The United States is currently the world’s largest manufacturing economy, producing 21 percent of global manufactured products, according to the National Association of Manufacturers (“Facts about Manufacturing,” www.nam.org/statistics-and-data/facts-about-manufacturing/landing.aspx).
But our global competitors are not far behind, and they are closing the gap: China is second at 15 percent, and Japan is at 12 percent.
To maintain its ranking as the world’s leading manufacturer, the United States must capitalize on technological and market opportunities, accelerate the idea-to-market cycle, and increase the number of US innovations and products in foreign markets.
The key to this is standardization. There has never been a more crucial time for American businesses to leverage standards and conformance to build business performance and gain a powerful trade advantage.
Unfortunately, decision makers and executive leaders in many US industry areas far too often demonstrate a marked lack of standards- and conformance-related knowledge. At a time when standards professionals are needed most, this information gap has led to corporate decisions to downsize or eliminate standards-related positions and programs to cut costs. More and more, corporate standards professionals are not being replaced when they retire, and younger professionals are not being groomed for corporate standards roles. On top of that, the challenging economic climate has resulted in some companies further decreasing their levels of involvement in standardization – a mistake that proves very expensive. Failing to recruit and develop standards-based personnel will always leave companies coming up short in the long term.
This is a troubling trend for US industry. We are at risk for a real shortfall in terms of the number of standards professionals as compared to other countries. As US standards experts retire and we relinquish our power and position at the tables where global solutions are developed, the Chinese, Koreans, Brazilians, Indians, and others eagerly exert greater influence. Who could blame them? They’re seizing an incredibly powerful opportunity.
Not only are US companies hurting their own bottom line when they miss out on the opportunities standards provide, US industry as a whole is shooting itself in the foot in terms of global market share and long-term economic strength. For America to stay competitive globally, we must train, retain, and invest in standards professionals so that we do not fall behind our competitors and hinder our economic growth.
STANDARDS BOOST BUSINESS
From design and manufacturing to distribution and marketing, all products and services are affected at some point by standardization. Standards and conformance influence global commerce, inform the direction of innovation, and impact the strength of the American workforce. In short, standards have the power to turbo-charge innovation and fuel a business’ growth.
That is why the American National Standards Institute (ANSI), with its 26 partners from industry and the standardization community, has launched Standards Boost Business (SBB). ANSI and partners believe it will help American companies leverage standards and conformance to win a trade advantage in the global market. Benefits of standardization are clear:
- It has the potential to save your company millions of dollars;
- It can help you accelerate time to market and even expand and open new markets;
- It can save you time and money on research and development, and keep you informed on issues that impact your business.
And keep this in mind: There is a good chance that your competitors are already using it.
The US Department of Commerce estimates that more than 80 percent of global commodity trade is impacted by standardization. That amounts to more than 13 trillion dollars each year. With such numbers, it is easy to see why companies that participate actively in standardization gain a foothold over the competition. In today’s economic climate, you need every advantage you can get.
INCREASED EXPORTS = MORE JOBS AT HOME
In many respects, the manufacturing industry is a barometer of the US economy: US manufacturing is responsible for nearly two-thirds of the nation’s exports of goods (according to the International Trade Association) and 11 percent of the gross domestic product, as NAM’s “Facts about Manufacturing” reveals.
Also, consider this:
- Manufacturing supports 18.6 million jobs in the United States, according to NAM’s facts;
- Manufacturing jobs include roughly 65 percent of US scientists and engineers, according to an August 24, 2011 New York Times Magazine article (“Does America Need Manufacturing?” by Jon Gertner).
American manufacturers, and particularly small- to medium-sized enterprises, should be aware of what they are missing out on in the export market when they do not take advantage of the economic and strategic value of standardization. Ninety-seven percent of companies that export are small and mid-sized businesses, and yet the majority of these companies export to only one or two countries, leaving vast opportunities uncovered. With 95 percent of the world’s consumers outside the United States, we need to grow our exports to grow our economy. The greatest opportunities for growth are in other parts of the world, and it is imperative that US companies tap these markets to find new customers.
Under the National Export Initiative (NEI), President Barack Obama set the goal of doubling US exports in five years, an increase that will support two million American jobs. Realization of this goal requires that exports grow from 2009’s $1.57 trillion to $3.14 trillion by 2015.
Standards are the technical underpinning of many products and services and, as such, play a critical role in removing barriers to trade, enforcing free trade agreements and expanding foreign markets for US goods and services. This results in increased export opportunities for US companies abroad. In turn, this helps create more at-home jobs. It’s time to turn the tide and take steps into the 21st century manufacturing economy and create high-tech, good-paying jobs here in the United States.
REAP THE REWARDS OF STANDARDIZATION
Time and again we have seen that companies leveraging standardization are the ones that capture opportunities in the domestic and international markets.
Standards development enables a company to exert influence on technical content and align its products and services with changing market demand. It provides insiders’ knowledge and early access to information on emerging issues, and helps reduce redundancy, minimize errors, and shorten time to market.
THREE STEPS TOWARD REWARD
Three critical steps companies can take to ensure that they reap the rewards that standards and conformance provide include:
- Participation in standards development activities, both domestic and international – This allows a company to exert influence on technical content and its products and services with market demand. By participating in such activities, your company has the opportunity to directly influence the requirements and guidelines for your product;
- Reliance on standards to design your products and services, and embracement of recognized conformity assessment systems to test, inspect, certify and accredit them – Not only will this help you assure quality and customer satisfaction, it will also facilitate cross-border interoperability, ensuring market access for components and products you manufacture in all countries in which you want to sell;
- Utilization of standardization as a strategic business tool – Put in place a corporate policy that supports standards development and use right alongside quality, safety, intellectual property, and environmental performance. It is just as important to the long-term health of your business.
POWER OF STANDARDIZATION
It comes down to this: Those who understand how to effectively influence and address standardization and compliance issues have the greatest success in the global marketplace.
Think about it. If your experts are active participants in standards development:
- They will be the ones to help shape the requirements and our preferred positions that the United States brings forth to these international forums;
- They will be the ones to influence the global standards that cross borders and expand markets worldwide.
Domestically, the opportunities are just as great.
The US government recognizes the advantages of a flexible, responsive, timely and reliable standards and conformance system. Through the National Technology Transfer and Advancement Act (or NTTAA), the government has affirmed its commitment to using standards developed by private-sector standards bodies as a means to carry out their policy objectives or activities whenever possible. Another thing to keep in mind is that voluntary standards are often later adopted into legislation. Consider the advantage that affords to those companies that participated in the shaping of those standards: not only are they ahead of the game in aligning with regulation, but they are actually influencing the way their entire industry conducts business. This is a huge competitive edge.
Standardization, particularly in high-tech manufacturing industries like electric vehicles (and alternative energy sources such as nuclear, wind, and solar technologies, as well as smart grid, nanotechnology, and cyber security) can help US business shape enormous growth and reap the rewards from that influence.
TAKE YOUR SEAT AT THE TABLE
As an executive you really have two choices: position your organization to take a seat at the table and be part of the process, or let your competitors (both foreign and domestic) dictate the way you do business. Remember, both standards and conformance represent critical business tools that must be managed alongside your organization’s quality, safety and environmental policies.
Despite the highest jobless numbers in a quarter century, companies across industry sectors are reporting difficulty in finding skilled workers. At the same time, there are millions of people across America with abilities and ambition that are just waiting to be tapped. With job creation and the economy at stake, we cannot afford to wait. The time to act is now.
Let’s meet the moment.
S. Joe Bhatia, is president and chief executive officer of the American National Standards Institute.