manufacturers employ 62,575 of the state's industrial workers, up 2,495 jobs or 4.2% over the past 12 months. MNI reports Atlanta is among the top 50 manufacturing cities in the nation, ranking 16th in the U.S. for number of industrial jobs and 22nd for number of manufacturers. Dalton ranks second in the state for employment with 34,358 jobs, up 1.2% from a year ago, while Norcross is third in the state with 15,857 industrial workers, down 5.9% over the year. Marietta accounts for 16,999 jobs, up a half percent over the past twelve months, while fifth-ranked Alpharetta saw industrial employment jump 9.4%, and currently is home to 16,835 jobs.
