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How do you compete in the brutally competitive global marketplace? How do you keep manufacturing in the United States? The answer is obvious. Manufacturing companies need to first reduce the cost of operations, followed by investing in innovation.
We were recently working an American company’s factory, which had relocated to a foreign country a year earlier. The machinery was 35 years old and it was obvious that it had been years since it operated at peak performance. Not only was there a lack of new machinery, the old machinery had not even been maintained to the level that was needed for optimum reliability and quality of products. The company took the easy way out: They chose not to invest in improvements, they kept their costs down, and when it became necessary, they moved the factory to yet another country.
This week at National Manufacturing Week, we heard from the National Association of Manufacturers that what is needed are such things as reducing externally imposed costs on manufacturing, and the government need to take action on such items as taxes, legal, regulatory, energy and heath care. They say that this is key to keeping manufacturing in the U.S. While there may be some truth in this, what we actually see in companies is an inordinate concern about the short-term profits, Wall Street and stockholder value. This results in manufacturing companies reducing expenses to the bare bones.
We at Global Innovation believe that what we need is to have the management of manufacturing companies give attention to sustaining and improving the ability of their companies to compete, investing in their infrastructure. Perhaps, what we need is to change our system in which companies find it wise to invest in improving and maintaining their already-made investments instead of taking the easy way out, and going overseas.
To us, this means cutting costs judiciously by using improvement techniques such as lean manufacturing followed by investments, innovation, productivity and resulting in growth and a new ability to compete globally. That is what we should all be encouraging our government and society to do. Manufacturing contributes 62 percent of the nation's innovation (NAM); we cannot afford to lose it.
Global Innovation Leadership Inc. is a consulting company with headquarters in Miami. For more information, visit www.global-innovation.com. |
