Oct 10 2012
See on Scoop.it – lean manufacturing
Seven Charts from the US Census Bureau That Show How Essential Manufacturing Remains To America. These charts do not include other useful numbers from the US Census Bureau, such as value-added per industry, with value-added defined as Sales – External Inputs, where the external inputs are comprised of materials, energy, and outsourced services.
See on www.businessinsider.com
Sep 24 2012
The title misleads, because the book is not about entrepreneurship but about the state of manufacturing in the US. Fortunately, the subtitle is more descriptive: “Why manufacturing is still key to America’s future.” Thinking about entrepreneurship in 2012, the first companies that come to mind are Google, Facebook or Amazon, who do no manufacturing, or Apple, which subcontracts it. Several of the executives described are in fact entrepreneurs, but you also encounter regular managers and fifth generation heirs running family businesses. I don’t blame the author for this, as I suspect the title was chosen by marketers who thought that entrepreneurship would sell better than manufacturing.
The author’s bio on the book jacket describes him as “former deputy assistant secretary of commerce,” a title that leaves you wondering what he was actually doing. You have to look up his LinkedIn profile to find out that his primary function was to boost exports of manufactured goods. Until then, he was an intellectual property lawyer. To his credit, he makes no claim to having any particular knowledge of manufacturing before he started. But he clearly fell in love with the subject, and a passion for it shows through in his writings.
The book contains facts, interpretations of these facts, and policy recommendations. Crisscrossing the country for the commerce department enabled the author to visit many companies and meet outstanding leaders in steel making, aeronautics, mining machinery, defense, and other manufacturing industries. I had not heard about many of them and learned from the author’s account of these visits.
The author quotes many sources, and his position gave him the opportunity to be tutored by industry icons like Andy Grove. Nonetheless, I find his analysis of the situation lacking in depth and originality. I agree with his fundamental point that the Federal Government of the US should have a policy about Manufacturing, and that it makes no sense to have a cabinet-level Secretary of Agriculture and no Secretary of Manufacturing when Manufacturing is a much larger component of the economy.
His argument that government’s involvement in manufacturing is a long American tradition is based on a report by Alexander Hamilton as Treasury Secretary in 1791 arguing in favor of it. Khanna quotes it many times, but makes no reference to the role played by Thomas Jefferson in launching the multi-decade effort to make interchangeable parts, that the embryonic private sector of his day would not have undertaken, but that gave birth to the machine-tool industry and became key to the emergence of mass production in the 20th century. But his key point is valid that the government has a 200-year tradition of pitching in where the private sector can’t or won’t.
One argument that Bill Clinton makes but Khanna doesn’t is that none of the advanced economies in the world have developed on pure laissez-faire. The US hasn’t, and neither have Japan, Germany, the UK, France, Italy, or Canada. The visible hand of government plays some role everywhere. The question is what that role should be. Just because the government of another country intervenes in the economy in a particular way doesn’t mean we should do it too. Khanna appears to have yet to meet a government program he doesn’t like; to him, they are all underfunded and their budgets should be increased, and I have to disagree on some of them.
He asserts, for example, that the Manufacturing Extension Partnership (MEP) is a great program that does not “pick winners and losers.” Through this program, the federal government has been subsidizing consulting firms in all 50 states to provide services at reduced rates to small and medium-size enterprises (SMEs). In so doing , the government may not pick among the recipients but it certainly does among providers. And the MEP program is run by NIST, the agency in charge of standards for weights and measures. It is run by managers who have never worked in factories and you wonder how they can select consultants. It is, however, exactly what NIST does, and, thereby, creates unfair competition to other consultants.
Khanna also makes the common confusion between having a strong manufacturing sector in the economy and having a large proportion of the work force involved in manufacturing. Most manufacturing jobs in the US today are still the kind of repetitive assembly line work that no child dreams of doing as a grown-up. The future is in the current minority of jobs that involves programming and maintaining machines. It is a slow transition that has been underway for decades and has already seen, for example, the number of employees needed in a steel mill drop by a factor of 10 in forty years. It still has a long way to go but the direction is clear. It is a process that moves like a glacier, not a tsunami, with the consequence that it can and should be planned for. The strong manufacturing sector of the future employs a small number of highly skilled people. The jobs are more desirable that traditional manufacturing jobs, but in much smaller numbers.
