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Speaking of Precision

Speaking of Precision is a knowledge preservation and thought leadership blog covering the precision machining industry, its materials and services. With over 36 years of hands on experience in steelmaking, manufacturing, quality, and management, Miles Free (Milo) Director of Industry Research and Technology at PMPA helps answer "How?" "With what?" and occasionally "Really?"

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It Takes a Factory to Make a Manufacturer

Posted July 18, 2014 11:00 AM by Milo
Pathfinder Tags: factory manufacturing

How can you call yourself a manufacturer if you don't manufacture anything?

If they don't really manufacture, why should we call them manufacturers?

The Economic Classification Policy Committee (ECPC) of the Census Bureau is considering changing the definition of manufacturing to include "Factoryless Goods Producers" (FGP's) as part of an update to the North American Industry Classification System (NAICS) 2017.

They say "A factoryless Goods Producer (FGP) establishment outsources all of the transformation steps traditionally considered manufacturing (i.e., the actual physical chemical or mechanical transformation of inputs into new outputs), but undertakes all of the entrepreneurial steps and arranges for all required capital, labor, and material inputs required to make a good." Factoryless Goods Producer Fact Sheet

Buying stuff from other manufacturers isn't manufacturing, it's wholesale trade.

If an establishment doesn't actually manufacture something, why should it be classified as a manufacturer?

If a company doesn't have a factory and means of transforming inputs into goods, why should that be classified as manufacturing?

If a firm doesn't employ workers to transform inputs into finished goods, why is that manufacturing?

We submitted our comments on this issue.

You can too go to http://www.regulations.gov then

  • Type in "NAICS for 2017″ in quotes in the search box labeled 'Rules, Comments, Adjudications or Supporting Documents'
  • Click search;
  • Click the Comment Now!
  • Follow instructions for submitting your comments.

There are many reasons to oppose the creation of a type of manufactuirer called a Factoryless Goods producer. I put a bunch of them in my comments.

But you only have to ask one logical question, really- How can you call yourself a manufacturer if you don't manufacture anything?

And how does that help create statistics we can use if manufacturer no longer means "company that manufactures?"

Photo credit:

We've covered this before:

http://pmpaspeakingofprecision.com/2014/03/17/manufacturing-defined-making-things/


Editor's Note: CR4 would like to thank Milo for sharing this blog entry, which you can finish reading here.

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#1

Re: It Takes a Factory to Make a Manufacturer

07/19/2014 1:09 PM

You mean to say buying stuff from China and gluing your label on isn't manufacturing?

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Re: It Takes a Factory to Make a Manufacturer

07/21/2014 8:12 AM

Yeah, like the "Financial Industry"... industry? My ar$e!

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Re: It Takes a Factory to Make a Manufacturer

07/21/2014 10:39 AM

Don't miss the point here. Governments are desperate to show that their economies are healthy and growing. If you add to the definition of what constitutes manufacturing then you can included previously ineligible figures into your totals and boost your manufacturing at a stroke (of a legislative pen). Without all the faf of investment and new infrastructure and training and all the other things that make increasing manufacturing difficult.

You should applaud your Government. This is creative accounting at it's best.

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Re: It Takes a Factory to Make a Manufacturer

08/07/2014 8:47 AM

Yup, GDP seems to be about the most looked at thing for any country no matter how many flaws there may be in calculating it.

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#4

Re: It Takes a Factory to Make a Manufacturer

07/21/2014 11:12 AM

This may not be that simple a designation as the article and comments imply. I design, build and market test equipment. I send the drawings to a machine shop who actually fabricates the metal parts. I buy other off the shelf components from specialized vendors. I then assemble and calibrate the equipment. My facility has no smokestack, no piles of metal shavings, no heavy equipment, forklift, loading dock, etc. Is this manufacturing?

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Re: It Takes a Factory to Make a Manufacturer

07/21/2014 12:21 PM

Yes. Key words - assemble and calibrate. You are producing added value from "raw" materials, that without your smart input are just a pile of parts.

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Re: It Takes a Factory to Make a Manufacturer

07/21/2014 12:47 PM

The place you assemble and calibrate is a factory... maybe a small one, maybe a work shop, but it is more than a warehouse.

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Re: It Takes a Factory to Make a Manufacturer

07/21/2014 2:04 PM

man·u·fac·ture

etymology

Mid-16th-century (denoting something made by hand): from French (re-formed by association with Latin manu factum 'made by hand'), from Italian manifattura. Sense 1 of the verb dates from the early 17th century.

noun: manufacture

  1. the making of articles on a large scale using machinery. "the manufacture of armored vehicles"
    synonyms:production, making, manufacturing, mass-production, construction, building, assembly, creation, fabrication, prefabrication, processing "the manufacture of aircraft engines"
    • a specified branch of industry. "the porcelain manufacture for which France became justly renowned"
    • manufactured goods or articles.plural noun: manufactures "exports and imports of manufactures"

verb: manufacture; 3rd person present: manufactures; past tense: manufactured; past participle: manufactured; gerund or present participle: manufacturing

  1. make (something) on a large scale using machinery. "a company that manufactured paint-by-number sets"
    synonyms:make, produce, mass-produce, build, construct, assemble, put together, create, fabricate, turn out, process, engineer "the company manufactures laser printers"
    • (of a living thing) produce (a substance) naturally.
    • make or produce (something abstract) in a merely mechanical way. "manufactured love songs"
  2. invent or fabricate. "The Economic Classification Policy Committee (ECPC) of the Census Bureau is considering changing the definition of manufacturing to include "Factoryless Goods Producers" (FGP's) as part of an update to the North American Industry Classification System (NAICS) 2017."
    synonyms:make up, invent, fabricate, concoct, hatch, dream up, think up, trump up, devise, formulate, frame, contrive;
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