A new report from the Information Technology and Innovation Foundation (ITIF) indicates that manufacturing job loss is not due to automation, but instead due to the activities of countries who incentivize transfer of manufacturing jobs through their policies. Those of us who work in manufacturing already know this. Yes, automation is a factor, but not everything can be automated cost effectively.
The good news is that folks who grew up in the service sector now have a little “data” to influence their opinions about the relevance of domestic manufacturing jobs. I’m not a proponent of protectionism. However, I do believe that countries with strong manufacturing sectors prosper. I also believe that manufacturing regionally (vs. perpetually chasing the lowest cost manufacturing market) is more cost effective for many products. Back when I was teaching leadership and marketing classes at a couple of local universities, I frequently brought up the example of Henry Ford because his choices apply to both curriculums. He was criticized by his peers for the above market wages he paid his employees. He pointed out that his production lines could build more cars than the rich could buy and that he needed a middle class capable of buying cars. We need transformative manufacturing jobs to sustain a middle class. By transformative, I mean jobs with a path to higher compensation as an employee’s skills increase. The service sector doesn’t have enough of those. A manufacturing resurgence floats all boats by increasing consumption, lowering governmental “welfare” costs associated with underemployment and creating a growth driver for the middle class that isn’t paid for by our taxes. To me, the middle class is the conscience of the country and also its biggest engine of consumption. When trade is balanced that is good thing globally and well as domestically.
As I’ve written before, a U.S. manufacturing resurgence is also good for EMS companies. Reports such as this signal changing attitudes. It is the right time to invest in marketing strategy. PMCI can help. Learn more here.
In my latest column in Circuits Assembly, I look at the challenges associated with establishing an operation in Mexico. The increased cost competitiveness of Mexico’s manufacturing, migration of automotive and aerospace clusters, and a lessening of the violence that has plagued the country for much of the last decade have incentivized a new wave of US-based regional manufacturers to look at the benefits of opening operations there as a the next step in their expansion plans.
That said, Mexico remains a country full of complexity when it comes to establishing a viable operation. There isn’t one right answer for best location or business structure. This month we look at some of the tradeoffs to consider when establishing a small operation in Mexico. Read more here.
Recently, I watched my local City Council lecture a manufacturer looking to relocate about the fact that they didn’t feel his wages were high enough to receive incentives and it really got me thinking about how detrimental the current political grandstanding around wages is. Part of that reason is that we’ve been focused on becoming a service economy so long that many of our politicians simply don’t understand how transformational manufacturing jobs can be. A manufacturer paid for my Master’s degree back when I made $5/hour in my first job of out college–that was a great tradeoff that has paid dividends my entire career. In virtually every manufacturer I’ve worked for, I’ve watched other people increase their skills and earning power through the training, tuition refund programs and career advancement opportunities. I focused my Circuits Assembly article in April on that topic. Feel to send copies to any elected officials that you feel are in need of enlightenment about the contributions your companies make to our society as a whole.
Medical Product Outsourcing just published a good article on EMS trends in the medical sector. Yes, I’m quoted, but more importantly Managing Editor Michael Barbella did a great job of looking at some interesting product trends.
Part of the reason I’ve been a little lax on my posting is that I’ve had a heavy travel schedule that included teaching segments of the IPC EMS Program Management Certification course as well as co-organizing a session at SMTAI on conflict minerals with Mike Buetow from Circuits Assembly.
My October Circuits Assembly column looks at ways to build a unified program management team and ensure that all program managers understand how best to do their jobs. Program management is truly the most difficult job in EMS and anything that reduces the learning curves of new program managers will generally save your company money.
Circuits Assembly has just redone its website. The new look is great, but they haven’t finished re-indexing all their articles and apparently it will take some time. If you click on one my article links and get a bad page, just contact me and I’ll get you a copy of the article. Once they’ve fixed their site, I’ll re-index my links but their process may take several months. Sorry for any inconvenience.
One of my recent columns in Circuits Assembly focused on contracts. A contract or manufacturing agreement is a lot like a prenuptial agreement in that with a happy marriage you can throw it in a drawer and forget about it. And, business divorce without a contract isn’t much different from marriage breakups without a prenup – there is a lot of latitude to behave badly. Check out the article to learn the 5 worst reasons for not having a contract and negotiating strategies that will help you quickly get one in place.