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On Taking on Giants

By know I’m sure you’ve heard of Malcolm Gladwell, the pioneering journalist whose unlikely best sellers, Blink, The Tipping Point and Outliers, have turned so much conventional thinking on its ear and defied us to take a second look at accepted wisdom and countless things we take for granted.

Well, Gladwell’s at it again, having just released his latest book, David and Goliath, which critics say parses a number of what experts have always considered shocking victories and analyzes how a number of underdogs throughout history were able to achieve victory in the face of overwhelming odds.  And while I’ve not read the book yet, I did recently pick it up and plan on plowing through it over the next few days.

After all, when you’re a small manufacturer competing against some of the biggest corporations in the world, often from countries that channel millions of taxpayer money directly into the workings of those same corporations, a little understanding of how other Goliaths have been brought to their knees might not only be informative and inspiring, it might just turn out to be life-sustaining. 

And I bring this up today because a few weeks back I read the obituary of a small manufacturer the New York Times described as a “serial entrepreneur,” and I wanted to share with you in today’s blog post one of the most remarkable decisions he ever made.  

Also because in reading his obit, I was reminded once again how manufacturers like me – relatively small guys with a limited number of resources – are often given no alternative but to try to out-smart, out-quick and, perhaps most of all, out-think the big guys we’re trying to compete against.

Here’s the story: Robert R. Taylor was a soap salesman for Johnson & Johnson in the 1960s who found himself frustrated by the limitations and drudgery of corporate life.  In time he branched out on his own and started his own soap and cosmetics manufacturing firm, a decision that compelled him to constantly experiment and tinker with many of the very same products he used to schlep around the country for a giant he was now trying to go after with a slingshot. 

Then one day Taylor hit on something, and he knew immediately it was going to be big.

For years he had obsessed over how to make everyday bar soap better, since at the time soap used in the shower, sink or workplace always got smaller, softer and less useful with each usage.  Eventually, the bar and all that still-useful soap would simply have to be thrown away.

So Taylor invented a liquid version of everyday hand soap that he planned to sell not in bars, but in small plastic containers with pump dispensers.  The problem was, he realized, it would only be a matter of time until Colgate-Palmolive, Lever Brothers, Proctor & Gamble, Johnson & Johnson and the rest of the big boys started producing their own variation of his invention, patent or not, and that his product would soon be swallowed whole by his competitors’ almost unlimited resources – in either the courts or in the marketplace.

So what did he do?  He made a strategic decision in which he bet everything he had on his understanding of what it would take to bring liquefied bar soap to market.  And it turned out to be a classic bet-the-company strategy. 

Taylor borrowed against his company’s few assets, put together as much cash as he could get his hands on, targeted the two manufacturers of plastic bottles in the country, and then split his order between them – an unprecedented total order that amounted to some 100 million small plastic bottles, or what he projected to be a year’s supply of liquefied soap containers for his company.

Taylor gambled, correctly so, that by tying up the capabilities of his competitors’ potential vendors for a full year, he’d give himself a twelve-month head start with which to hit the market, relentlessly brand his radical new product and establish it as a breakthrough alternative to the messy and wasteful bar soap his competitors were going to spend the year trying to pass off as hand soap.

Which is exactly what happened, and for the duration of 1972, Softsoap – and Softsoap alone – set about the process of changing forever how America washed its hands.

The lesson?  When you’re a small manufacturer, industriousness, smarts, blood, sweat and long-hours will only take you so far.  So, frankly, will even the greatest idea.  At some point, it is probably also going to require a level of intestinal fortitude on the manufacturer’s part, or something our friends south of the border might call, “cojones.”

My friends, Robert R. Taylor had cojones in spades.  And my guess is Malcolm Gladwell has just written about a number of people who had a surplus of them as well.

And even as I write this, I promise myself to finish Gladwell’s book right away.  I promise too to never lose sight of the role that guts and courage have to play in the process of waking up each morning and realizing that, as a small manufacturer, right outside my door is yet one more giant laughing at me, my smarts, my experience, my staff, and most of all, my slingshot.


From the Shop Floor — The Week in Manufacturing (10/4/2013)

Market Watch says that, while manufacturing jobs are returning to the U.S., the flow of jobs has been little more like a trickle.

