Small and medium-sized companies can compete successfully against the big guys

The Fords, the Boeings and the General Electrics of the world grab most of the headlines, but small and midsized businesses comprise more than 99% of our nation’s manufacturers. What’s more, these companies account for more than 40% of the value of U.S. production and 60% of total U.S. manufacturing employment.

A new report written by the National Association of Manufacturers (NAM) and The Manufacturing Institute (TMI) finds these companies facing fierce future challenges that could require action and attention from legislators and regulators in Washington. “Small and midsized manufacturers are doing many things well and it shows,” says John Engler, president of NAM. “However, there are some growth-related challenges they must address to achieve long-term, competitive success in a dynamic global business environment.”

Changing customer demands, worker shortages, evolving technologies and high costs are constant challenges that may impede the ability of small and midsized manufacturers to compete against foreign competitors. Businesses also face myriad internal management challenges due to limited financial and human resources.

The report cites important competitive strengths that help attract outstanding employees to small and midsized businesses, including a close relationship with their customers and a flexible, innovative approach to doing business.

The NAM/TMI report outlines the 15 best practices that are inherent in successful companies in this size-range. NAM defines small manufacturers as companies with 500 or fewer employees and mid-sized manufacturers as those with 2,500 or fewer. The highlighted practices are:

1. Stay in touch with customers, talk to them about their needs and look to them for new product ideas.

2. Differentiate products and services to better define and develop a competitive advantage.

3. Devote the necessary time and energy to marketing; develop a distinctive product and marketing strategy; and expand and diversify your customer base.

4. Go global: Develop export markets.

5. Ensure that your activity-based cost system is helping your company contain cost increases, focus on which activities are consuming the most resources and highlight non-value added activities.

6. Look for a long-term relationship with a banker who is willing to take the time and effort to understand your company.

7. Invest at least 3 percent of your payroll in employee training; get involved with Workforce Investment Boards (WIBs), government-sponsored training programs and local educational institutions such as community colleges that offer training in manufacturing skills.

8. Explore how experts from a Manufacturing Extension Partnership (MEP) center can help you with your business.

9. Appoint a majority of outsiders with relevant and diversified business experience to your board of advisors, look to those outside directors or advisors for opinions and advice, and welcome their challenge.

10. Develop a plan for management succession. Start estate planning early and continually keep abreast of estate tax laws and regulations.

11. Monitor your company’s viability and competitiveness on a daily, weekly and monthly basis with a set of key performance indicators (KPIs) tailored to your company’s particular business challenges.

12. Weigh both quantitative and qualitative factors in making capital investment decisions. Strike a balance between staying on top of technology and making investments you can’t afford; no company has unlimited resources.

13. Constantly look for opportunities to delegate, to empower your employees at all levels and to create the corporate culture for a high-performance workplace.

14. Speak out to your government representatives at the federal, state and local levels.

15. Stay abreast of legislative, regulatory and policy developments through the general media, business publications, and industry, trade and professional organizations.

For a full-text PDF file of the report or more information, go to

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