Made in America? More and more U.S. businesses are trekking overseas to explore cheaper ways to make their products. But what does that mean for small manufacturers left behind on the home front?

Entrepreneur, Oct, 2003 by Joshua Kurlantzick

SURVIVAL TACTICS

* DEAL WITH YOUR HEALTH-CARE AND PENSION COSTS. "Part of the difference between U.S. companies and foreign firms is all the extras, like health insurance," says Al T. Lubrano, president of Technical Materials Inc. in Lincoln, Rhode Island. "You have to show employees that health insurance can't cover everything--it should cover the essentials and catastrophic problems."

Greg Scandlen, a health policy analyst at the Galen Institute in Alexandria, Virginia. suggests that small companies use medical savings accounts, which are becoming simpler to use as mole insurance providers offer MSAs. He suggests visiting the Galen Institute's health-care policy links (www.galen.org) for MSA primers or MSN Money's Health Insurance portal (http://moneycentral. msn.com/insure/healthlp.asp).

* GET OUT OF EXTREMELY LABOR-INTENSIVE SECTORS. "You have to look at your business and think about what parts of it are so labor-intensive that there's no way you could compete with people in India or China," says Chip Coker of Coker Textiles in Anderson, South Carolina. "Figure out which these are, and cut them."

* LOOK FOR FEDERAL CONTRACTS. "Federal contracts are still one of the places where U.S. manufacturing companies can really develop a cash cow," says Collie Hutter, owner of Click Bond in Carson City. Nevada. Both the SBA (www.sba.gov) and The Catalog of Federal Domestic Assistance (www.cfda.gov) offer information on federal contracts.

For every dollar of final output in manufacturing, $2.26 is created through linkages to other parts of the economy. By comparison, every dollar in services creates only $1.70.

JOSHUA KURLANTZICK is a writer in Washington, DC.