U.S. history is a story of innovation and manufacturing prowess. From Ford to Dell Computer, we are a nation whose wealth was built on the ideas of creative people. Even World War II was as much about U.S. innovation and superior manufacturing as it was about the exploits of our fighting men.
Now our innovation and manufacturing skills are losing slowly to competition from elsewhere. From television to merchant shipbuilding, we can find industries that the United States invented or led that now have no American company in the field.
Where will the United States generate wealth if it looses its manufacturing base?
The current upturn in the economy and the falling dollar have created a temporary boom for American manufacturers. Unfortunately, the underlying causes of our manufacturing decline are still present, and unless companies use this boom time to prepare for the next downturn, the erosion will continue.
Many have laid the blame for the decline on the unfair trade deals, health care costs, tax policy, unfair trade and labor practices in China, while ignoring the lack of process improvement, poor management practices, lack of strategic thinking and other flaws of U.S. companies. There is one overriding reason: sloppiness.
Companies and U.S. government officials have become sloppy, and they are competing in a global economy where competition will eat the sloppy.
During the recent outsourcing binge, companies raced to take parts of their supply chain overseas to China. Despite warnings, many did not take the time to make sure they understood the Chinese business culture. They experienced quality problems, missed deliveries and some financial losses, instead of savings.
U.S. officials negotiated trade deals even though many of them did not understand the differences between how we tax and fund health care, compared with the rest of the world. Now we have built-in cost differences that give us a 30 percent disadvantage with most trading partners.
During this growth boom, U.S. business is scrambling to meet its current demands. However, few American companies are strategically planning how they will weather the next downturn, improve their processes, create the next breakthrough for their customers or learn the culture to sell or source in another country to be more competitive.
This is what the GE’s and Intel’s do, but every U.S. company, regardless of size, has got to be positioning itself in the global economy to become more competitive.
Japanese and many European companies are doing exactly that. During the boom times, they position themselves globally and hone competitiveness. During the slumps, they are less negatively affected and thus don’t downsize but capture more market share.
Many say only big companies can afford to invest in the resources to become globally competitive. Then why do I see small to midsize Swiss, German and French companies with offices in the New Berlin industrial park near where I live? Why, no matter what trade show I go to, do I see more small foreign companies? It’s as if American business is playing on half a football field, playing defense, while the rest of the world is playing offense and defense.
Now is the time to make the next downturn an opportunity for growth and not a funeral.
Joe Geck is a principal of a Milwaukee-area consulting and cross-cultural training company with workshops on China. You can contact him at geckj@execpc.com
March, 4, 2005, Small Business Times, Milwaukee, WI