The book paints China as an enemy, at war with US manufacturing. But the Chinese I know are focused on pulling >1 billion people out of poverty, not putting Ohio machine shops out of business. We will do better if every way if they succeed and become consumers than if they stumble and China reverts to the chaos of 40 years ago. In a truly emerging economy, labor costs rise with the skills of the work force. As local companies develop their own intellectual property, they also become more sensitive to others’ and counterfeiting declines. Finally, as incomes rise, so does the demand for imports.
While GE’s reshoring of appliance production in a happy ending for Louisville, KY, the story makes you wonder what the executives had been thinking when they outsourced in the first place. Why did they wait until they had actually moved production to Mexico and China and wrecked Louisville before assessing the full economic consequences of these decisions?
The book is about success stories. In a context where so many are writing off the US manufacturing sector, Khanna wants to show how it can be successful, and it is understandable that he would not dwell on failures. One that he could not avoid, however, is Solyndra, because it is a case in which the government made a mistake, even if the mistake was made by a department other than the one Khanna worked for. He talks about “the lessons of Solyndra” but does not say much about what these lessons are. You shouldn’t overinvest, but you already knew that.
May 25 2012
This is an interview conducted by Alexander Filippov in this month’s issue of Business Excellence, quoted in the Lean Forum, and translated by Michel Baudin. Konstantin Novikov is director of development at our Russian partner OrgProm. This article shows a Russian perspective on the challenges facing Russian business, and manufacturing in particular.
Konstantin Novikov: The laws of business management are international , but you can always find cultural differences in management styles. Do they make management stronger?
Alexander Filippov: Is there a Russian national character in management? Can you, in your opinion, subject Russia’s “generic features” to international standards?
KN: There are national features, of course. And if you wonder if they are good or bad, the answer is disappointing. Currently, they are bad.
The reason is a bad heredity. Let us remember the popular saying, and slightly rephrase it: “What is important in the life of a manager? Who his parents were, who he has learned from and whom he married … ” It is simple-minded folk wisdom but, in this case, it explains a lot. Who gave birth to modern Russian management? Repressive post-Soviet management, dense as a Pithecanthropus. What examples did we learn from? The dramatic post-Soviet experience of the remnants of state industrial enterprises, yes, but more often – from our own mistakes. And it has not been the most effective teacher: it is sick and cannot teach the faithful how to search for a brighter future.
And we “married” mergers and acquisitions (often hostile), ignoring worthy “brides” like effectiveness and productivity.
If you try to identify “generic features” of Russian management, the first thing we should mention is the fear of problems and the unwillingness to solve them, based on lack of ability. In this sense, it is appropriate to recall the key words of managers from different cultures. The American says: “The problems – they are a challenge for me;” the Japanese, “Problem solving – it’s a daily routine. Problems are good. It is bad when there are no problems.” A Russian manager is likely to say: “The problems are headaches.” You see the difference?
As for the reduction of specific features of Russian management at a certain standard, it must be understood that there are different international standards for management. Who said that the international way is always good! That’s why I do not understand why we should be brought down to somebody else’s idea? This is the way to eternal backwardness. What we need is the most advanced management, and we won’t settle for anything less.
And yet we don’t need to brood. Now Russian management has no problem in learning scientific management. There just was no serious need to do so . But things change very quickly …
AF: Much is said about the laziness and conservatism of our managers …
KN: The laziness and conservatism of Russian management are only the symptoms of the problem, not the problem itself. And life happens in different ways. There are leaders who “plow” for 16 hours a day. Only a few benefit from it, the efficiency is low. Intensifying managerial work does not give results. It causes heart attacks and strokes, but the early death of leaders is not economically advantageous for the country. It is more important to get to the root causes of key problems. Not all managers of industrial enterprises realize that they no longer have time to lose. For many the crisis is already personal — the executive armchairs are “burning” under them. The market will not wait. Russian state component factories, for example, has long lost theirs orders to foreign component manufacturers even for customers like state-owned Oboronprom.
Still, many executives, managers, and, I think, even workers in general, believe that Lean and effective management are a fad that will pass, and that the state will not abandon its defense industry. Such leaders are carriers of an unacceptable management style and will soon leave the stage.
