We’ve all heard the arguments about the loss of business to
overseas competition, caused by everything from unfair trade practices
abetted by foreign governments to lack of US capital investment and
curtailed R;D investment.
It has become popular to point fingers at the shortcomings of US
corporate managers and their lack of insight concerning the problems
they face. Particular criticism has been leveled at them for taking a
myopic view of company finances. As a result, management experts have
taken up the cause of educating managers in theories labeled X, Y, and
Z, and searches have been made to locate companies displaying excellence
in running their businesses.
Some troubled industries saw fit to petition the government for
trade relief, which has done little but stir up a hot debate over the
respective values of free trade versus protectionism. Generally, little
relief has been granted. Instead, a new flurry of activity has been
spawned, best described as, “If you can’t beat ’em, join
’em.” Mergers, marketing agreements, and joint ventures
between US and foreign companies with similar or competing lines of
products is the new way to skirt the problem of overseas competition.
Robert B Reich, writing in the November 26, 1984, issue of The New
Republic, raises a flag of caution regarding this approach. He says
that, typically, the US partners supply the initial basic R;D, but
the complex production techniques are done by the overseas partner, such
as in Japan. This is followed by relatively simple assembly operations
performed by US workers, and marketing, distribution, and sales through
the 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 the
product–is not done here. Instead, overseas workers develop the
collective capacity to transform ideas quickly into world-class goods.
Reich contends that such experience in making products generates more
social 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 of
manufacturing?” Robert H Hayes (coauthor of the famous 1980 Harvard
Business Review article, “Managing our way to economic
decline,” with the late William J Abernathy) has collaborated with
Stanford Professor Steven C Wheelright, on a book Restoring our
competitive edge: competing through manufacturing (John Wiley ;
Sons, Inc, New York). The thrust of the book is that, in order for US
manufacturer to close the gap with overseas competitors, managers must
look at manufacturing as a key component of corporate strategy.
“The secret weapon of international competition is not superior
product designs, marketing ingenuity, or financial strategy, but
manufacturing superiority–the ability to make it better.”
On a recent trip to Japan, we saw a lot of advanced manufacturing
technology applied in metalworking industries that, historically, have
been among the least progressive in the US. The technology exists, we
invented most of it here. It’s up to management to turn their
manufacturing engineers loose and let them do their stuff. It’s
time to stop looking at manufacturing as part of the problem, when it is
really the solution.