Manufacturers Shift Priorities, Search for Markets
Georgia Manufacturers
Compete on Low Price
Manufacturers’ priorities have shifted since 1999. More manufacturers have needs in the marketing and product development areas in 2002 than in 1999. In contrast, concerns about information technology hardware and software declined from peak 1999 levels. Human resource problems are still a foremost worry of Georgia manufacturers, although at below peak 1996 levels. Most human resource needs involved technical and supervisory skills rather than basic skills.
About half of Georgia manufacturers underwent major changes in strategy or structure in the last two years. An increasing share of Georgia manufacturers dealt with these changes by competing on low price. The percentage of Georgia manufacturers competing on price rose from 19 percent in 1999 to 27 percent in 2002. However, low price (along with quick delivery) strategies are associated with lower returns on sales and lower employee wages.
Product Development is Positively Associated with High Performance
More than 60 percent of Georgia manufacturers do some type of product development. Twenty-two percent are developing new-to-the-industry products and 37 percent offer support services that add value to their products. Companies with new to the industry products and value-added service offerings had significantly higher growth, profitability, and productivity than those not engaged in these practices.
Use of Computers is Positively Associated with High Performance
Manufacturers with more than 20 percent of their shop floor employees regularly using computers have significantly higher sales growth, profitability, and productivity. Other findings in the information technology area include:
- Virtually all manufacturers use e-mail
- Also prevalent among the majority of manufacturers are company Web sites, shared databases, and high-speed Internet connections.
- Although most Georgia manufacturers have Web sites, only 6 percent got 10 percent or more of their 2001 sales through the Web.
- Customer requirements drove IT adoption for more than one-third of Georgia manufacturers
- IT adoption was more common among large manufacturers with more than 500 employees than among small manufacturers with fewer than 50 employees.
Georgia Tech-Assisted Manufacturers Had Higher ProductivityTwenty-four percent of manufacturers surveyed used Georgia Tech for business assistance. The top benefits reported by Georgia Tech customers were improved management and employee skills, improved an existing process and increased productivity. Compared to manufacturers not assisted by Georgia Tech, Georgia Tech clients on average experienced a value-added increase of $353,000 to $443,000 (or $3,000 on a per employee basis), adjusting for what value-added per worker would have been if the company had not been a client.
About the Survey
The Georgia Manufacturing Survey (GMS) is a statewide survey conducted every 2-3 years by Georgia Tech's Economic Development Institute and School of Public Policy to assess the business and technological paths of Georgia's manufacturers, and to inform manufacturing assistance programming and regional innovation initiatives. Mail surveys were sent to 4,000 Georgia manufacturing firms with 10 or more employees between April and October 2002. Completed surveys from 636 manufacturers were weighted to reflect the actual distribution of manufacturers by industry and employment size in Georgia. Researchers use results of these surveys to track trends in the state's industrial sector and to improve or design EDI programs to better assist manufacturers statewide. Companies participating in the survey receive customized benchmark reports. The survey was co-directed by Professor Philip Shapira and Dr. Jan Youtie. Research assistance was provided by Kathy Brice, Deepak Hegde, Don Changeau, and Jue Wang.
| For more information | ||
You may also contact: Philip Shapira, School of Public Policy, Georgia Institute of Technology. Email: ps25@prism.gatech.edu; Tel: +1-404 894 7735 |
