Industry Overview: Manufacturing

Posted by The Editors on December 3, 2012
Manufacturing is a broad term. Virtually any process that turns a raw material into a finished product through use of a machine can be considered manufacturing. If you look around at the objects strewn about the room in which you're currently sitting, you'll see that quite a few things are manufactured. However, we can break down the types of manufacturing based on what companies produce or by industry; how they produce them, discrete or flow; and the level of engineering effort required to manufacture them. The universe of manufacturing includes the galaxies of aerospace and defense, automobile and transportation, chemicals and metals, consumer goods, electronics and high tech, industrial and farm equipment, and medical and biotech. Generally, sectors that involve technology and are less mature-especially biotech and medical manufacturing-are high-growth opportunities, whereas those that have reached maturity-chemical and metals, for instance-are waning and have seen much of their growth exported overseas. Manufacturing companies typically emphasize materials management and sourcing functions. Additionally, the majority of overseas opportunities reside with manufacturing firms.

While manufacturing has gotten short shrift in recent years with the rise of the service economy and the information economy, it still occupies an undeniably large piece of the American psyche and a very real place in the heart of American business. Three of the 2004 top ten Fortune 500 companies belong to the manufacturing sector: General Motors, General Electric, and Ford. And while the behemoths of American industry hold their own, a whole new breed of manufacturers, in the guise of specialty medical and electronics equipment manufacturers, rank among the fastest growing and most profitable sectors of the economy.

Within each manufacturing segment-motor vehicle and motor vehicle parts, aerospace and defense, electronics and scientific equipment, medical equipment, industrial and farm equipment, consumer durable goods, chemicals, and good old-fashioned conglomerates-are handfuls of Fortune 500 companies, making the final tally of companies within the industry a large one.

Six Sigma Quality
According to General Electric (GE), Six Sigma is a "disciplined methodology of defining, measuring, analyzing, improving, and controlling the quality in every one of the company's products, processes, and transactions-with the ultimate goal of virtually eliminating all defects." Sigma is the Greek symbol for standard deviation. Six Sigma refers to controlling a process to six standard deviations, which translates into 3.4 defects per million, or in other words, a maniacal focus on quality.

Bill Smith, a reliability engineer at Motorola in the early 1980s, developed Six Sigma. During routine testing, Smith saw that products were failing at a much higher rate than was predicted. He hypothesized that increased system complexity might be the cause of the failure. His solution was to build controls into the system so the process could be measured and acted on before a final product was produced. He convinced Motorola management to adopt the program, and the rest is history. Six Sigma is still proliferating throughout both manufacturing and retail organizations. It is somewhat strange that an industry obsessed with precision would take so long to adopt the methodology. Nevertheless, employers are seeking Six Sigma experience at the analyst level and higher.

Lean Manufacturing
Lean manufacturing was developed by Toyota and its Toyota Production System more than a decade ago. Traditional manufacturing methodologies stress high utilization of machinery with slim regard for cycle time or manufacturing waste. Lean manufacturing, on the other hand, stresses reduced cycle times and waste. Cycle time refers to the amount of time that it takes to complete a set of operations. So, in lean manufacturing, the goal is not to push more goods through a process-say the painting area of an automobile assembly line-but rather to develop a better process. Similarly, lean manufacturing attacks root causes by identifying seven wastes: overproduction, transportation, motion, waiting, processing, inventory, and defects.

Expanded Outsourcing
Though contract manufacturing is not a new concept, its scope continues to increase. Companies such as Solectron and Flextronics already manufacture computers and electronics for companies such as HP, Cisco, and Apple. Now, however, these companies are seeking to expand by tapping new markets, such as consumer electronics and automobile parts, and adding supply chain and materials management services to their offerings. Within the automotive industry, companies like BMW are already experimenting with outsourced production.

Automobile and Components
The leaders in this segment are the Big Three auto manufacturers: DaimlerChrysler, Ford, and General Motors. There are also foreign manufacturers producing autos in the United States, including Nissan, Honda, Toyota, and BMW. Auto manufacturing is one of the most global of the manufacturing sectors. For job seekers, it means potential international assignments. Another good thing about automobile manufacturing is that its end user is a consumer and that consumer is highly influenced by marketing messages and design. Marketers and designers look out; automobile manufacturing is a hot spot for you.

