How manufacturers can compete with low wage countries
Posted by Bert Maes on February 22, 2010
(From the CBS News Series “Where America Stands” that looks at how to get back lost manufacturing jobs)
And the kids liked it:
- “It’s not a dead-end situation. All the guys that are the bosses typically started out at the very bottom.“
- “It’s amazing, the skill they have to make sure that the weld is just right.“
- “I like working with tools. I like working with my hands. It makes me feel nice and fuzzy inside.“
>> 2 Main Problems (also reflected in the Manufacturing Challenges of 2010):
- The disappearing jobs in western manufacturing are going to countries where workers are paid far less. In China, where health and safety rules are few and millions are looking for work, the average manufacturing worker earns just $134 each month – compared to almost $2,400 a month in the United States.
- “We have lost respect for the kind of work that once provided prosperity,” steelworker Brandon Nelson says. “It seems like nobody wants to do this work, they want to be in an office, or work in front of a computer instead of building things.”
>> The Solution
We probably can’t compete for the mass production anymore, but we can be the master in research and development. Take the huge success of Apple’s iPod — 250 million of them have been made in Chinese factories. But the design and the programming are done in America which takes the biggest share of the profit.
Peter Adriaens, a University of Michigan entrepreneurship professor, says “There is virtually nothing we can do to keep large-scale production here. The jobs of the future will be done in small batches and highly customized.” One of the 10 predictions for 2010 by IDC Manufacturing Insights is that “companies will transform business models to better meet the needs of increasingly demanding customers” >> Read my post on the “Small Batch Movement” in Manufacturing.
According to Harley Shaiken ( labor expert at the University of California Berkeley), labor costs are very important in any manufacturing economy, but what’s critical is labor costs combined with innovation, high productivity, and quality, for keeping our business.
According to Mitch Free, CEO at MFG.com, credit lines necessary to sustain and grow manufacturing businesses have been tightened or eliminated. He would establish “low-interest venture capital assistance for training, technology, and enabling manufacturers with the tools—intellectual property protection and management, patent acquisition, logistics and supply chain management training, and business development guidance—to spur exporting to emerging middle-class consumer markets.”
On the other hand: “to stay competitive we need more skilled workers,” says Drew Park, president of Columbia Wire and Iron. “Our workforce is aging and we’re having a hard time getting the younger generation involved.”
There is no shame in wanting to work with your hands.
For America and Europe to rebuild its greatness in manufacturing
perhaps it’s time all learn that working with your hands,
making things, is not only honorable – it’s ESSENTIAL.
A program that that tries to tackle the problem at the root, i.e. the attractiveness of manufacturing EDUCATION is the “Haas Technical Education Center” concept from www.HTECnetwork.eu.
It is set up as a long-term partnership program between education and manufacturing industry, in which the company Haas Automation, inc. helps technical schools towards:
- Higher motivation of young people;
- Saving teachers time via offering them proven CNC teaching materials for direct use in the classroom;
- Supporting the quality of instruction and the performance of student learning;
- Helping the school to build a very strong reputation and competitiveness in the field of manufacturing education (and beyond);
- Bringing education closer to the workplace and the “real industry”;
- Bringing the training directly into line with the needs of the local manufacturing industry, etc.