Future depends on flexibility, the ability to compete

“Manufacturing for the Future” is not just a nice slogan, it was the subject of the June 3 discussion in downtown Chicago, sponsored by Financial Times and Machines Italia, a part of the Italian Trade Commission. That a storied British business publication and an Italian commerce group would come to the Midwest to discuss global manufacturing ought to tell you something about where we are in the world right now. And where we are, according to the experts, is smack in the middle of an exciting, evolving, maddening and challenging environment.

“The world is a much more competitive place. People in high-cost countries have a lot to learn from those people based in low-cost countries,” said Financial Times manufacturing editor Peter Marsh. “The people who will do well are those who will straddle these two parts of the world.”

Dr. Pascal Bova of the Italian Trade Commission noted that some manufacturers leapt at the idea of low-cost manufacturing salaries and have discovered that also leads to lower quality and logistical issues that drive costs back up. “Now they are thinking that shipping their entire manufacturing operation abroad maybe was not such a terrific idea.”

Even in the face of a skilled worker shortage, Dr. Bova said the U.S. is missing an opportunity to retain talent trained in America. “The U.S. used to be a magnet for highly-skilled workers,” he said. “Changes in U.S. immigration laws and more aggressive recruiting have led to more than 200,000 workers trained in the U.S. returning to their countries of origin.”

Dr. Ambrogio Delachi is president of the DELMAC group, which makes machines for furniture manufacturing, and is also president of the Italian trade organization representing wood processors. He noted labor is not your biggest expense “if you have a good factory and a good product. Today, people require flexibility, low batches, quick changes. We’re trying to work just in time. Fifteen years ago, we asked one of our biggest customers what their minimum batch size was, and they said 10,000 pieces. We’re looking at batches of 200 pieces today.”

Sean Monahan, a VP at consultant A.T. Kearney, noted five major trends in manufacturing:

• Globalization
• Demographic changes
• Consumption patterns
• The use of natural resources
• Regulatory and activism issues.

“You can begin to tailor your manufacturing operation only after you’ve fully identified how you intend to compete,” Monahan said. “Develop a framework that works for you.”