Given the purportedly dire straits of the manufacturing industry in the U.S, what is one to do? Hang it up? Whine about U.S. manufacturing policy, or the lack thereof? As I'm writing this, it's the Fourth of July weekend, and I'm wondering what Paul Revere would have said about U.S. manufacturing if he had made his famous ride today. "U.S. manufacturing is in trouble! China, global economy, NAFTA! Outsourcing is coming! Outsourcing is coming!" However, there are ways in which U.S. manufacturers can compete, thrive, and win in the global marketplace. First, U.S. manufacturers must find their sweet spot. What is the sweet spot for U.S. manufacturing? It is the location in the global manufacturing value chain where U.S. manufacturing processes are relatively close to research and development and design: upstream in the process, where innovation occurs. You might ask why the U.S. manufacturing sweet spot is located there. The closer manufacturing processes are to innovation processes, the higher the margins and the skills requirements. These are two critical requirements for manufacturing today in America -- the ability to support our higher labor wage requirements, including health care costs, as well as leverage our highly skilled work force. That is only possible if we focus our manufacturing efforts where these factors are positives rather than negatives. Consider the R&D process. New products are created in R&D and eventually "launched" into production. One U.S. manufacturing sweet spot is the transition from R&D to mass production, when the product is new and the manufacturing processes may also be new. In this scenario, a highly skilled and experienced workforce is essential in order to rapidly ramp up production volume on a new manufacturing line. In the early phases of a typical product lifecycle, the margins support higher labor costs as well, but that misses the point. When a new product is launched, the opportunity can only be exploited by getting to market as quickly as possible at the target production volume and with the appropriate quality. An experienced and skilled manufacturing workforce is the only way to accelerate the transition from R&D to volume manufacturing. This is a potential U.S. manufacturing sweet spot. This is not the only sweet spot, but it is one area where skills, experience, and rapid time-to-market support the American manufacturing workforce. In general, the following ideas will help you find your own sweet spot. First, find the innovation engine of your industry and that of your company. In general, the closer manufacturing is to R&D processes, the more opportunity a business has to leverage a highly skilled, yet more expensive workforce. Focus on the transition from R&D to volume manufacturing. Look for areas where complex, high-value final assembly occurs. Naturally, when new products are manufactured, the final assembly processes are initially high value and can be complex. Determine how your organization can focus on these operations. Look for portions of industry value chains where there are mission-critical manufacturing requirements. These areas have more potential to support the U.S. workforce than mature, high-volume manufacturing does. U.S. manufacturing must find the spot at which our skilled and experienced workforce is an asset and not a liability. That means finding the innovation engines of your industry's value chain and then focusing your manufacturing efforts there.