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New Directions in Manufacturing: Report of a Workshop
delays in receiving payments can cause problems for small companies. Cash flow becomes a problem because wages must be paid. Third, fewer competitions result in intense pressure to bid low. Major competitions are seen as “must win.” The result is thin margins, greater risk, and overruns. Government agencies often impose cost caps on cost-type development contracts, making it difficult for small manufacturers to make profits. Government agencies often impose, and companies accept, production cost curves before development is complete; these often prove to be optimistic.
Finally, DoD is still struggling to transition its acquisition and business practices to either a commercial business model or a hybrid model. Numerous efforts and initiatives have thus far failed to produce an industrial policy that addresses a changed industrial reality and helps small manufacturers. DoD and independent agencies frequently state that without a clear vision and committed mandate, DoD and its prime suppliers could be in a precarious position with regard to technology and people. Small manufacturers have a vital role to play in addressing these shortcomings, but do not presently have a voice within DoD acquisition groups.
The involvement of small manufacturers is essential to a strong, competitive, and cutting-edge DoD. In order for small manufacturers to prosper, increased integration of supply chains is needed, as well as easier access to technology and better access to capital. Public awareness programs must be created to make working for small manufacturers more appealing to the new work force, including both experienced management and technical staff. A mid-level brain drain is occurring throughout the supply chain. This is a void that small manufacturers can fill, working with each other in partnerships and virtual environments, and working with DoD and major prime original equipment manufacturers.