Leadership & Business

The Resurgence of Manufacturing in America

A resurgence of manufacturing in America is coming—and when it arrives it will be here to stay. It’s true. I just can’t tell you exactly when.

That’s because as low cost manufacturing areas of the world become not so low cost, it will be time to drive out one of the last remaining inefficiencies… transportation.

That’s right. As any good Lean expert will tell you, transportation adds no real value—it’s an inefficiency. And as companies strive to drive inefficiencies out of their supply chain, they will ultimately drive out the need for intercontinental transportation.

Think about it. Whether because labor rates ultimately rise in China (secret: they already are), or because automation brings down the cost so much in the Americas, the value of shipping food from Asia to the US will ultimately diminish. So will the value of shipping anything else.

Even in the US, the likes of UPS as a product delivery system will ultimately go away as technology currently used (and quickly improving) for things like rapid prototyping become feasible for routine product manufacturing. Over time, the place of manufacture will get closer and closer to the customer.

American manufacturers should anticipate these trends and be weary of moving overseas too quickly—only to have to move back a few years later. Already we’ve seen companies move from Thailand in the 90s to China in this decade now looking to Vietnam and Cambodia for low cost labor. Asia is simply running out of low cost labor. And while some of these companies will go to Africa, that won’t last forever either.

World-class manufacturers, instead, should be looking a few more years down the road to better automation—right here at home. And to continuing their productivity gains through hard work and ingenuity. Because ultimately, the only successful manufacturers in the United States will do their manufacturing right here—at home

Are You An Idea Killer?

My new Inc. column, entitled Beware of the Idea Killers is out and focuses on how new ideas are what will help your business remain competitive. However, be sure you aren't killing them before you consider bringing them to fruition.

As Innovation remains a hot topic in 2008 and as executive teams continue struggling to build effective, sustainable, and measurable innovation programs. The battleground becomes how to structure innovation departments, drive company-wide innovation initiatives, and sustain efforts over the long haul.

To help executives with these challenges my company, Breakthrough Management Group (BMG) is hosting a 2-day Executive Seminar February 25-26 in Denver, CO, entitled Chief Innovation Officer: Lead Your Company’s Growth and Innovation Efforts.

This is the third CIO course for BMG.  We hosted two similar events in 2007, each time heralding attendees from industries as diverse as healthcare, retail, manufacturing, and financial services into one room to discuss and learn about what they all have in common – the need to better drive growth and innovation in order to compete in the future. Past attendees include, Levi Strauss, AVNET, Circuit City, NYC Health and Hospitals Corporation and GE Energy to name a few.

If you are interested in Innovation and what it really takes to lead your company to the forefront, I highly recommend this course. More information can be found here.

China—From Cost to Quality in Less Than a Decade

How many of you—readers that is—think China is kicking our rear because of low costs. Well, guess what…you’re right. But you’re wrong, too. That’s because while China IS kicking butt with lower cost manufacturing, it’s long since turned its attention to quality. That’s because any able-minded Chinese business person or politician knows that the more successful they are, the sooner their success will run out. That is to say that the faster they grow, the sooner cost will no longer be a competitive advantage. That’s why Chinese companies have already begun taking quality very seriously. They know that in the future, quality is how they will compete—just like the Japanese figured out in the 50’s and 60’s.

Every time I travel to China I have a mini-awaking upon my return. That’s because I’m always astonished at how much Americans underestimate what’s going on in China. I guess it’s no surprise in a country where 70 percent of the population doesn’t even hold a passport, much less travel abroad, but you’d think television and the internet would fill the gap. Not so.

The rate at which improvements are happening in China—technically, politically, socially—is simply amazing. And what that means in the near term is that there will be no American company will have a competitive advantage simply by virtue of being an American—or western—company. The number of competitors we have to deal with is growing exponentially. Even in my own industry (if you can call it an industry), we’re already finding ourselves competing with Indian consultancies coming here—to the US. They’re not outsourced providers. They’re competitors in our own darn market. How soon will it be before Chinese companies come here to open up factories—much the way Japanese automakers have? The answer…not long.

I encourage every business person, whether you do business internationally or not, and whether you have foreign competition or not, to make an effort to study what’s going on internationally and to be ready for the coming Chinese and Indian quality boom. It’s not far off.

It’s Time to Stop Messing Around

Performance Excellence is poised to become more and more important at your company—or it’s not. Investment in better processes is key to executing your company’s growth strategy, or it’s key to ensuring your company survives a downturn, or it’s key to…something else. Anyway, I’m sure it’s key.

What I’m saying is that the ability to drive growth and reduce cost by simply picking up the low-hanging (or ground) fruit is coming to an end. That’s because there’s just not much fruit left on the ground, anymore than there’s much oil or copper or silver left in the ground. Low hanging fruit as a cheap commodity is running out. So we have to start figuring out how to make our way up the tree to the other fruit that’s up there…somewhere.

Creative Destruction

Creative Destruction – words most often associated with today’s world of newly intensified innovation. A term first coined by economist Joseph Schumpeter in the 1940s, it’s only in much more recent years that business leaders have come to understand its wisdom.

Nowhere is this understanding more clear than in the recent appointment of Robert Nardelli to the helm of Chrysler. Amid a great deal of criticism over his tenure at Home Depot, Nardelli appears to be a perfect choice for Chrysler.

Most experts agree that Chrysler will need to excel on many fronts: a razor-sharp discipline, a take-no-prisoner’s attitude toward cost cutting and a genuine willingness to destroy before recreating will be at the forefront. While many people have accused Nardelli of destroying the culture at Home Depot – much as they’ve accused James McNerney of destroying the innovation culture at 3M – I would argue that perhaps neither destroyed too much of anything in their first forays outside of GE. In fact, they may not have destroyed enough, or done their destroying creatively enough, and they were replaced before they could meet their boards’ high expectations. Then again, neither of them had a predecessor like Jack Welch, who’s own predecessor left him behind instructions to “blow it up.”