Small U.S. manufacturers, once dismissed as the dusty underbelly of the economy, are quietly becoming one of the hottest sectors around. And you'll never guess what's behind the change: a little known, low-budget federal program.
Some of the leanest, fastest companies around are manufacturers. You'll never guess who's behind the change.
It was quality -- or lack thereof -- that first inspired Debbie Young to start a company in her parents' Plains, Ga., horse barn five years ago. And it was quality that nearly drove her to distraction four years later.
In the mid 1990s, when Young was general manager at a patio-furniture company in Atlanta, she was frustrated by her employer's inconsistent quality control. "The owners weren't interested in fixing that, so I left," she says. Confident she could do better, Young started her own company, Windham Castings, only to face quality problems of her own. The fully assembled cast-aluminum furniture Young ordered from Mexico wasn't up to her standards, so she spent vast amounts of time cutting up the tables and chairs, then welding them back together correctly.
By 1999, Young decided it would be more efficient to simply build her own permanent-mold foundry. That's highly atypical in her industry, but the numbers were persuasive: while her company's sales were doubling every year, ship times were long, repairs on imported goods were numerous, and investment in inventory was high.
The following year, Young opened the foundry with her brother, Walt, as cofounder and partner; the U.S. Department of Agriculture loaned them $852,000. More help came from consultants at Georgia Institute of Technology, who traveled with Young to Kansas City to visit Stahl Manufacturing, a working foundry. "Georgia Tech identified them as a leader in the industry," explains Young. The Georgia Tech consultants helped Young choose equipment for her foundry and then, back home, offered her advice on plant design and saw her through the start-up phase. "I didn't know anything about manufacturing," Young admits. "We had to be innovative and efficient, and we learned as we went."
Young certainly learned fast. In the past 18 months, Windham's labor costs have dropped by 10%, cash flow has improved dramatically, and ship times have been halved. During the past year, Windham's revenues grew by an impressive 60%, from $5 million in 2000 to $8 million in 2001.
Today, in the months after last September's terrorist attacks, Young's company enjoys a new advantage: "Made in America" means something again. Sure, patriotism is part of the equation, but we're also yearning to embrace "real" businesses once again. Suddenly, building your own factory seems a lot more admirable than setting up shop in cyberspace; it implies permanence and commitment. But pragmatism also comes into play. "People realize that because we have control over our supply, they don't have to invest in inventory," says Young. "If you're buying outside the country, you're buying container loads that you have to pay for up front. And who knows what's going to happen next?"
It's no accident that Young got up and running so quickly. She had help. Much of it came from Georgia Tech, which is home to the state's Manufacturing Extension Partnership (MEP). In fact, the Georgia program is part of a national network of more than 400 manufacturing extension offices. They're part of the National Institute of Standards and Technology (NIST), with support coming from federal dollars, matching funds from state governments, and consulting fees from companies like Windham. The MEP network's national mission: increase the competitiveness of small and midsize U.S. manufacturers by bringing them state-of-the-art technology and helping them institute best business practices.
It's a mission that makes as much sense today as it did in 1988, when MEP got started. Back then U.S. manufacturers were just starting to get hammered by foreign competitors. Today MEP's mission is critical for a more sobering reason: in the aftermath of September 11, the U.S. domestic capabilities are in the spotlight. Manufacturing, once the sector that the country looked to for innovation, now occupies center stage again. And MEP is helping manufacturers use the best of the technological advances to revitalize existing plants and create new ones in industries that can now only be imagined.
While manufacturers may lack the sexiness of their high-tech brethren, they have something even better: viable businesses that can be transformed with cutting-edge technology and sophisticated ideas, and CEOs who are in the game not for a quick buck, but for the long haul. Also, while many small manufacturers are now struggling to survive, unprecedented opportunities should arise for those nimble enough to respond to new market needs. Such opportunities are not limited to obvious industries like defense, pharmaceuticals, and security. Think, well, patio furniture.
In fact, for entrepreneurs like Debbie Young, MEP offers much more than the know-how of a few talented consultants. Through MEP, Young gained access to the collective knowledge of hundreds of experts nationwide, many of whom communicate daily with one another and with their mother ship at NIST headquarters, in Gaithersburg, Md.
MEP's broad scope is due largely to the unrelenting efforts of Kevin Carr, its national director. Carr joined MEP in 1989 as its second employee. A former civilian Navy worker who had done manufacturing and technology research for the Naval Weapons Center, Carr quickly became known within NIST as a promising, confident young man bristling with ambitious plans for MEP. Five years later, when MEP was still a sleepy program with just seven centers, Carr was appointed its director. He was then just 35, making him the youngest director on the NIST executive board by about 20 years. He was charged by the Clinton Administration with creating a national system of MEP centers within four years. "The task ahead of us was always much larger than the resources available," Carr recalls.
