If you don’t think manufacturing is critical to an economy, just take one look that the nations that don’t have it. Not to cast aspersions, but look at countries such as Saudi Arabia, Venezuela, Zaire, and Equatorial Guinea. I pick these since they are extremely rich nations in many ways — they are floating on oil and other precious minerals — certainly critical in today’s world. And yet . . .
Contrast them with manufacturing nations Japan, China, Singapore, Taiwan, Germany, England, Brazil,1 and of course the US and Canada. Where are our next great ideas that are changing the worlds of energy, healthcare, educational systems, communications, materials and consumer convenience coming from? Manufacturing.
I recently patrticipated in one of the most important and inspiring events — the Manufacturing Leadership Summit — a truly unique conference, where these and other issues were discussed.
Manufacturing Is Big Money!
Though we moan about manufacturing jobs, the actual rate of creating new manufacturing companies has been increasing,2 as has productivity.
Even looking at the new Fortune 500, it seems that companies that are involved in stuff: making stuff and selling stuff — GM, Ford, HP, Apple, IBM, GE, McKesson, WalMart, CVS; in energy: extracting, refining and selling stuff — Exxon, Conoco, Chevron, Valero are at the top again, having displaced financial services. The financial services companies in the top twenty have all shrunk since last year; whereas the stuff companies were all gainers. Ah, feels a little like the good old days. Searching through the top 100, this observation pretty much holds (except for the Aerospace and Defense sectors).
Talking heads who rant on about service economies miss the most important issue: Who researches, innovates and creates products and materials? The manufacturers!
Being a Believer: Innovation and Determination
At the Manufacturing Leadership Summit, I met the real heroes of the manufacturing sector. These companies and people have gone the extra mile to create new products, develop new business ideas, or transform their companies.
For example, family-owned businesses such as Chirch Global are dedicated to their family — and their factory — and are driving the success of small manufacturing enterprises. Anthony L. Chirchirillo, President, Chirch Global said, “You measure your company’s progress in quarters. A family business measures in generations.” In other words, what kind of business am I leaving for my children and grandchildren? Chirch Global won the ML100 Small Business award for innovation. They created a collaborative network so small businesses can find, bid and source business opportunities, and when appropriate, work together on projects.
Tops on my list of winners are Chuck Mooty, President of Faribault Woolen Mill, and his cousin Paul Mooty. Coming from a textile manufacturing family of multiple generations, myself, I appreciated his story.
Chuck was not the original founder of Faribault — he’s too young (Faribault was founded in the 1860s). But he is an energetic believer who bought the company in 2011. (You can go to the time line of Faribault here — a real walk through manufacturing history.)
They re-opened the doors of this heritage company and have modernized it, hiring over 35 people with plans to more than double in the next year. Faribault is banking on the idea that people really do care about craft, reputation and quality.
Faribault is a winner of the ML 100 Leadership Award for Turnaround Story.
Quality and Value — People Do Care.
I recently read the reviews for a product that cost $250 dollars plus on Amazon. I was going to buy until I read the negative reviews and saw how many people returned it, so I decided not to do it. Consumers do care, and companies should too. The returns were mounting up for this company and they’re losing customers.
On a larger scale, Apple is now 17th on the Fortune 500. This is another turnaround story: many people may remember the late ‘80s and early ‘90s with the roiling computer industry. Apple was sinking (under Sculley) and so-called management pundits said that Apple should just be a software company and give up hardware. Wintel machines were selling aka Compaq and Dell — cheap hardware for the PC was selling in the consumer markets. The so-called management pundits, who clearly did not understand quality and design (or manufacturing), missed this one (and many others). Remember, this was the era of the rise the hostile raiders and the ‘core competency’ mantras. However, Steve Jobs was a believer, too. The rest of the story you know.
The above-mentioned firms and their management are the believers. And they make a difference to the communities in which they operate, to their customers and to their stakeholders; and they make a difference in the advancement of science, methods and materials.
