SmartLeads Limited Edition Database Subscription can assist you in finding your best business opportunities! 6-Month & 12-Month subscriptions available. Call 616-786-2500 today to reserve your spot!

Blog

Understanding Value-Added Manufacturing

By Jeff Vedders

We’ve had many clients request that we target value-added manufacturing companies recently. What is value-added?

“Value-added is an economic term to express the difference between the value of goods and the cost of materials or supplies that are used in producing them. It is a measure of economic activity which eliminates the duplication inherent in the sales value figure which results from the use of products of some establishments as materials or services by others. Value added is thus defined as the gross receipts of a firm minus the cost of goods and services purchased from other firms. Value added includes wages, salaries, interest, depreciation, rent, taxes and profit”

Source: Personal communication from the National Marine Fisheries Service, Fisheries Statistics and Economic Division, Silver Spring, MD

What does this all mean? Companies with high value added in their manufacturing process require employees with higher skill levels; thus these companies may offer jobs with higher wages.

Examples include of value added manufacturing include:

Pharmaceuticals

Organic and inorganic chemical manufacturing

Plastics manufacturing

Semiconductors

Computer manufacturing

Communications equipment manufacturing

Surgical and medical instruments manufacturing

Automotive parts

Aviation parts

Source: General Summary 1997 Economic Census Manufacturing Summary Series, U.S. Department of Commerce, Donald L. Evans, Secretary

Related Post