There’s excess production capacity in America’s industrial base. Yet finding capable local suppliers is an opportunity that continues to be overlooked

 

US manufacturing is stuck in a negative feedback loop. Consider Ford CEO Jim Farley’s otherwise well-intentioned comments relating to his company’s workforce challenges. “We are in trouble in our country,” Farley recently said, referring to America’s acute need for trade talent. “We are not talking about this enough.”

Yet for the past decade, talking about manufacturing’s labor shortage is all we’ve done. What we seem incapable of doing is escaping the narrative. So much so that today, opportunities for OEMs and product manufacturers to source more local and domestic manufacturing are going by the wayside. Despite workforce challenges, there’s often ample resources available to manufacture more in the US.

J.B. Cheatham leads Conroe, Texas-based standout Minco CNC. I asked Cheatham recently if his shop had production capacity that could be utilized with current staff.

“Yes, we have available capacity that could be utilized,” Cheatham responded. “Our bottleneck analysis shows that while we have constraints in specific areas (like material availability and certain machining operations), we are not running at full capacity across the board.” He added, “The key qualifier is ‘the right customer’, meaning work that fits precision machining/welding capabilities in segments such as oil & gas subsea components and other engineered like-minded segments, where we can leverage our established quality systems and technical expertise.”

Cheatham acknowledged a perception gap. “The industry talks about talent shortages, but the real issue is more nuanced. Shops like Minco have capacity but can’t just absorb any work – there’s a matching problem between available capacity and work that fits capabilities and our economic model. The ‘talent shortage’ narrative sometimes obscures the fact that many shops have underutilized capacity for the right projects.”

It’s a key insight – the “right project.” But considering that no two manufacturers are alike, each with unique capabilities and talent, the possibility of finding the “right fit” within established industry supply chains, seems high.

Two things seem to be standing in the way.

For one, procurement managers often gloss over “fit” to start with price and lead-time. More deals pivot on “lowest cost, shortest lead-time” than not. It’s a practice that vexes the manufacturers that OEMs and product manufacturers rely on.

I interviewed Daniel Hester, CEO of Austin-based American Precision Engineering in 2024, and his comments have stuck with me since. Hester’s APE had won an opportunity on what he described as a “wheelhouse” project. “In the end, it was solving a very complex geometry problem — how can we figure out how to get all this functionality into a very small space from what essentially began as a crayon drawing? To be trusted with that process means everything,” he said at the time.

“Consider the alternative,” Hester added. “What we often see is that a customer will design something, give it to us and basically say, ‘how much to make this?’ The cost is often astronomical — and we tell them why. They go back to the drawing board, and they bring something back again. But it’s the same price for a different reason,” he laughed. “They quite often end up throwing that part ‘over the fence’ (to offshore providers) to shop on price, when the better approach would be to hire a design-to-manufacturer like us. We’re involved from the outset, but then share in the rewards of the value we’re created,” Hester explains. “And when I talk to companies that are like, ‘oh, we send this stuff overseas,’ I’m just like, ‘how do you sleep at night? You’re literally slitting your own throat.’”

I wrote then that “This self-defeating behavior, where companies wish there were more capable domestic manufacturing options, only to perpetuate offshore supply chains, is maddening — but also a habit that’s hard to break.”

The other “bottleneck” to procurement reform is, well, us. Manufacturers are notoriously tight with information. If we want a more transparent, accessible ecosystem, it’s up to us to make it so.

There’s no shortage of good ideas to help OEMs and product manufacturers source new providers. In fact millions are being invested in digital platforms that would match demand for domestic manufacturing with supply – platforms like Sustainment, CONNEX Marketplace, MFG.com, Thomas, and others. In food and beverage, similar efforts have taken root, including PartnerSlate and Keychain.

Perhaps a sleeper in the group is a production platform developed by Houston-based, energy manufacturer NOV. I’ll detail their efforts in a follow up column.

Ironically, what’s lacking in this dizzying array is the very thing suppliers value: insight relating to “fit.” Finding people and culture and expertise that often make or break a deal – some of the “nuance” that Cheatham mentioned – is often hard for buyers to glean from data

None of this is easy. But influencers throughout manufacturing’s value-chain have been working tirelessly to raise awareness, revise school curricula, innovate with apprenticeships and the like, and altogether engage industry to train and deploy more talent. It’s been an epic undertaking, and for some of us, it’s evident that we’re turning a corner on the workforce challenge.

Until we change the narrative and embrace the possibilities of what can be done, and not what’s lacking, the outcome all of us seek will continue to be elusive.

Bart Taylor is executive director of the Greater Houston Manufacturing Association and founder of InsideMFG. Reach him at [email protected].