Forbes says that if Apple were to produce the iPhone domestically it would cost them $4.2 billion.

Japanese manufacturing giant Yokohama Tire Corporation is going to be building a major production facility in Mississippi.

And in South Carolina, they’re excited about the fact that German tape manufacturer Coroplast is spending $12 million to bring a new plant to York County, a move that will add roughly 150 jobs to the local economy.

The Department of Energy this past week honored 120 different U.S. manufacturers which, using better plant design and a more efficient allocation of resources, saved some $1 billion in energy and emissions costs this past year.

The ISM says that U.S. manufacturing expanded at a faster rate in September than it had in any month in 2 1/2 years.

Meanwhile, China’s manufacturing grew in September as well, though at a slower rate than anticipated.

The Hill writes that National Manufacturing Day this year highlighted both the opportunities and challenges of anyone contemplating a career in our sector of the economy.

U.S. News and World Report, on the other hand, says the day casts a light on the skills gap that continues to haunt so many manufacturers, large and small, around the country.

In Indiana, officials used the occasion to alert the media that the Hoosier State has a higher percentage of private sector jobs in manufacturing than any state in the union.

While in West Virginia, officials used the day as an opportunity to communicate the need for cooperation between the public and private sectors.

Perhaps defying the re-shoring trend, Hershey’s, the Pennsylvania-based chocolate giant, is opening an all-new production facility in Malaysia, with 90% of the plant’s output targeted for export.

In Computer World, an industry CEO blogs about 3D printing, the U.S. manufacturing renaissance, and the American middle class.

And finally, Wal-Mart last week ramped up the verbiage around its current “Made in America” initiative by emailing consumers across the country, urging them to buy American, and reminding them they can help bring manufacturing jobs back to the U.S. if they do so.




An Open Letter to Jay Timmons, President and CEO of the National Association of Manufacturers

Dear Mr. Timmons:

I was recently finished a story in the New Republic detailing GOP resistance to the Obama Administration’s ongoing attempt to fund new science and technology research – and by extension, new product innovation.  And what disturbed me – beyond the absurd idea of stifling innovation in the interest of politics – was the story’s claim that NAM has been regularly carrying the water for the Republicans in this regard.

Look, you do not know me from Adam, but I am a proud and (knock wood) prosperous American manufacturer – a second generation one to be exact.  And my little company here in the American heartland is exactly whose interests your organization should be protecting.

But I have to be honest, Mr. Timmons.  It seems lately almost every time I read something you’ve said or others have written about NAM’s position on issues impacting “American manufacturing,” I can’t help but feel you’re being a mouthpiece for manufacturers whose interests are not necessarily in concert with mine – or, for that matter, the current reality of the global marketplace.

What’s more, I can’t help but feel there is something inherently ideological to many of NAM’s positions, as opposed to practical, prudent or wise.

Let me detail a few truths that 40 years of manufacturing (and life) have taught me.

  • That in both industry and economics, innovation should always trump history, and that sacrificing the former in the name of the latter is not only foolish, it’s dangerous.
  • That countless game-changing, life-saving and job-creating  innovations this past century have been (and continue to be) the product of U.S. government funded research.
  • That if a government turns the over the keys to industry and lets industry operate as it sees fit, with little or no accountability to anyone but shareholders, industry will start to operate in its own self-interest, with little regard to the public good.
  • That America has always been both a beacon and a magnet to the world’s brightest and most innovative entrepreneurs and new product developers, and that our economy’s strength is due to the fact that we are constantly being re-energized first-generation dreamers and doers.
  • And, finally, something my father taught me when I first went into business; that if your goal is to make an omelet or two, at some point or another it’s going to be necessary to break a few eggs.

Yet, Mr. Timmons, none of these truths seem evident to you; at least not if what I’m hearing you’re saying on so many issues is true.

These days, it seems, once you’re done blowing smoke about the power and greatness of American manufacturing, and are done tossing about politically charged words like “jobs,” “growth,” “re-shoring” and even “manufacturing” itself, I start to hear the kind of small minded, limited-vision and self-serving bromides – especially about taxes – that, frankly, call to mind many of the two-dimensional ideas behind the Tea Party – ideas that, all due respect, are not just overly simplistic and half-baked, they’re often flat-out wrong.

