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Report: U.S. Falls Behind in Manufacturing, Distribution Innovation

Non-U.S. firms take a 'more holistic view' of manufacturing innovation.

The U.S. may be falling behind when it comes to manufacturing innovation, according to the 2015 Manufacturing & Distribution Monitor Report from McGladrey. Compared to other industrialized nations, the U.S. ranked sixth based on overall innovation and tenth based on manufacturing innovation.

The report, released last week, revealed that many U.S. manufacturers and distributors trail their global counterparts in several areas that fuel innovation and business growth.

Confidence in protecting and growing foreign market share. While U.S. business leaders are confident about protecting and growing domestic market share, many are "uneasy" about their foreign market share, according to the report. Just under 60 percent of U.S. firms expressed any level of confidence about protecting nondomestic market share, compared to 75 percent of European manufacturers and 73 percent of Asia-Pacific manufacturers. The strong U.S. dollar was cited as one of the reasons for the lack of confidence.

U.S. firms lack strong strategic planning processes. According to the report, only 40 percent of U.S. manufacturing and distribution executives said their companies have strong strategic planning processes, compared to 55 percent of non-U.S. leaders.

Fewer U.S. firms have formal innovation processes. Most U.S. manufacturer participants (83 percent) said they have a formalized process to drive innovation, but they're still being outpaces by companies in Latin America (91 percent), Asia-Pacific (90 percent) and Europe (86 percent).

Innovation in the U.S. is less broad-based than other regions. Companies in the Asia-Pacific region take a much broader approach to innovation than any other region. At least 30 percent of thriving manufacturers in this region say they expect to drive growth in 11 of 13 investment categories. By comparison, U.S. companies were focused on only five. "Clearly a more holistic view of innovation may well be what separates winners from losers in the advanced manufacturing sector," said Frank Le Bihan, a principal in McGladrey's international services office, in the report.

Read more about the results from the 2015 Manufacturing & Distribution Monitor in the July 25 issue of MDM Premium.

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