{"62522":{"#nid":"62522","#data":{"type":"news","title":"Georgia Manufacturing Survey 2010: Recession Makes Innovation More Critical Than Ever for Competitiveness","body":[{"value":"\u003Cp\u003EThe recession has expanded the business advantages of Georgia\nmanufacturers that compete on the basis of innovation in new or\ntechnologically improved products, processes, organizational structures\nor marketing practices.\u0026nbsp; These innovative companies are more than twice\nas profitable as firms competing on the basis of low price.\u003C\/p\u003E\u003Cp\u003EThat\u2019s one conclusion of the \u003Ca href=\u0022http:\/\/stip.gatech.edu\/wp-content\/uploads\/2010\/10\/GMS-2010.pdf\u0022\u003E2010 Georgia Manufacturing Survey\u003C\/a\u003E,\nwhich also found that companies are preparing for post-recession\ngrowth, expanding export capabilities, addressing sustainability issues\n\u2013 and still dealing with out-sourcing and in-sourcing.\u0026nbsp; The survey,\nwhich included nearly 500 manufacturers, was conducted by Georgia\nTech\u2019s \u003Ca href=\u0022http:\/\/innovate.gatech.edu\/\u0022\u003EEnterprise Innovation Institute\u003C\/a\u003E, the Georgia Tech \u003Ca href=\u0022http:\/\/www.spp.gatech.edu\/\u0022\u003ESchool of Public Policy\u003C\/a\u003E,\nand Kennesaw State University, with support from the Georgia Department\nof Labor and accounting firm Habif, Arogeti \u0026amp; Wynne, LLP.\u003C\/p\u003E\u003Cp\u003EGeorgia has approximately 10,000 manufacturers that provide nearly\n350,000 jobs and account for 11 percent of the gross state product.\u0026nbsp;\nWorkers in manufacturing companies earn wages averaging nearly twice\nthose of workers in retail companies.\u003C\/p\u003E\n\u003Cp\u003EThe survey found a widening profitability gap between manufacturers\nthat compete on the basis of innovation compared to those that use\nother competitive strategies.\u0026nbsp; That gap has grown in each survey\nconducted since 2002.\u003C\/p\u003E\n\u003Cp\u003E\u201cCompanies that compete on the basis of innovation are much more\nprofitable, pay higher wages and more likely to benefit from\nin-sourcing opportunities than firms that compete on low price,\u201d said\nJan Youtie, the survey\u2019s director and a principal research associate in\nGeorgia Tech\u2019s Enterprise Innovation Institute.\u0026nbsp; \u201cAdoption of an\ninnovation strategy can be useful to manufacturers regardless of\nindustrial segment, and is especially important during difficult\neconomic times.\u201d\u003C\/p\u003E\n\u003Cp\u003EAs part of the survey, companies were asked to rank six competitive\nstrategies for their importance to winning sales.\u0026nbsp; More than half of\nthe respondents mentioned \u201chigh quality,\u201d while approximately 20\npercent chose \u201clow price\u201d or \u201cadapting to customer needs.\u201d\u0026nbsp; Fewer than\n10 percent reported \u201cinnovation\/new technology\u201d as a primary\ncompetitive strategy.\u003C\/p\u003E\n\u003Cp\u003EAcross all six strategies, innovation was associated with the\nhighest mean return on sales: 14 percent, compared to just six percent\nfor the low-price strategy.\u0026nbsp; And those financial benefits extended to\nworkers, whose annual salaries averaged $10,000 per year more at\ninnovative manufacturers than at other companies.\u003C\/p\u003E\n\u003Cp\u003EThe top five innovative tactics reported by respondents were (1)\nworking with customers to create or design a product, process or other\ninnovation, (2) signing a confidentiality agreement to access a new\nproduct or process, (3) working with suppliers to create or design a\nproduct, process or other innovation, (4) purchasing new equipment, and\n(5) conducting research and development activities in-house.