Future of the Supply Chain Network
At the summit, I was honored to participate in a discussion with Cindy Reese, SVP, Worldwide Operations, Oracle; and Steven Tungate, VP/GM, Supply Chain & Innovation, Toshiba America Business Solutions about Factories and Supply Networks of the Future. So what are these manufacturers doing? Significant rationalization of the supply base (Toshiba, especially, has this issue since they have a long history of many acquisitions), streamlining production to increase productivity, and looking for lower-cost countries for manufacturing.
No doubt firms have global customer bases, so they need to be present in these markets. However, a low-cost-country manufacturing source does introduce more risk in the supply chain. And that was discussed. Quality, security, and intellectual property protection were the critical global manufacturing issues we also discussed.
Cindy told a fascinating story about Oracle’s acquisition of Sun and the supply chain that was subsequently created. Here was one of the key points: Although Oracle sells on a global basis, they now do their own factory-installed software. This keeps potential ‘factory-installed malware’ from getting into the servers at contract manufacturers, and prevents pirated software. In this way, Oracle ensures that they deliver the quality and security people expect.
There were many other discussions about quality. For instance, Toyota’s US head of Manufacturing, Steve St. Angello,3 told the audience how Toyota is now managing quality after the challenges and issues they had two years ago with recalls. With more local control of manufacturing and customer care, Toyota can respond more quickly to issues and reports that arise concerning quality.
So What about Those US jobs?
At the conference we learned that many jobs go unfilled for skilled labor, as well as for positions in research, science, computer programming and IT. A recent U.S. News & World Report stated, “Employers surveyed by the National Association of Colleges and Employers (NACE) say they plan to hire 9.5 percent more graduates from the class of 2012 than they did from the class of 2011.” And for those grads, the focus on hiring will be in the so-called STEM fields (science, technology, engineering, mathematics). The salary offered to engineering majors rose 2.8 percent from last year’s average, to $60,291. Likewise, the average salary offered to petroleum engineering graduates jumped 7.1 percent, to $82,740, making it the highest-paid major, according to the same U.S. News article.
12-Year-Olds Go to Manufacturing
Education in supply chain, manufacturing, material sciences and IT is a national discussion that needs national solutions. But much can be done without government intervention, as we heard at the summit.
Many of the speakers at the summit talked aboutreaching out to colleges to get them to include manufacturing in their curricula and also have summer internship programs for students with engineering and technology interests. Young people have a lot to share, some of the speakers pointed out. They can share their unspoiled, fresh and creative ideas and their knowledge of new technology. And college interns are more encouraged when they can see a bright future in manufacturing.
But I think we need to start programs when kids are younger. High school or even earlier may be the place to start. Remember being eager to do science experiments (like building rockets in the backyard). Again, education and reaching out are the keys.
Though my Mom was in sales and marketing, each year we would go to her company’s manufacturing headquarters together. I looked forward to the factory tour and talking to the people on the line about their work, what went into the products, and how they liked their jobs. So when I became the ‘boss’ in manufacturing many years later, I used to take kids on tours of the factory and watch them get excited about the work, the robots, and seeing the end products being produced from lumps of metal.
Imagine 12-year-olds running around your factory. I still get a thrill when touring factories and distribution centers. But the point is to make a concerted effort to create excitement while children are still daydreaming.
That is where we need to go — to become part of youngsters’ dreams. Who knows? We may be encouraging the next Homer Hickam.4
Manufacturing Executive Leadership Journal- May 2012 – The Innovative Enterprise issue
Nightly Business Report- Faribault
Winners Announced for the 2012 Manufacturing Leadership 100 (ML100) Awards
1 And other nations like Sweden, Finland, Norway, the Netherlands, and many more. — Return to article text above
2 Where the jobs go for those manufacturing is another issue. — Return to article text above
3 Steve St. Angelo, Executive Vice President, N.A., Toyota Motor Engineering & Manufacturing, N.A., Inc., Chairman, Toyota Motor Manufacturing, Kentucky and Mississippi, Inc. — Return to article text above
4 Homer Hickam won a national science contest in high school and went on to work at NASA.
To view other articles from this issue of the brief, click here.