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Executive Summary
Manufacturing Needs, Practices, and Performance in Georgia, 1999 to
2001
GMEA Evaluation Working Paper: E9901
December 1999
Jan Youtie, Economic Development Institute, Georgia Institute of Technology, Atlanta, GA 30332-0640, (tel.) +1-404-894-6111,e-mail: jan.youtie@edi.gatech.edu; Philip Shapira, School of Public Policy, Georgia Institute of Technology, Atlanta, GA 30332-0345, (tel.) +1-404-894-7735, e-mail: ps25@prism.gatech.edu.
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This study, conducted as part of the assessment and evaluation process of the Georgia Manufacturing Extension Partnership, examines manufacturing needs, practices, and performance for the period 1999 to 2001. The study is based on the 1999 Georgia Manufacturing Survey. The 1999 survey went to all Georgia manufacturing firms with 10 or more employees. More than 700 responses were received and weighted to reflect the actual distribution of manufacturers by industry and employment size. The 1999 survey refines and repeats an earlier surveys conducted in 1996 and 1994.
Problems and Needs
The 1999 Georgia Manufacturing Survey, cosponsored by Georgia Tech’s Economic Development Institute (EDI) and its School of Public Policy, showed that human resources was the most frequently mentioned problem, though it declined in importance for the first time in 5 years.
Manufacturing process difficulties also ranked high among manufacturers’ concerns, as did market development, plant layout, and computer applications. More manufacturers indicated problems in the information technology area—hardware and business systems/software —than they did in 1996. Market development concerns also grew in importance, particularly among firms with fewer than 500 employees.
Technologies and Techniques
Two electronic commerce technologies—electronic mail and Web sites for information and marketing—were the most commonly used technologies noted in the 1999 survey. Use of electronic commerce technologies and techniques increased dramatically. The survey showed that 68 percent of responding manufacturers use e-mail, 59 percent have a Web site, and 22 percent engage in online ordering and selling. It took just one year (1996-1997) for Web site use to go from 5 percent to 25 percent penetration in the state, compared with 7 to 12 years for manufacturing technologies such as computer-aided design or computer numerical control.Among manufacturers with fewer than 50 employees, the numbers run less for e-commerce technologies. For example, only 19 percent of small manufacturers place orders and sell to customers compared to nearly 50 percent of large manufacturers.
Other frequently used technologies and techniques in the 1999 survey included teamwork in manufacturing planning and production; software for production planning and control of orders, scheduling, inventories (e.g., MRP II, ERP); and computer-aided design.
Manufacturing Strategies
Georgia manufacturers typically compete for customer sales first through the quality of their products followed by quick delivery, customer adaptation, and low price. Relatively few Georgia firms compete primarily through innovation or new technology.
Encouraging manufacturers, especially smaller firms, to focus more on innovation is a major challenge in Georgia. Firms that invest in innovation are rewarded. Manufacturers who compete through innovation or new technology report returns on sales nearly 40 percent higher than firms competing through low prices.
Benefits from Georgia Tech
Seventy percent of survey respondents served by Georgia Tech/EDI experienced some benefit. Among these customers, the most frequently reported intermediate benefits were: