From the Shop Floor — The Week in Manufacturing (5/18/2012)

Reuters columnist John Wasik says Bet on U.S. Manufacturing for a Rebound.

From the story that won’t go away, Chinese solar power equipment manufacturers rejected an anti-dumping ruling by a U.S. court this week.  Forbes, meanwhile, said that there is one group of people caught in the crossfire of this U.S./China trade war: the installers.

Here’s a recap of Manufacturing Innovation 2012, a recently concluded confab of 800 or so industry experts and insiders, sponsored by the Manufacturing Extension Partnership.

The Motley Fool addressed the issue of moving manufacturing back to the U.S.

Writing in the Huffington Post, Marco Trbovich says that one group in particular deserves a lot of credit for the turnaround in U.S. manufacturing: a handful of responsible private equity investors.

The two presidential candidates are ramping up the election year rhetoric over the importance (and their support) of U.S. manufacturing.

Bloomberg reports that U.S. industrial production increased more in April than analysts had projected.

The business news agency also says that Volkswagen has some serious momentum going for it in the U.S.

Here’s a report that says U.S. net job growth in the manufacturing sector has been overblown, citing the fact that, while there is some level of re-shoring taking place, a number of jobs in the sector are still migrating overseas.

Yet another CEO says that U.S. manufacturing is headed for — there’s that word again — a renaissance.

Manufacturing in New York State has always been a little bit of a canary in the coal mine for Wall Street.  And reports that industrial production in the Empire State rose yet again this past month seemed to delight investors.

Foxconn denied what had been previously reported; namely that its CEO had unwittingly leaked his firm’s deal to manufacture the all-new Apple iTV.

Manufacturing.net reports that China is under fire to reverse its economic slowdown.

In a bit of good news from an unexpected source, Bloomberg reports that a spark in the sale of U.S. made auto and trucks has triggered some meaningful economic growth nationwide.

Here’s the head of one U.S. manufacturing firm who claims the biggest problem his company faces is a “skilled labor force” — or more to the point, the lack thereof.

And finally, one last item.  The New York Times reports that China’s new-found desire to rise to the top of the aerospace manufacturing industry is presenting U.S. manufacturers an interesting mix of options, problems and, of course, decisions.

Wall Street Can Take a Lesson from Manufacturing

As I was working at my desk this morning, I picked up an old New York Times op-ed piece I had stuck in my never-ending pile of not-so-urgent items.  The piece, from March of this year, was an unabashed, almost gut-wrenching mea culpa from an investment banker named Greg Smith, and appeared just days after he resigned as the head of Goldman Sachs U.S equity derivatives business.   

And if you haven’t yet read it, I urge you to do so.

As you may recall, Smith, a native South African, had risen up the ranks at Goldman over the course of 12 years and had cut his teeth as a market analyst.  But he eventually chose to leave because he felt the culture of his firm had fundamentally changed over the past few years and that the company had lost sight of a culture that, in his words, “was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years.”

After ranting about his firm’s new-found zeal for putting profits above all else and about how Goldman has stopped operating in the best interests of its clients, as it had always done, and is now operating almost exclusively in its own self-interests, Smith offered this slap in the face: “I truly believe that this decline in the firm’s moral fiber represents the most serious threat to its long-run survival.”

Smith’s letter, as you may remember, made headlines – particularly in the business press.  For some it validated what they believed to be the current attitude of way too many higher-ups on Wall Street.  For others, it was just sour grapes and the ramblings of a scorned lover/disgruntled ex-employee.

As for me, like most things in life, I thought – and, in fact, still think – the truth was probably somewhere in between.

But it is ironic that I pulled this piece off my pending file the very same week that news broke about another former Wall Street golden boy, Jamie Dimon, and how his series of risky derivative trades which – through some combination of recklessness and hubris – cost JP Morgan Chase’s investors some $2 billion.

And I was reading Smith’s piece, and reflecting on Dimon’s troubles, it occurred to me that what’s happening on Wall Street might not really be such a bad thing.  Because it’s a little reminiscent of another sector of our economy which not all that long ago got its own measure of comeuppance, and ultimately benefitted from it – mine. 

Frankly, it doesn’t seem that long ago that American manufacturing found itself in a place not unlike Wall Street finds itself now.  Thirty years ago U.S. manufacturers were mighty full of themselves, swimming in profits, flush with cash, and absolutely convinced beyond a shadow of a doubt that the products they made were the finest in the world – which, in their defense, for many years they were.

But then almost overnight came the globalization of the marketplace, automation, the technology revolution, lean manufacturing and an entire Eastern-based philosophy on how to best manufacture things – not to mention, of course, the worldwide availability of cheap labor and a litany of other offshore inducements. 

Suddenly American manufacturers found themselves completely blindsided.  And for the first time in nearly a century America’s stading as the leading manufacturing nation in the world found itself at risk, which sent all of us in the sector reeling.

And, as it turned out, that was exactly what we needed.

I’ll spare you the specifics, but you probably know what came next.  Collectively, we manufacturers took off our blinders.  We got leaner, we got more efficient, and we got vastly more productive. 

