Viewpoints: Make It Here
The US has become the bargain store for the western world. Europeans and Canadians flock across the borders to take advantage of the strong Euro and Canadian currencies, and gobble up luxury goods, stocks, and real estate. Lured to the States seeking 30–40% discounts on these goods, wealthy buyers find these purchases and investment opportunities a "no-brainer," and seize on the moment in a type of feeding frenzy.
Meanwhile, the Arabs wish they had pegged their oil to the Euro, to earn even higher profits on their precious natural resource. At the November summit, Iranian President Mahmoud Ahmedinejad pressured other OPEC Nations to dump the dollar, calling it a "worthless piece of paper." Despite Saudi Arabia's early defense of the greenback, Venezuela and Iran managed to pressure the Saudis to agree to discuss the weakening dollar before the next OPEC meeting.
However, we live here. We work here. We manufacture here. What does this mean to us? The matter of fact is that the exchange rate has made the US a cheap labor and production country! Where else in the world do you find such a flawless infrastructure with little red tape at reasonable cost? Manufacturing space is easily obtainable, in many cases with tax incentives from the local and state governments. And our best, untapped natural resource that can make American manufacturing great is our people. The workforce is readily available, educated, has a good attitude, and can be as productive as their managers allow them to be! No European would work 40 hr/week with two or three weeks vacation. And let's not mention all the benefits required to keep the European workforce motivated, so they show up for work.
Asia is a different story, half a world away. If you intend to start manufacturing there, as the panacea for your company, that is certainly possible, but not as a long-term survival strategy for export. You are eventually going to lose your product, along with your investment. The locals will copy your business model and steal your product design, and be more successful with it on their home turf. For starters, they can read and speak the language. Also, they have the relationships within their manufacturing community needed to make it all happen.
Why then do we have more and more transplant organizations here, building excellent products and beating the establishment with the workforce laid off by the initial competitor? They have figured out the truth; you have to manufacture locally to be successful. Relationships with the customer, and being close to the customer, mean something special. There is no future in shipping parts around the world while purchasing, engineering, and production people spend more time in airplanes than on plant floors, unsuccessfully chasing the quality and delivery they need to compete in our marketplace. What if oil goes to $150 per barrel or, God forbid, $200 per barrel? Are your parts still cheaper when they're made 8000 miles away?
We've lost five million manufacturing jobs in the US over the last decade. If only those directors in the boardrooms knew what they were doing. If they had talked to their marketing, engineering, and production personnel about US technology advancements they could have brought to bear, rather than chasing the quick buck, many plants would still be operating successfully here, at home.
Here's the good news. After years of hearing the conventional wisdom that American manufacturing is dead, today we have a breath of fresh air. Many US firms are not only holding their own against foreign competition, they are winning business back. Manufacturing is still 12% of the US economy, with 10% of jobs in America coming from this sector. Manufacturing accounts for two-thirds of our exports, and believe it or not, it still makes us the world's top manufacturing exporter.
Get back to the basics: Invest in product development, engineering, and manufacturing, and look at what the successful ingredient was when you made real money.This has got to be the winning solution. Locate where your customers are and work on that relationship. Find an overseas partner to complement your operation. Buy and share certain information and products without giving away the store. Put Americans and their know-how back to work. Business has become very sophisticated these days, but the fundamentals, like making money, have not changed! Give the US as a production site another look; it might be where the profit is.
This article was first published in the April 2008 edition of Manufacturing Engineering magazine.