What is Manufacturing in Business? | Examples of Manufacturing Companies – Video & Lesson Transcript | Study.com

History And Development of Manufacturing

Before the large-scale production of goods, many items were made by hand and took specific skills and human labor to create. Manufacturing businesses became popular in the 19th century during the Industrial Revolution, which began in Europe and spread to North America. New technologies such as steam power and natural sources of fuel allowed for production to be sped up by a large margin, therefore meaning more goods could be manufactured in a shorter amount of time. The number of workers and human labor required to produce these goods decreased because of newer and more automated technologies as well.

One of the most important developments during the Industrial Revolution was the invention of the assembly line. During the assembly line process, workers would each have a specific task to complete at their station before sending the product to the individual responsible for the next step in the assembly process. In 1901, Ransom Olds invented and patented the assembly line to increase the production on his automobile manufacturing line. In 1913, the first Ford Model T automobiles were produced using Henry Ford’s moving assembly line, which was an improvement on Olds’ original concept. Ford added conveyor belts to the line to increase output even further.

The Ford Model T was the first product to utilize the moving assembly line, an improvement made to Ransom Olds’ assembly line by Henry Ford that featured conveyor belts.

By the early 1960s, engineers began to experiment with robotic machinery. Robotic arms, in the automotive industry, for example, reduced the human labor involved in the assembly process and allowed even more products to be manufactured in less time. The additional goods delivered to the market benefited the growing number of consumers as well as the national Gross Domestic Product (GDP), in turn growing the economy. The Market Value Added (MVA), an estimate between the value of a company or the economy and its relationship with investors and consumers, also benefits when more goods are able to be delivered to consumers with a high demand for a product.

Types of Manufacturing Businesses

Manufacturing businesses utilize many manufacturing methods to provide consumers with the products they desire. Some of the ways which manufacturing businesses may conduct operations to output as much product to the consumer market as possible include:

• Mass production: The industrial process of creating large amounts of a product at once. This method is cost-effective and saves time and labor while generating large outputs of products and profits.
• Pre-fabrication/Fabrication: Fabrication is another term for manufacturing used mainly in the construction industry. Pre-fabrication refers to the manufacturing of components off-site before they are assembled somewhere such as a construction zone. Prefabrication saves time during the final assembly process.
• Manufacturing engineering: The design, development, and implementation of new technologies to produce goods more efficiently. Automation and computerized technologies, such as robotic arms, are the result of manufacturing engineering and reduce human labor while increasing output.

Examples of Manufacturing Business

The processes involved with manufacturing businesses directly impact the products and industries which require manufacturing to generate a profit. Examples of manufacturing companies and the largest sectors involved with manufacturing are:

• Ford Motor Company (Automotive technology production)
• General Electric (Power production)
• Boeing (Aviation and spacecraft production)
• General Motors Corporation (Automotive production)
• Michelin (Automotive/rubber production)
• Under Armour (Textile and clothing production)
• Exxon-Mobil (Petroleum and fuel production)
• HP Inc. (Computer technologies and software)
• Nestle (Food and beverage production)
• Pepsi Co. (Food and beverage production)

A manufacturing company may be responsible for more than one product on the consumer market. These products do not have to be in the same industrial sector, though in many cases the products that a manufacturing company outputs are related in some way. For example, a company may only produce food or only produce hygiene supplies. Manufacturing business examples that follow this trend include:

• Hershey’s: Specializes in chocolate and candy products such as milk chocolate, peanut butter cups, and malted milk balls
• Procter & Gamble: Produces cleaning supplies and personal care items, all of which are used frequently in the household
• Nike: Manufactures clothing and textile products including shoes, shirts, socks, and pants

Safety in Manufacturing Businesses

Due to the high volume of production that often occurs within manufacturing businesses, many are regulated by strict rules and procedures set forth by the Occupational Safety and Health Administration (OSHA). Remaining incident-free, operating in a safe and efficient manner, encouraging environmental and eco-friendliness, and properly complying with legal measures are all objectives that companies promote. OSHA closely monitors and inspects manufacturing businesses to ensure that regulations and labor laws are being followed. They also exercise the authority to hold companies accountable for non-compliance through fines and training programs.

Labor unions also play an important role in the manufacturing industry. Unions represent the workers within a specific company or field and fight for their rights as individuals. Though labor unions have become less prevalent in the manufacturing industry within the last 50 years, they continue to negotiate workers’ rights, wages, and benefits within the industry. Companies must pay careful attention to labor laws, environmental laws, and state and local regulations to comply with both union and OSHA standards.

Profit And Loss in Manufacturing Businesses

Within any business, either manufacturing or consumer wholesale, a margin for profit and loss exists as part of the economic cycle. When customers have a high demand and manufacturing companies are able to produce enough output to meet the demand, a profit is made. Conversely, if there is a high demand for a product but the product cannot be produced, then a manufacturing company or store may incur an economic loss. A similar situation would occur if there is little demand for an item.

Because of innovative technologies such as robotic arms, production rates have increased within manufacturing businesses. These allow a greater profit to be made in less time.

The margin for loss is much more unpredictable than generating a profit from any given item. Losses may be the result of a lack of raw materials or components, a lack of consumer demand, malfunctioning machinery in the assembly process, labor laws causing strikes, or other safety issues. The cost of raw materials may also be higher than the final produced good, meaning that loss is incurred before the product even meets the consumer. Though a rare occasion, companies must monitor this factor as well as other more likely causes of loss in order to plan how to handle manufacturing ventures in the future.

Future Manufacturing

In the 1970s, the United States saw a shift in manufacturing businesses. Goods being produced domestically began to be produced internationally through a concept called offshoring. The Manufacturing Belt of the United States, also referred to as the Rust Belt, became the victim of cheaper production costs elsewhere and was abandoned in favor of greater economic gains. In recent years, the Midwestern United States where the Rust Belt is located has experienced a resurgence in domestic production, bringing jobs and financial gains to the local and national economies. Innovation and implementation of new technologies have greatly impacted these events.

The future of manufacturing appears to be expansive and impactful to the markets which require this process. Technologies are constantly evolving to meet the growing consumer demand and deliver products in the most timely and quantifiable manner. Many manufacturing businesses are shifting to more automated technologies to become more competitive and produce more goods. Employment has also benefitted the manufacturing industry, particularly in the field of engineering. Manufacturing businesses remain an essential aspect of the economy and consumer market and will only continue to grow as technologies and consumer demands evolve.

Lesson Summary

Manufacturing, also sometimes referred to as fabrication, is the process of converting raw materials into a finished good by the use of labor, tools, and machinery. A manufacturing business is a business that uses components, additional parts, or raw materials to make a finished good. Products can be delivered directly to the consumer, to a store, or to a business within another industry such as construction. Manufacturing became more significant during the Industrial Revolution and was improved by the evolution of the assembly line, a production process that allows for higher output while reducing time and labor costs.

There are many types of manufacturing, including mass production, prefabrication, and manufacturing engineering. Manufacturing affects many sectors of the commercial or consumer markets, such as automotive technologies, computerized technologies, aviation, power, fuel, food, and textiles. In the manufacturing industry, there is a large focus on safety and compliance with legal measures, as well as the possibility of both economic losses and gains. The future of manufacturing needs to be innovative in order to meet the growing demand in the consumer market. This goal can be achieved through the implementation of newer, more automated technologies.