Chemicals and Metals
Chemical and metal manufacturers tend to be process manufacturers; their production is characterized by long, continuous runs. Picture sheets of steel rolling continuously out of a furnace. Chemicals and metals provide the building blocks for a myriad of other products. Large manufacturers like Alcoa not only produce aluminum for your Coke can, but also for 747s. Most of the world's largest metal producers now reside overseas. As with the metals industries, chemicals in the United States are somewhat stagnant but additionally subjected to the vagaries of the oil market. Less susceptible to prices of oil and commodity are specialty chemical manufacturers-companies like Eastman Chemical whose end products require more engineering and production effort than commodity chemicals.

For new graduates, most opportunities are in engineering. Because these companies sell primarily to other manufacturers, marketing opportunities are generally filled by people with technical or engineering backgrounds.

Consumer Goods
Consumer goods manufacturers make everything from apparel to windows and wall coverings, and everything in between. Many companies in this field have design and marketing operations in the United States and manufacturing facilities overseas. Companies in this segment include Newell Rubbermaid, owner of Rubbermaid, Graco, and Calphalon brands. Many companies in the sector, like Whirlpool, manufacture products under both their own brands and on a contract basis for other brands; Whirlpool manufactures products under the Sears brand in addition to the Whirlpool brand.

Because the engineering of consumer goods tends to be well established, the hiring focus is on operations, management, marketing, and design.

Electronics manufacturers (excluding high technology/computer hardware, which are covered in another profile) divide themselves into two camps, consumer electronics manufacturers and industrial manufacturers. The consumer camp is dominated by foreign firms, such as Sony and Matsushita (Panasonic). This sector is, not surprisingly, closely tied to consumer spending and the overall health of the economy. And while everyone has a television and a CD player, the industry thrives on technology changes that create new markets.

As you might have guessed, firms in the industrial space tend to be engineering focused, as their end customers are other businesses (which is not to say that they aren't good marketers). Consumer electronics manufacturers have better opportunities for those of the nontechnical ilk.

Industrial and Farm Equipment
John Deere plowed the way for the industrial equipment industry with the invention of the steel plow that broke through the tough but fertile sod of the Great Plains. Today, industrial manufacturers make equipment for agriculture as well as equipment for construction and mining and diesel engines for large trucks and generators. Since most new construction and mining projects are overseas, the larger companies within the industry have developed significant overseas operations.

As with many other manufacturing sectors, industrial and farm equipment manufacturers look for undergraduates with engineering degrees. However, because much of the focus of these companies is on production and manufacturing rather than product development, they look primarily for mechanical and industrial engineers. In the graduate realm, industrial and farm equipment manufacturers have relatively strong track records in hiring MBAs, especially in account management and business development positions.

Medical Manufacturing
The medical manufacturing industry has the unique distinction of combining manufacturing technology with medicine. For those who go into the field, there is a large degree of satisfaction from the knowledge that you're doing something very good for mankind. The R&D process for medical manufacturing is more akin to that of pharmaceuticals than to industrial manufacturing. Product development includes huge development costs and a lengthy and costly FDA approval process. So, as with pharmaceuticals, a company's fortunes ride heavily on the will of the FDA. The largest companies in the industry include Johnson & Johnson, GE OEC Medical Systems, Baxter, Tyco Healthcare, Medtronic, and Boston Scientific.

Medical manufacturers tend to hire for a wide range of functions, including both engineering and business positions. Many of the business opportunities are in business development and marketing. The firms in the industry also tend to have well-defined product manager roles. Finally, because the of the sector's relatively rapid growth, not only are there likely to be more positions available than in other sectors, but the pace of advancement also tends to be more brisk than in other sectors.

To paraphrase Orwell, some manufacturing sectors are more equal than others. Mature industry segments have been exported overseas for many years. Overall, the manufacturing industry is not growing in the United States. Within the industry, many sectors, such as aerospace and defense and the automobile industry are undergoing continued consolidation. During the recent recession, companies underwent significant headcount reductions.

Bright spots abound, though, and they tend to be exceptionally bright. Areas such as medical manufacturing and specialty electronics manufacturing have been growing steadily. Moreover, they stand to show even more growth with coming advances in nanotechnologies.

While the industry as a whole couldn't be said to be booming, the outlook is much more sanguine now than it has been in recent years. Similarly, as the economy continues to recover, the industry will likely trend up along with it. For job seekers, especially recent college graduates, the outlook appears decent. Manufacturing companies are hiring, albeit at a tempered pace.

