A thriving manufacturing sector is already boosting local economies across the U.S.—but it's often overlooked. Meet the titanium economy

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We’ve all seen pictures of small towns that lost their last factory and never recovered. Their high streets are dotted with vacant shopfronts, and young people are leaving wherever they can in search of better opportunities. Across America there are communities that can be described this way, but there are also those who break this mold.

In fact, The death of manufacturing has been greatly exaggerated.

Manufacturing employment rose from 11.6 million jobs in January 2011 to 12.5 million in October 2021. The United States is home to hundreds of manufacturers that provide world-class products and good financial returns. Collectively, These companies constitute the “titanium economy”; Their performance is critical to our nation’s needs in driving sustainable and inclusive growth.

The titanium economy is hidden in plain sight. Many of these companies are based far away from major media markets and do important things like manufacturing or refining lifting equipment. The median annual wage is $63,000, compared to $30,000 for service jobs—most of these jobs go to people without four-year degrees.

Many are also buried in the birthplaces of their founders and families.

An estimated 688 titanium commercial companies are public—a fifth of the private number. When value is created, it’s not just Wall Street, it’s Main Street. One of the most interesting things to emerge from this cross-country set of research on these companies is that the birthplaces of the titanium economy often seem like good places to live.

If you conjure up images of a quaint workshop with bleary-eyed workers and a few muffins on Monday. Think again. About 80% of public titanium commercial companies are small to mid-cap, with sales between $1 billion and $10 billion and between 2,000 and 20,000 employees. The 380 largest privately held titanium business companies have annual revenues of approximately $250 billion.

One of the hallmarks of this team is that they excel at organic growth driven by innovation. That’s because they are leading players in “micro verticals,” clusters of ten to fifteen businesses in specialized segments. Because the market is narrow, the companies and their customers are intimately known.

Florida-based Welbilt, a major player in the $80 billion industrial kitchen equipment market; Take New Port Richey. Welbilt knew that restaurants and other large kitchens had been monitoring the temperature in each of their machines for a long time. Therefore, After three years of trying, It created the kind of innovation that didn’t make headlines outside the trade press: a common controller and user interface that could be used across all Welbilt equipment; Productivity Reliability; Improves quality and safety: along with company performance.

All of this is interesting in itself, but it’s more than that: the success of Titanium Economy companies can spread beyond their bottom line. Their strength means they can become hubs for related industries, bringing in talent and investment. Then to attract more companies. and so on is called the “Great Amplification Cycle”.

Simpsonville, South Carolina, was thrilled to attract a Michelin factory when its textile industry was in decline. He then followed automobile manufacturers and worked in various adjacent industries such as warehousing and commercial cleaning.

But Sealed Air was there first. Founded in 1955, Titanium Economy Company is known for making bubble wrap. Its success has been central to the community throughout and a living testament to Simpsonville’s potential for other industrial companies. The government has created a hospitable business environment, high schools, universities, And the government has also played a key role by building and refreshing the talent pool with other institutions.

America’s titanium economy has one problem: We need more of it. Shipping around the world There is a stronger economic case for domestic manufacturing due to rising insurance and labor costs. As shown by COVID-19, we have the disadvantage of not being able to meet critical needs ourselves.

However, more than just a titanium economic hub needs to be nurtured. across the United States; Leaders from the public and private sectors and academia can do more.

Titanium business companies are undervalued and less than one percent of capital goes into industrial technology. Public sector support is limited, especially compared to major competitors such as China and Germany. Another thought challenge: The emphasis on four-year college degrees dramatically reduces the manufacturing possibilities for people who would be well-served.

You can do more: It should be done urgently. If properly nurtured, more and more titanium economic hubs will create circles of innovation and prosperity in every region.

This effort need not be serious. Investors can help themselves by evaluating the merits of industrial technology. Schools can open students’ eyes to careers in manufacturing and encourage girls to consider these trades. Trade unions can extend apprenticeships. Trade bodies are nationally recognized; Transferable credentials can be developed. State and national governments can consider ways to support Industry 4.0, especially in distressed regions.

The titanium economy is a hidden gem that defies much of the conventional wisdom about American manufacturing. Building on its strengths can promote greater efficiency and resilience and improve competitiveness.

Asutosh Padhi is the North American Managing Partner of McKinsey & Company and co-author. The Titanium Economy: Better Industrial Technology; How to create a faster, stronger America.

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