I recently read the transcript from your speech in Detroit earlier this year, extolling manufacturing’s need for lower corporate taxes. That’s fine, Mr. Timmons, but it also seems you like to link this country’s corporate tax rate to the size of its government – becoming in the process a de-facto advocate of a small, hands-off government.

That, perhaps on the surface, is why NAM is trying to put a damper on government-funded research and development of new technologies; because — again, at first blush — doing so would seem to consistent with your anti-big government stance. And I truly believe you and your members are for less government intervention.

But I also can’t help but feel there’s something more sinister at work in NAM’s position relative to corporate taxes, government-funded research and product innovation.

If I were a cynic, it would sound to me that by speaking out against this country’s corporate tax rate and the size of its government – and by offering such steady resistance to the Obama Administration’s ongoing desire to use tax dollars to fund science and technology R&D — what you’re really doing is running interference for America’s biggest and most powerful manufacturers; manufacturers that also happen to be NAM’s most influential and highest dues-paying members; and manufacturers that, unfortunately for them, are often invested in (and wedded to) 20th Century fuels, 20th Century technologies, 20th Century models, 20th Century world views, and, perhaps most alarmingly, a 20th Century mindset.

The link between your association and this country’s biggest manufacturers could certainly be looked upon by a mind more cynical than my own as at least one reason why the New Republic alleges you’re acting as a roadblock — or at least a hurdle – to federally funded tax-fueled R&D.  Because, let’s be honest, that’s who you work for, isn’t it? Giant U.S. manufacturers?

Not small ones like me; not the hundreds, if not thousands of lean, nimble, market-savvy plants, shops and factories that continue to pop up across this country, continue to jump headlong into the 21st Century, and continue to embrace the world market – both its perils and its opportunities – with arms open, eyes wide, and an ear to the ground.

Because, after all, for small manufacturers like Belden Universal to either ignore or not support the research and development of new technologies and alternative, renewable energy sources would be dangerous, if not fatal.

Because if we didn’t, small manufacturers like me would be forced to try to grow our market share and maintain our global relevance, not by rapidly evolving as today’s fluid and ever-changing world market dictates, but by doing what so many of your biggest and most unwieldy members seem to be trying to do; stunting new energy, technology, and product R&D in a desperate attempt to delay the future for as long as it takes for them to play catch-up with the speed of change and the dizzying rate of innovation.

That’s one of the reasons why I am not a member of NAM, Mr. Timmons, though I admit I’ve often been tempted to join.

But your organization’s position on key issues – especially government-funded research and renewable energy development – often comes off as transparent, self-serving, myopic, and even slightly disturbing.  But more than that – and especially in these times – it seems to me dangerous.

Because while you and your most resistant-to-change members are spending millions trying to play politics in Washington, ranting about corporate tax rates, and demonizing federally funded R&D, my competition overseas is licking its chops at the thought that NAM is willfully (and unwittingly) giving it the one thing it has been desperately craving since the onset of this amazing new age in American manufacturing – a chance to play catch-up with the most aggressive and innovative U.S. manufacturers, and to close the gap between them and us to an even greater degree than they already have (and, frankly, continue to do).

I would love to have you address my concerns, Mr. Timmons – either in person, over the phone, or in this space.  And I invite you to answer this one simple question for me.  In light of NAM’s constant demand for lower corporate taxes, what is your position on tax-funded science and technology research?

Because, as a manufacturer I sit here and look at everything from Velcro and M&Ms to the internet, the laser beam, NASA, Google’s search engine, the GPS systems on my phone and in my car, and so many revolutionary Apple products, pharmaceutical drugs, and medical breakthroughs I cannot begin to name them all – each of them a product of government-sponsored research – and I find myself amazed at what I’m reading about NAM’s resistance to the one constant that links every one of these game-changing,  if not life-altering products — namely, Uncle Sam’s steady supply of patient, prudent and nurturing seed money.

I eagerly and respectfully await your response.


Perry Sainati
Founder and CEO
Belden Universal Joints