Maryland - USA - October has been a month where Maryland has celebrated the state’s manufacturing sector through a series of events, forums and conferences.
The state hosts high caliber industry sectors — aerospace and defense, information and technology, cybersecurity and biotechnology but it is the emergence of new technologies that has seen the evolution of advanced techniques that has taken Maryland’s manufacturing sector into the 21st century.
Maryland has recently released a survey that shows how the state’s manufacturing firms play a crucial role in the state’s economy, employing more than 100,000 workers and generating revenues in excess of $20 billion?. We have bullet-pointed some of the survey’s findings below:
- DBED’s survey of manufacturers found that 55 percent identified themselves as advanced manufacturers, and that these firms employed 62 percent of all workers. Almost two-thirds of Maryland manufacturers consider themselves to be “green” or “clean” manufacturers.
- More than half of all advanced manufacturing firms were planning on making continued investments in advanced manufacturing processes within the next 12 months, while one-fifth of traditional firms were planning on making new investments in this area.
- The majority of advanced manufacturing firms consider themselves as such because they have the ability to custom-manufacture products to customer requirements and use automation in their production processes. Due to Maryland manufacturers’ focus on producing leading-edge, customized products in low production volumes, the use of advanced robotics in the manufacturing process has not been widely adopted here. Robotics are more likely to be found in manufacturers that produce large numbers of similar products.
- The most likely area of investment was in the automation of production processes, followed closely with the related goal of optimizing manufacturing processes. A significant proportion of firms were interested in investing in the use of cutting-edge materials to create their products, improving worker skills, and bringing in outside consultants to advise them on their investments. The highly specialized area of robotics was the least common area of investment.
- Most Maryland manufacturers were found to be small, locally-owned businesses. Seventy percent of manufacturing firms in Maryland reported being family-owned, and 81 percent reported operating out of one location. Family-owned firms were much more likely to be sole proprietorships than other firm types. The vast majority of manufacturing establishments (75%) employ fewer than 20 workers. However, these employ only 12 percent of all manufacturing workers. About half (48%) of all manufacturing firms are involved in creating finished goods for sale to customers. Seventeen percent are involved in creating products engineered to order, and 12 percent process raw materials.
- The survey found that smaller firms were less likely to have invested in advanced manufacturing technologies or techniques. Family-owned firms were somewhat less likely to have made these investments than other firm ownership types, though the majority of family-owned firms report that they are advanced manufacturers (52% vs. 62%).
- Lots of the firms that were surveyed reported that their markets and sales either remained stable or grew over the last year. Interestingly, 37 percent of firms saw their own company’s sales increase over the last 12 months, but only 28 percent saw the overall market for their product increase, which implies that many of Maryland’s firms are having success at penetrating existing markets and growing their market share. Note that these firms are growing sales without growing employment, as almost 60 percent reported that their employment has neither increased nor decreased over the past 12 months.
- Maryland’s firms are positive about future growth, with 61 percent forecasting growing sales over the next year. Even so, only 43 percent are forecasting a need for new employees over that time period indicating that, on average, Maryland manufacturers have high levels of productivity, which allows them to increase sales without increasing employment.
- One-fifth of surveyed manufacturers had plans to expand over the next 12 months, and 81 percent of those planned to expand in Maryland.
- Almost half (46%) report that they sell the majority of their products to customers outside of Maryland. For advanced manufacturers, the rate is 54 percent.
- The value of Maryland’s manufactured exports has grown over 29 percent since 2009. Even with this growth, only 31 percent of Maryland’s manufacturers are exporters. Companies that report themselves to be advanced manufacturers are almost twice as likely to be exporters than those that do not (39% vs 21%). The top three most common reasons for not exporting were that firms felt that their products were only intended for local markets (56% of all non-exporters), they lacked resources, knowledge, or internal expertise (12.7% of all non-exporters), or that U.S. markets absorbed all of their output, leaving no need to find foreign markets (12% of all non-exporters).
- The majority of Maryland manufacturers are involved in the supply chain of other firms (either as a customer or a supplier) that are based locally or within other U.S. states. However, only 23 percent reported being involved in international supply chains. Manufacturers saw some areas of supply chain risk that had the potential to negatively affect their businesses. Highest on the list was reliance on small businesses for components or sales, with problems with the availability of components or raw materials coming in at a close second. Lowest on the list were threats to a firm’s trade secrets or intellectual property, although 18 percent of firms felt that this was an area of concern.
- More than half of Maryland’s manufacturers report that there is a lack of qualified workers to fill vacant positions in their industry. Fully 77 percent of manufacturers feel that healthcare costs are a problem for their firms, and almost 60 percent feel that labour regulations are an issue that is affecting their businesses.
- Almost 40 percent of survey respondents reported having problems recruiting workers over the past year (not surprising considering most firms did not hire new employees). Of firms that did hire, 90 percent reported problems with finding skilled workers. More than two-thirds of firms with labor shortages reported that their shortages were long term problems. To help combat skills shortages, and to keep existing workers current, the majority of Maryland manufacturers surveyed (74%) reported having internal training programs for their workers.
- More than one-third reported investing in R&D, and almost all of those firms operated their own internal R&D programs. Sixty percent of firms reported R&D activities in collaboration with their business partners. A small percentage reported technology transfer and licensing agreements with University or Federal laboratories and research institutions, a surprising outcome due to the volume and breadth of research being performed in Maryland by Universities and Federal laboratories. Only 17 percent of Maryland manufacturing firms hold their own patents. Of those, a third have applied for patents within the last 12 months. While patents serve to protect a firm’s intellectual property, patent applications often demand disclosure of trade secrets. Many companies (especially advanced manufacturers) instead rely on speed to market and industry-leading technological innovation to maintain their market position.
- Fifty percent of the State’s Research and Development tax credit funding in FY2013 went to manufacturing firms, which make up a third of all firms receiving those credits.
- Slightly under one-third of manufacturing firms sought financing from banks or other financial institutions over the last year. Of these, 59 percent reported that the experience was somewhat difficult (20%) or very difficult (29%). Since advanced manufacturing companies must constantly reinvest in technology in order to remain competitive, difficulties with obtaining capital can be a barrier for success for manufacturers in Maryland. The most common reason for seeking funding was to purchase capital equipment (36 percent of respondents). The second-most common reason was to finance daily operations (18 percent), followed by expansion of existing facilities (12 percent).
For more information about Advanced Manufacturing in Maryland please get in touch with us or contact the Maryland Department of Business & Economic Development directly.