The problem is not in the machines, equipment and new lines. It is the system that created and reproduces the people who are at the controls of enterprise management. The problem is antiquated, obtuse forms and methods of management. The system, which had previously coped with the task of managing people in the production process, and can no longer cope. In its depths are useless and operate manufacturing processes. If the processes are bad, the results are unsatisfactory.
AF: Does the situation change with the formal accession of Russia to the WTO?
KN: The formal accession is just formal. It is unlikely to affect the quality of business management. Management decisions depend on the competence of managers themselves. And we still have low competence. Resulting in an inability to work as a team, and in the absence of leadership as a phenomenon. And the list goes on.
AF: Is a continuing recession or a protracted crisis necessary to push management to improve
KN: Crises are good “levers of change”, but it is not always the case. Much depends on company CEOs. Only the top person can initiate the changes to the system. The people below can only destroy the system. These are the laws of the existence of systems.
AF: There are already many expatriates in Russian management. Will Russia turn into a settling tank for underachieving foreign consultants?
If you look deeply, it becomes clear that this will not happen. If a manager or consultant is of no use, how long will the business owners who will keep him around?
AF: Are we seeing the Does the germs of a qualitatively new, competitive management?
KN: Yes. And it is sure to come! As conditions change, new people emerge – with new knowledge and skills. Previously, people with this temperament were less in demand. I am personally acquainted with the new industrial leaders. And a characteristic of this new leadership that is key to effectiveness is that people do things without being ordered to or even asked.
The leaders of this “new wave” – are still no more than 5% of the managers. But they are the catalysts of growth and will “reset” the economy.
Mar 6 2012
This is a section of a photograph published in the UK’s Guardian on 12/20/2011, showing four operators at work on an aircraft fuselage section.
When you examine the picture, how many do you see actually engaged in modifying the work piece?
Feb 26 2012
Via Scoop.it – lean manufacturing
This article describes a method involving initial testing and extensive training used by an Alabama steel mill to increase Maintenance’s share of its work force to almost 30%.
Jim Peck drew my attention to it on NWLEAN through a post in which he questioned their approach to recruitment as training people who didn’t need it or turning down people with the right skills. This kind of information, of course, is not in the article.
The article points out the growing of share of Maintenance in the work people do in a manufacturing operation as it evolves. Based on the numbers in the article, close to one in four employees of the mill works in Maintenance today, and they are trying to increase this ratio. Steel is an industry that has had enormous productivity increases in the past decades. As they point out in the article, they went from 45,000 employees in the 1940s to 2,100 today, who produce as much.
In today’s labor-intensive manufacturing activities, maintenance’s share of the labor force is on the order of 5%, and I believe we can expect that number to rise. For example, an auto plant that employs 5,000 today may produce the same amount with the same depth of manufacturing with 500 people 25 years from now — if cars are still around in 2037… And, out of these 500 people, 150 to 200 will be in Maintenance, the rest being primarily programmers of automatic machines.
Whether testing is appropriate or not depends on the relevance of what people are tested on. An organization has the right to decide what “qualified” means for its own needs. On the other hand, I find testing inappropriate if there is a hidden agenda.
Many Silicon Valley software companies, for example, subject applicants to “coding interviews,” in which they are tested on such topics as the details of sorting algorithms. A computer science student learns this in college but rarely uses it as a professional programmer, because 90% of the time you need to sort records, you just invoke a sort function without worrying about what is under the hood. As a consequence, this kind of test is an effective way to bias the interviews in favor of recent college graduates and filter the experienced programmers.
Via www.reliableplant.com
Oct 14 2012
Manufacturing bouncing back as US, Colorado companies reshore jobs – Denver Post
See on Scoop.it – lean manufacturing
This is an “I told you so” moment. For years, we were telling US manufacturers that it made business sense to improve their existing operations, only to hear executives say “We’ll skip Lean and go straight to China.”
In emerging economies, low wages are temporary, and they come with low productivity and quality, long lead times across oceans, and high logistics costs. As the work force learns manufacturing, wages rise along with performance, and the cost advantages vanish.
Admitting there are cases where chasing low wages around the world makes economic sense, in most, if you invest in an emerging economy, you do better by betting on its future, and developing relationships that pay off more and more as it grows, for example by building local factories to serve the local market, as the top car companies have done in China.
See on www.denverpost.com
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By Michel Baudin • Press clippings • 0 • Tags: Manufacturing, Reshoring