Original equipment manufacturers (OEMs) in Kentucky can pat themselves on the back as 2014 draws to a close. The manufacturing industry has played a major role in the state's economic gains over the course of this year, according to the Kentucky Cabinet for Economic Development's latest reports.
"Manufacturing is not only a tremendous driver of Kentucky's economy, but it also directly impacts the well-being and stability of thousands of families throughout the Commonwealth," Governor Steve Beshear said in October. "Kentucky's manufacturers continue to be a source of quality, high-paying jobs. I want to thank these companies for making Kentucky stronger as well as the employees who work tirelessly to make these great products."
How is manufacturing driving growth?
With roughly 220,000 jobs spanning the more than 4,000 Kentucky-based manufacturers, the organization pointed out that the industry is responsible for supplying one in every eight jobs for state residents. This statistic is set to become even more impressive in coming months and years, as many of the 200 manufacturers that announced in 2013 they would be expanding within the state's borders will begin to fulfill their goals. The CED indicated that the expansion and addition of factories will create as many as 7,500 new jobs.
In addition to employment benefits, Kentucky manufacturers are also outperforming the nation as a whole, according to the CED. Global exports that originated in Kentucky totaled $23.5 billion in 2013. If that's not impressive enough, the CED indicated that by October of this year, manufacturing exports had already expanded 10 percent over 2013's numbers, which is 7 percent higher than the national average growth.
What does this mean for the future of Kentucky manufacturing?
OEMs in the state can make efforts to remain in position for further expansion, as everything from reducing lead times to revising purchasing and supply management strategies may have positive impacts on production speed, quality and efficiency. To keep up with increasing demands, OEMs should place emphasis on ensuring they can deliver their products on time. This may involve revisiting inventory management, as running out of class C components or raw materials in the middle of a build can throw a wrench into a delivery timetable. Now may be the time for OEMs to look into options such as Just-In-Time (JIT) inventory or vendor managed inventory (VMI) programs that can vastly reduce the risk of stock-outs and ensure materials are on-hand as they are needed.