\u003C\/p\u003E\n\u003Cp\u003EWhile manufacturers of technology products are most often associated\nwith the strategy, innovative companies can be found in all industrial\nsegments, said Philip Shapira, co-director of the survey and professor\nin the Georgia Tech School of Public Policy.\u003C\/p\u003E\n\u003Cp\u003E\u201cMany people think that innovation is something that has to be done\nin a lab, but our results show that innovation occurs more broadly,\nparticularly as companies partner with customers and suppliers to take\ninto account their needs for a new product or process,\u201d he explained.\u0026nbsp;\n\u201cWhile high technology companies tend to be innovative by their nature,\ninnovation occurs across all segments, and every firm has opportunities\nto be innovative.\u201d\u003C\/p\u003E\n\u003Cp\u003ECompanies often cite cost as a reason for not innovating, but\nShapira noted that only 10 percent of companies take advantage of\nR\u0026amp;D tax credits; fewer still use investment tax credits.\u0026nbsp; \u201cWhile\nfinancial incentives can assist innovation, there is a greater need to\nbuild awareness and capabilities among more of the state\u2019s firms to\nundertake innovation,\u201d he said.\u003C\/p\u003E\n\u003Cp\u003EThough more than two-thirds of Georgia\u2019s manufacturers have cut jobs\nor lost sales in the recession, many of these companies are now looking\ntoward the future with plans for locating new customers, boosting\ncapital investment, expanding research and development and continuing\nto reduce costs.\u003C\/p\u003E\n\u003Cp\u003E\u201cWhen we look at their plans, Georgia manufacturers are in an\nexpansive mood, looking for new customers and getting ready for the\nnext phase of economic growth,\u201d Youtie said.\u003C\/p\u003E\n\u003Cp\u003EThe survey found that 70 percent of respondents were looking for new\ncustomers, 20 percent planned to expand capital investment, and 15\npercent planned to increase expenditures on research and development.\u0026nbsp;\nAt the same time, 60 percent of respondents said they still planned to\ncut costs.\u003C\/p\u003E\n\u003Cp\u003EAnother trend studied was growth in the number companies selling to\ninternational markets.\u0026nbsp; More than half of the responding manufacturers\nsaid they were exporters \u2013 and those manufacturers reported 50 percent\nhigher profitability than non-exporters.\u0026nbsp; Some 22 percent of\nrespondents had increased their export sales since the last survey in\n2008.\u003C\/p\u003E\n\u003Cp\u003E\u201cWe don\u2019t find much difference between exporting companies when\ncomparing them by the amount they export,\u201d Youtie noted.\u0026nbsp; \u201cWhat seems\nto be important is the capability to export.\u0026nbsp; We think there is some\nlearning that takes place, and some capability that a company develops\nto become an exporter.\u0026nbsp; That capability translates into improved\nperformance across the board, in addition to creating new markets and\ndifferent margins.\u201d\u003C\/p\u003E\n\u003Cp\u003EThe survey also found that out-sourcing of work has leveled off,\nwith approximately 16 percent of manufacturers affected by the loss of\nbusiness in 2010.\u0026nbsp; At the same time, the percentage of firms\nbenefitting from in-sourcing \u2013 movement of work to Georgia \u2013 has grown\nto nearly 15 percent.\u003C\/p\u003E\n\u003Cp\u003E\u201cOut-sourcing isn\u2019t going away, but it has stabilized,\u201d Youtie\nsaid.\u0026nbsp; \u201cIn-sourcing appears to be growing, which creates opportunities\nfor good manufacturers to benefit from consolidation of production from\nother U.S. facilities or even from overseas.