Manufacturing still an option for entrepreneurs

Most discussions of new businesses and jobs include some mention of manufacturing. The history of business in the Tiffin area is well known in terms of the manufacturing jobs that have left the area over the years.

During the campaign, President Donald Trump made promises to keep manufacturing jobs in the United States. His claim to having a hand in keeping jobs at Carrier and threats to American car manufactures about making cars outside the country are examples. But is manufacturing an option for someone wanting to start a new business today?

As stated in this column before, most new jobs are created by new businesses. But starting a manufacturing businesses is typically more complex than starting a service business.

Manufacturing concerns take a much larger initial capital investment. This kind of capital can be more difficult for entrepreneurs to raise because of the risk involved if the firm fails.

David Zak, president and CEO of Seneca Industrial & Economic Development Corp., said manufacturing is a strength of the area: “One in four people in Seneca County works in manufacturing, which is 2.4 times the national average.”

Manufacturing also is the major focus of the new cluster strategy SIEDC will be pursuing in targeting for growth. “Three of our four target clusters are in the manufacturing sector,” Zak said. “Food processing and agribusiness, automotive and industrial machinery.”

The Small Business Administration has a section of its website devoted to those wanting to start manufacturing businesses. It includes a link that lists numerous alternatives for financing a new manufacturing business. It also encourages those considering starting this type of business to engage in lean manufacturing, a systematic approach to eliminating waste in the production process.

For entrepreneurs, manufacturing is a real option for growing an existing or starting a new business, according to Andrew Felter, president and CEO of Webster Industries in Tiffin. “The U.S. business environment is demanding rapid reshoring of automated, flexible, lean and data-rich production systems, along with services to support those operations,” Felter said.

From 2000 to 2010, the number of Ohioans employed in manufacturing decreased by 40 percent. Much of this was due to the movement of steel jobs to China and the recession that started in 2007.

However, since the end of the recession, the Bureau of Labor Statistics said goods produced in Ohio increased 28 percent between 2000 and 2015. Manufacturing employment is up nearly 11 percent since 2010, although there are still fewer industrial jobs than in 1990.

These productivity gains have to do with technological innovations that typically have computer-driven machines doing what used to be labor-intensive work. Manufacturing productivity gains in Ohio have regularly outperformed the national average in recent years. This has allowed workers to generate more products without having to work more hours.

In fact, the human resources problem for manufactures today is that they cannot find employees with the skills needed to run the more sophisticated machines now used in manufacturing. The goal of manufacturing is to make products that people and companies will purchase and use, not to employ people to make those products.

Felter said the challenge for many manufacturers today is finding people with the right training.

“In the coming months and years, demand for technicians and manufacturing associates will increase, along with wages and cost,” he said. “The labor market is tight and there is a real lack of talent that is interested in manufacturing from past stereotypes.”

Cleveland is cited as one of the cities growing its manufacturing base. Much of this increase is coming from medical device industry and creates middle-class jobs that pay higher and are looked at more respectfully. Industrial firms are hotbeds of research and development. Manufacturing generates 75 percent of private-sector research and development spending in the United States.

Felter said Tiffin already has several entrepreneurial manufacturing businesses such as Sarka Sheet Metal, JEB Machine, Arnold Machine, Tiffin Loader Crane and Tiffin Insulators. “The entrepreneurial spirit is positioned well for starting new manufacturing businesses and thriving in Tiffin and other communities in the U.S. making a positive economic and societal impact.”

Perry Haan is professor of marketing and entrepreneurship at Tiffin University. He can be reached at (419) 618-2867.