New Look American Manufacturing

Posted on June 30, 2006 by John Hunter

The New Look American Manufacturing [the broken link was removed] by Dale Buss:

The evidence shows that American manufacturers that revise their processes and integrate technology in ways that allow them to stay close to customers can survive the onslaught from China. Adaptability is key above all other factors.

I agree by applying lean manufacturing and other management improvement ideas manufacturers can (and are) prospering in the USA. I don’t think one factor is the key. Many factors determine whether the USA will continue to lead the world in manufacturing. The USA has to continue to support a dynamic economic system, maintain a transportation system, improve the health care system, improve the educational system, maintain the rule of law, reduce excessive legal costs, improve the management of manufacturers etc.. Each country has to work on these and other systems to stay competitive globally.

“Those American manufacturers who are succeeding today are focusing on doing one thing: innovate, innovate, innovate,” says Scott Kingdom, global managing director of industrial markets for Korn/Ferry International, a management consulting firm. “They’re doing more valuable, higher-margin, mission-critical sorts of things that are less apt to be outsourced or taken abroad.”

Once again the innovation mantra is stated. I agree innovation is good and is helping American (and overseas) manufacturers. But it is not the only thing (unless you just classify everything as innovation – lean manufacturing, customer focus, long term planning, cooperation with suppliers, systems thinking, six sigma, savings through the proper application of information technology, quick response…).

There’s only so much they can do when faced with what the National Association of Manufacturers says is a 22 percent cost disadvantage against the rest of the world due to excessive regulation, taxation, litigation, out-of-control health insurance costs and ballooning energy charges.

What a bunch of poorly veiled propaganda. Yes the USA has excessive health care costs – so do something about it. What country has lower energy costs – other than OPEC countries? And higher global energy costs should help protectionists thinkers as it serves the same purpose as raising tariffs or otherwise taxes trade in goods (since they must be shipped).

Higher global energy costs should increase the cost of imports. It should harm USA manufactures that are exporting but should aid those producing for sale in the USA versus overseas competitors. Excessive regulation compared to what countries – China, India, Germany, Japan? If you are talking about environmental regulation, the USA has more than China less than Germany or Japan. If you are talking about permits to get things done I think the NAM needs to go try to do business in Japan, China, India, Thailand, Mexico… and see how easy it is to navigate the undocumented processes.

And does NAM think the USA is good at nothing? Don’t manufacturers here benefit from being the USA? What cost advantages does that give them? I think being a manufacturer in the USA offers huge advantages as well as some challenges. The prospects are good.

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