And we not only embraced technology, we rode it.  In fact, we rode it all the way back to the top.

That’s why, even as you read this, jobs continue to re-shore to this country, even back from places like India and China. 

That’s why American manufacturing is as strong as it’s been since the middle of the 20^th Century.

And that’s why the entire U.S. economy is once again starting to something it hasn’t done in 50 years; ride our coattails. 

And all of this is happening because a few short years ago we got exactly what we needed – a good slap in the face.

Look, it may not be the most popular stance to take, but I remain, for better or worse, a fan of Wall Street.  Some of the most brilliant financial minds in the world are operating there, and those minds and the investment vehicles they create are helping fuel the engine that, if it’s not driving this country’s economic turnaround, is at least funding it. 

And I’m confident they will continue to do that, just as they will continue to breathe life into the kind of entrepreneurial enterprises we need to keep this country strong.

I just think the entire financial sector, like its partners on the manufacturing side learned not all that long ago, that sometimes a little adversity is a good thing.  And that, just maybe, adversity represents a chance to return to your roots and re-discover what you do best. 

Or like the old saying goes, “Dance with who brung ya.”

From the Shop Floor — The Week in Manufacturing (5/11/2012)

Using the Revere Copper Products plant in Rome, New York as an example, the New York Times tackles the complex issue of U.S. manufacturing subsidies.

MSNBC says the economic recovery, combined with the lingering high price of gas have two auto makers hoping the demand for newer, more fuel efficient vehicles will mean even brighter days in the weeks and months ahead.

This Wednesday the Brookings Institution issued a report that told us something which, if you’re reading this, you already knew and then some:  U.S. manufacturing has shed its Rust Belt image, diversified and maintained its role as an absolutely vital part of the nation’s economy.

The Brookings Institution also mapped, detailed and rated U.S. manufacturing by metropolitan area and region and concluded that certain geographical regions in the country specialize in certain segments of the manufacturing sector.

Speaking of which, guess which city according to Brookings ranks second in overall manufacturing job growth in the country?  Go ahead…guess.

Meanwhile, that very same think tank held a high-level confab in Columbus, Ohio this week, where a panel of business and political leaders, including Jamie Dimon of Chase and former Chicago mayor Richard M. Daley declared, among other things, exports were the key to Ohio’s manufacturing future.

U.S. Commerce Secretary John Bryson continued to beat the bushes in support (and praise) of U.S. Manufacturing, this week in a speech at MIT during which he released a report titled “The Benefits of Manufacturing Jobs.”  Which, let’s be honest, is a little bit like releasing a report titled, “The Importance of Air.”

Writing in the Boston Globe op-ed page, Novartis CEO Joseph Jimenez says this is a make-or-break time for “Made in the U.S.A.”

Anyway you cut it, it was a bad year for Osaka, Japan-based electronics manufacturer, Panasonic.

A Republican congressman from my home state of Illinois argues that a proposed bill full of mandates, reporting requirements and government sanctions will cost U.S. manufacturers billions and have a chilling effect on a number of the smallest of them.

MIT president Susan Hockfield said this week it is time to explode the myth and the negative stereotyping that centers around U.S. manufacturing and to dispel the notion that it is full of jobs that are “dumb, dirty and dull.”

With respect to increasing offshore labor costs, one blogger asks the intriguing question: is the U.S. regaining its luster?

When are China’s leaders going to wake up and smell the coffee?  First it was dumping an ocean of below-market solar panels in the U.S., which triggered a long and ardent backlash from both our solar power industry and a number of federal lawmakers, including people in the Obama White House. 

Now it’s below-cost Chinese aluminum in Australia, which seems to be triggering a similar backlash Down Under.  At some point my hope is the Chinese are going to realize that the fallout from their government-funded dumping ends up doing more harm than the increased market share does good. 

One more reason why China is still a good generation or two behind the West when it comes to market knowledge and marketplace savvy.

One Chinese manufacturer spilled the beans and said his company will soon be making an Apple TV.

One report claimed that manufacturing production slowed considerably in China in April.  The good news is that another reports that steel output rose in that country by 2.6% and that many of China’s mills are continuing to increase their capacity.  Could that spell the end of the hiccup of a slowdown that China’s been going through these past few months?

Or is the fact that China’s rapidly slowing April, the country’s slowest growth in nearly a decade, might bode something far worse for not only the Chinese, but the world”s economic outlook?

Mitt Romney hit the campaign trail in his former home state of Michigan this week and was, perhaps not surprisingly, mum on his recent outspoken criticsm of the 2008 bailout of the U.S. auto industry, which at the time had the full support of the Obama Administration.  Earlier in the week Romney, in no uncertain terms, took credit for the turnaround of the auto industry.

Finally, back to ex-Mayor Daley and the Brookings Institution, check out this point-of-view opinion piece which ran in the L.A. Times, in which the former Hizzoner and the head of the DC-based think tank contend that our cities might just serve as incubators for the next generation of U.S. manufacturing plants.  It’s actually a pretty good read and a pretty interesting concept.