A new story by Reuters (“U.S. manufacturers try to ride out the storm“) discusses the challenges that US manufacturers face in this economy.  The article came out of the Reuters Manufacturing Summit in Chicago this week where executives characterized the near-term outlook and the velocity and time of a recovery as highly uncertain.  On a positive note, many said their companies were quick to respond to changing conditions by slashing production when economic activity fell off a cliff in late 2008.

This is critical.  We’re seeing a massive reset right now where capacity far exceeds current demand in many manufacturing verticals.  The other problem, which I’ve talked about several times, is inventory (see “Inventory control plays critical role in economic recovery efforts” and “Inventory masking true GDP weakness“).

As painful as it is, this reset needs to happen.  Manufacturers need to get their production aligned with the new realities of demand and align their inventory levels to this reality as well.  This is going to mean the closure of plants and the painful domino effect that comes with it.  But, it’s the only way.  It’s good to see that strong action is being taken in this area according to the report.

Related articles:

• Manufacturing Drops to 28-Year Low (abcnews.go.com)
• Manufacturing contracts for 12th straight month (money.cnn.com)

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Tags: Inventory, Manufacturing
Posted in Supply chain management
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