Face up to the challenges, get involved in the solutions

What’s the matter with U.S. manufacturing? There’s a perception that U.S. manufacturers are fleeing to set up shop in countries where labor is cheaper, and this perception has created extensive debate throughout American industry. However, this perception is far from the reality that plagues our industries today.

01/15/2008


What’s the matter with U.S. manufacturing? There’s a perception that U.S. manufacturers are fleeing to set up shop in countries where labor is cheaper, and this perception has created extensive debate throughout American industry. However, this perception is far from the reality that plagues our industries today.

Statistics show 51% of manufacturing investments outside of the U.S. is in Europe, where the cost of labor is comparable. This is the result of increased market demands outside of the U.S. while domestic demand decreases. The harsh reality is that manufacturing investment in countries where labor is significantly cheaper, like Mexico, Singapore, China and Brazil, is less than 15%. So, it’s more an issue of survivability than greed.

Even though wages in the U.S. are significantly higher than those of many of our other nine major trade partners, it is not the driving force behind investment in foreign countries. Of our manufacturing costs, 30% are the result of government-imposed expenses, such as corporate taxes, healthcare, pensions, and regulatory compliance, many of which are the result of lobbyists who are believed to be protecting American jobs.

Corporate tax rates in the U.S. are consistently reported at 40% in contrast to countries such as the UK, France, Italy, and Germany who are already below 30%. Health care contributions for U.S. manufacturers are nearly 30% of their gross revenue, and regulatory compliance expenses are 23% higher in the U.S. at a rate of $10,000 per employee. On top of all this, U.S. manufacturers, who consume more than 25% of the nation’s power and natural gas, are experiencing an increase in energy and utilities costs to the tune of $3.7 billion.

One common definition of success is, “something that turned out as planned or intended.” U.S. manufacturers intend to stay in business; they plan to minimize the cost of manufacturing in the U.S. so they can continue to support the nation’s economy by providing employment and creating opportunities for service oriented businesses. In doing so, they must have the support and involvement of each member of the value-chain, this means you and me. So get involved in your employer’s success!

Taking the initiative

In Lean or Six Sigma efforts, people are selected from the organization to lead and participate in a focus team setting to analyze the current state, or current practices, and design a solution for implementation that improves performance in order to meet the business objectives. These focus team resources are not the only ones that need to be involved with the change process. Ultimate utilization of the solution is 100% contingent on everyone being proactively engaged.

There are five steps in changing personal behavior:

  1. Be aware of the need for change. Ask questions of your supervisor in regards to why our company is making changes to the way it’s always been done. Ask, “What’s in it for me boss?” so you will understand how the changes are going to impact, and ideally benefit you.

  2. Determine for yourself if you will support the change, If not, what must happen to create a desire to be involved, and ultimately adopt the changes being implemented. Desire for change is more than financial compensation. Try to identify how the changes will alleviate some of your day-to-day frustrations.

  3. Figure out what new skills or knowledge you will need in order to adopt and personally implement the changes being proposed. Engage those individuals in the focus teams and ask them what will be expected of you after rollout. Enquire as to what training will be provided as part of the project, or as a continuous improvement effort.

  4. Work with you peers and your leadership to create an ability to fully implement the changes in order to ensure that your personal benefits will be realized. A football team huddles before each play to ensure everyone knows what the play is, and creates an ability for any individual to clarify their role. How will you, your peers, and your leadership huddle-up on a regular basis in order to clarify the play?

  5. Find out what must you and your employer must do to reinforce the changes day-to-day. What information must be communicated from management in order to retain your support and involvement? What metrics do you want to know in order to gauge your performance or accomplishment? How will you know when the changes are fully adopted, or when your personal benefits have been realized?

    1. We can’t change many of the government policies, we can’t change the consumer demographics for our products, but we can prevent ourselves from becoming the reason why U.S. manufacturing fails to be successful. Understand the situation, get involved, and adopt the changes necessary for survival.




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      Author Information
      Darrin Wikoff is a principal consultant at Life Cycle Engineering specializing in project management, business process re-engineering, RCM and CMMS/EAM. Contact him at dwikoff@LCE.com