Many of the professional jobs in manufacturing are engineering roles. Ask an engineer what she likes about her job and she'll (at least the ones we spoke with) tell you that there's an incredible satisfaction solving a problem and getting something to work. "It melts when I'm working on a problem," says an insider. Whether it's finding a way to manufacture the product that seemed to exist only on paper or breaking up bottlenecks in production, people in manufacturing love the ability to think creatively. Moreover, the cultures of many firms are set up to support innovative, creative thought.

The Real World
"You deliver a real product, you can put it in your hand and touch it, it's not a 'solution' or some other intangible thing," says an insider. There's a certain amount of satisfaction that occurs when you see something you've designed roll off the assembly line.

Got a Life
You won't be putting in many all-nighters like your investment banking buddies. Manufacturing employees rarely log outrageous hours, giving people a chance to enjoy their lives; the predominance of flex time compounds this.

Beware the Military Industrial Complex
Some insiders complain that the complexity of manufacturing companies creates a somewhat stifling bureaucracy. "Its not a startup where you can push your ideas through in a day," says an insider.

Biding Time
Upward mobility in the manufacturing industry is relatively slow. There are ranks of qualified people ahead of you on the road to the executive suite.

No Oz
There's no twister to sweep you away to some fanciful kingdom-manufacturing companies are situated squarely in square states. If you're a cosmopolitan type, you might have to make your own fun in a factory town.

Designers are the engineers who dream up next year's Porsches, Mack trucks, and technical machinery. They interact regularly with other departments within their companies, so communication skills are important-as the industry becomes increasingly mechanized, they are increasingly required to have a high degree of technical savvy.

Commodity Manager/Buyer
Buyers in the manufacturing industry acquire the raw materials (like hot rolled sheet steel, say, or metal stampings) needed to build the things their companies produce. People in these positions get to know the vendors in their little black books well, as they call on them frequently to negotiate costs and shipping dates. They also work closely with their companies' designers, engineers, and production managers. These positions usually require a bachelor's degree in business or engineering and a background in both. Two or 3 years of work experience are also recommended.

Industrial Engineer
Industrial engineers are the glue that holds the manufacturing process together. Responsibilities can include everything from managing productivity and inventory to quality control to designing the layout of the factory floor. Industrial engineers need a thorough knowledge of product design, assembly methods, and quality control standards.

Mechanical Engineer
Mechanical engineers research and develop mechanical equipment and machinery that will help to make operations run more smoothly and efficiently. Like scientists, people in these positions conduct experiments, evaluate their findings, and develop and present new concepts, products, equipment, and processes.

Software Engineer
There are more students preparing to enter this sector of the manufacturing engineering world than any other, so competition may be tough in the coming years. These are the people who design the computer systems that help companies sharpen their competitive edge in the global marketplace. In addition to a bachelor's degree or higher, these positions usually require knowledge of computer programs like FoxPro, Visual Basic, and C++, as well as client/server software architecture design and implementation.

Other Engineers
Aside from the engineering disciplines listed above, the manufacturing industry relies on skilled design, electrical, and quality control engineers, among others. Many eventually move into management positions, where the salaries can soar into the six-figure range.

Information Technology Specialists
IT professionals keep up with rapid technological advances by developing, applying, and managing information technology for heavy manufacturing companies. They function as the mainstay between such areas as finance, human resources, product development, and sales; corporate communications would be lost without this division. Insiders say the way to break into this area of the manufacturing industry is to land an internship while still in college. This isn't to say that you're out of luck if you fail to do so, but most entry-level positions are snatched up by interns after graduation. Requirements include a business or engineering degree and a background in computer science.

Most manufacturing jobs require a degree or background in engineering. Job seekers with MBAs can also find openings in positions ranging from accounting and finance to human resources. And because of the new interest in the team-manufacturing model, manufacturing companies would like everyone they hire to have business skills and people skills. Here are a few other things to keep in mind during your job search:

  • In a market dominated by a few big players, technological advances are what give companies a competitive edge. To stay ahead of your competition, keep your skills sharp and be aware of the latest technologies.
  • Internships are a good way to get introduced to the industry. Some pay, but most are offered for college credit. Some companies also offer programs for recent college graduates where you can spend time rotating through different departments. This is a good way to figure out where you'll be most comfortable.
  • Be open to a teamwork environment. You'll be working with a broad range of people in different roles within the organization. As one insider tells us, "You have to be very down to earth to communicate with people from very different worlds."
  • Understand the market and the company. Read the latest industry and business news publications. Know what the different departments in the company do; jobs within the industry are becoming more team oriented, and roles less clearly defined, so proving your flexibility and broad understanding of the company will make you a more attractive candidate.