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Viewpoints: Think Long-Term


I always try to read Viewpoints because it shows many different opinions and approaches to a wide variety of subjects important to the manufacturing community. I especially agree with Jim Ellison in his article: "We are Competitive" (September, 2007). Contrary to popular belief, manufacturing is still big in the US. Outside of the US, "Made in America" indicates quality and innovation. When you think of heavy equipment you think Caterpillar; when you think of aerospace you think Boeing, and so on. In fact, the US ranked #1 in the World Economic Forum "Global Competitiveness Report." To see the report, go online and go to

Many shops are looking into the future of manufacturing and not the past. As a result, our company's business in the US is better than ever. On the other hand, some shops are going backwards. I had an experience with a company whose philosophy is to use unskilled labor to reduce costs. They fear that a multitasking machine like ours would be too complex for their employees. This kind of thinking will lose to overseas labor!

Other companies reach decisions on what equipment to buy based on what fits in the budget, or what looks best on a spreadsheet. These criteria rarely result in choosing the best machine for the job. Usually, this approach is not the fault of the engineers or managers evaluating the equipment. Instead, it seems to be driven by corporate America's short-term thinking: too many managers are more worried about this quarter's results than where the company will be in five or ten years.

Nowhere is this more evident than in the issue of education. We can't go a day without hearing that there are not enough skilled people to man today's modern machine tools, or listening to manufacturers complain that the schools are not helping US industries. Why wait for them? Remember when we had apprentice programs? Why is it that a company will offer incentives for someone to get a Masters degree in accounting, but will not take the time to teach an unskilled person to become skilled, and thus be more capable of producing parts that make money for the company? While there are, of course, costs involved, by training our own people we end up with a skilled employee who knows the culture of the company. I hear arguments that once a person is trained they will go somewhere else to make more money. That may be true, but isn't that argument also true for the accountant? Of the 12 Pillars of Competitiveness in the Global Competitiveness Report, the fifth says: "The importance of vocational and continuous on-the-job training, neglected in many economies, cannot be overstated, as it ensures a constant upgrading of workers' skills."

When buying equipment, long-term thinking can also help. While the purchase price and delivery may be a big short-term issue, making a two-year payback mandatory makes it sound like you have a two-year business. Long delivery times can be a problem and are hard to overcome, but most machines that are associated with quick delivery are commodities designed for light-duty and general-purpose work, and will not necessarily help you be competitive in the long run.To compete in the oilfield services business or today's aerospace market (for contracts to manufacture landing gear and jet engines, for example), you need a machine capable of heavy-duty machining in Inconel, stainless steel, Airmet 100, and titanium. Such machines are not going to be inexpensive.

Conventional thinking may assert that China, Korea, and India compete solely on cheap labor, or that labor is the only cost driver. Although there may be truth in that statement for the low-tech arena, you may be surprised to know that our company sells more mill-turn machines in these regions than in the US. Manufacturers in low-labor-rate countries are not buying based on price and delivery. If they were, they would turn to Asian machine builders to get the lowest price and speediest delivery. They are buying based on long-term thinking, and are looking for the capability that will enable them to be competitive in high-tech manufacturing fields.


This article was first published in the February 2008 edition of Manufacturing Engineering magazine.

Published Date : 2/1/2008

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