I have seen a lot in my 30 odd years of leading a manufacturing software company, but most recently I’ve been really intrigued by the ways small and mid-sized manufacturers are leveraging technology to be competitive. It reminds me of an article that I read about a year ago that made me chuckle, it was entitled something along the lines of the average manufacturer being smaller than you think and getting smaller.
When I first started working with what industry calls the “tier two and tier three” level of manufacturers – meaning, businesses that are generally below a billion dollars in revenue, and often under $500 million-the playing field was pretty stratified. The “haves” in the tier one conglomerate world had access to the biggest and best technologies because, well, they could afford it. The smaller, but often far more innovative companies generally relied less on technology and more on their brains, brawn and connections to make things happen.
As IT companies in the software sector started looking downstream at the possibilities to cost effectively service smaller manufacturers, a funny thing started to happen. t Smaller manufacturers started outperforming their much bigger rivals on multiple fronts.
Let’s look at the data. Estimates indicate that there are around 250,000 manufacturers in the U.S. that have fewer than 500 employees. If we do the rough math and divide it by 50 states, that means that each state would have an average of a whopping 5,000 manufacturing companies headquartered there. That’s a lot of companies, and a lot of potential opportunity for those cities housing them.
So here’s where the data gets really interesting: these smaller businesses produce more innovations per employee than large manufacturers. What’s more, they not only bring business to their communities by way of the job sector, they are the catalyst for future innovation often later leveraged by the industry giants. Looking to the future, I see even more bright spots on the horizon for mid-market manufacturers, because there is a new wave of technology coming that either individually or collectively is going to be game changing.