\u201d\u003C\/p\u003E\n\u003Cp\u003EThe study also looked at sustainability issues, and found that 60\npercent of companies recycle and attempt to reduce waste \u2013 one form of\nsustainability.\u0026nbsp; However, just 11 percent of respondents had\ninventoried their carbon footprints or emissions, and fewer than five\npercent were using renewable energy.\u003C\/p\u003E\n\u003Cp\u003EThe bottom line for manufacturers?\u003C\/p\u003E\n\u003Cp\u003E\u201cThe results of our survey can point manufacturers to a way forward\nfor getting ready for the next phase,\u201d said Youtie.\u0026nbsp; \u201cCompanies can\ndevelop innovation capabilities; they can look into exporting and they\ncan collaborate more with suppliers and customers.\u201d\u003C\/p\u003E\n\u003Cp\u003E\u003Cstrong\u003EResearch News \u0026amp; Publications Office\u003Cbr \/\u003E\nEnterprise Innovation Institute\u003Cbr \/\u003E\nGeorgia Institute of Technology\u003Cbr \/\u003E\n75 Fifth Street, N.W., Suite 314\u003Cbr \/\u003E\nAtlanta, Georgia\u0026nbsp; 30308\u0026nbsp; USA\u003C\/strong\u003E\u003C\/p\u003E\n\u003Cp\u003E\u003Cstrong\u003EMedia Relations Contact\u003C\/strong\u003E: John Toon (404-894-6986)(\u003Ca href=\u0022mailto:jtoon@gatech.edu\u0022\u003Ejtoon@gatech.edu\u003C\/a\u003E).\u003C\/p\u003E\n\u003Cp\u003E\u003Cstrong\u003EWriter\u003C\/strong\u003E: John Toon\u003C\/p\u003E","summary":null,"format":"limited_html"}],"field_subtitle":"","field_summary":[{"value":"\u003Cp\u003EThe recession has expanded the business advantages of Georgia\nmanufacturers that compete on the basis of innovation in new or\ntechnologically improved products, processes, organizational structures\nor marketing practices.\u0026nbsp; These innovative companies are more than twice\nas profitable as firms competing on the basis of low price.\u003C\/p\u003E","format":"limited_html"}],"field_summary_sentence":"","uid":"27418","created_gmt":"2010-11-03 14:11:21","changed_gmt":"2016-10-08 03:07:42","author":"Lauren Langley","boilerplate_text":"","field_publication":"","field_article_url":"","dateline":{"date":"2010-11-03T00:00:00-04:00","iso_date":"2010-11-03T00:00:00-04:00","tz":"America\/New_York"},"extras":[],"hg_media":{"62523":{"id":"62523","type":"image","title":"Temcor","body":null,"created":"1449176369","gmt_created":"2015-12-03 20:59:29","changed":"1475894541","gmt_changed":"2016-10-08 02:42:21","alt":"Temcor","file":{"fid":"191488","name":"temcor.jpg","image_path":"\/sites\/default\/files\/images\/temcor_0.jpg","image_full_path":"http:\/\/tlwarc.hg.gatech.edu\/\/sites\/default\/files\/images\/temcor_0.jpg","mime":"image\/jpeg","size":53678,"path_740":"http:\/\/tlwarc.hg.gatech.edu\/sites\/default\/files\/styles\/740xx_scale\/public\/images\/temcor_0.jpg?itok=az4BCYTD"}}},"media_ids":["62523"],"related_links":[{"url":"http:\/\/www.spp.gatech.edu\/","title":"School of Public Policy"},{"url":"http:\/\/innovate.gatech.edu\/","title":"Enterprise Innovation Institute"},{"url":"http:\/\/stip.gatech.edu\/wp-content\/uploads\/2010\/10\/GMS-2010.pdf","title":"2010 Georgia Manufacturing Survey"}],"groups":[{"id":"1281","name":"Ivan Allen College of Liberal Arts"}],"categories":[{"id":"135","name":"Research"}],"keywords":[{"id":"11156","name":"Georgia Manufacturing Survey"},{"id":"167078","name":"School of Public Policy"}],"core_research_areas":[],"news_room_topics":[],"event_categories":[],"invited_audience":[],"affiliations":[],"classification":[],"areas_of_expertise":[],"news_and_recent_appearances":[],"phone":[],"contact":[{"value":"\u003Cp\u003ERebecca Keane\u0026nbsp; 404-894-1720\u003C\/p\u003E","format":"limited_html"}],"email":["rebecca.keane@iac.gatech.edu"],"slides":[],"orientation":[],"userdata":""}}}