We’ve all heard the arguments about the loss of business tooverseas competition, caused by everything from unfair trade practicesabetted by foreign governments to lack of US capital investment andcurtailed R;D investment.
It has become popular to point fingers at the shortcomings of UScorporate managers and their lack of insight concerning the problemsthey face. Particular criticism has been leveled at them for taking amyopic view of company finances. As a result, management experts havetaken up the cause of educating managers in theories labeled X, Y, andZ, and searches have been made to locate companies displaying excellencein running their businesses. Some troubled industries saw fit to petition the government fortrade relief, which has done little but stir up a hot debate over therespective values of free trade versus protectionism. Generally, littlerelief has been granted. Instead, a new flurry of activity has beenspawned, best described as, “If you can’t beat ’em, join’em.” Mergers, marketing agreements, and joint venturesbetween US and foreign companies with similar or competing lines ofproducts is the new way to skirt the problem of overseas competition. Robert B Reich, writing in the November 26, 1984, issue of The NewRepublic, raises a flag of caution regarding this approach.
He saysthat, typically, the US partners supply the initial basic R;D, butthe complex production techniques are done by the overseas partner, suchas in Japan. This is followed by relatively simple assembly operationsperformed by US workers, and marketing, distribution, and sales throughthe US branch of the enterprise. This all works fine; both partners make money. The problem,however, is that the real expertise–that of adding value to theproduct–is not done here. Instead, overseas workers develop thecollective capacity to transform ideas quickly into world-class goods.
Reich contends that such experience in making products generates moresocial wealth than does inventing them or assembling and selling them,and is the key to gaining the competitive edge in the world market. Now we are hearing, “What happened to the art ofmanufacturing?” Robert H Hayes (coauthor of the famous 1980 HarvardBusiness Review article, “Managing our way to economicdecline,” with the late William J Abernathy) has collaborated withStanford Professor Steven C Wheelright, on a book Restoring ourcompetitive edge: competing through manufacturing (John Wiley ;Sons, Inc, New York). The thrust of the book is that, in order for USmanufacturer to close the gap with overseas competitors, managers mustlook at manufacturing as a key component of corporate strategy.
“The secret weapon of international competition is not superiorproduct designs, marketing ingenuity, or financial strategy, butmanufacturing superiority–the ability to make it better.” On a recent trip to Japan, we saw a lot of advanced manufacturingtechnology applied in metalworking industries that, historically, havebeen among the least progressive in the US. The technology exists, weinvented most of it here.
It’s up to management to turn theirmanufacturing engineers loose and let them do their stuff. It’stime to stop looking at manufacturing as part of the problem, when it isreally the solution.