The Manufacturing Decline

Control Engineering asks the provocative question: is manufacturing in decline in the USA?

Boston, MA - The keynote address at Aberdeen's first annual Manufacturing in the 21st Century Executive Summit served as a stronger wake-up call for attendees than the free coffee. During this session, best-selling author Michael Treacy highlighted the dramatic evolution of workplaces during the past several decades and asked the provocative question "does manufacturing even matter anymore?"
Well does it? The magazine has some answers.
Subsequent presenters, however, demonstrated that manufacturing in North America is not only relevant, but thriving.

Innovation is indeed the engine which keeps our factories running, and the transformation of raw production data into actionable business information is central to improving the performance, productivity and ultimately the productivity of any industrial endeavor. Case in point: the transformation highlighted by Juan Carlos Sol, special projects manager of Sigma/Q.

Sigma/Q, a leading provider of custom packaging products in North and Central America, recognized a need to improve the performance and return of multi-million dollar equipment within their plants while simultaneously decreasing operational costs. To accomplish this, however, the organization needed to transition to an automated data collection process without creating significant downtime. Once in place, the data could then be used effectively to drive continuous improvement and facilitate better decision making in real-time.

As per usual the answer is to work smarter and harder. Control Engineering agrees.
However, as the name implies, continuous improvement is a journey, not a destination. Even the most robust data is of little value unless that data is used to consistently measure the performance of the business. This point was reinforced by continuous improvement experts and co-presenters Richard Kunst, VP of continuous improvement for La-Z-Boy and Mariela Castano-Kunst, continuous improvement manager for Nestle Waters Canada.

"A few years ago, a case of our water would sell for around $12 - $15," said Castano-Kunst. "This week, one of our customers will be selling two cases for $5. Change happens rapidly and the business must be equipped to react."

To maintain profitability and competitive advantage, manufacturers need to continually challenge themselves to seek new ways to work smarter, better, and more cost-effectively. Processes must be both repeatable and sustainable to deliver the desired results. Methodologies, such as lean, six-sigma, 5S, and others truly can create a positive effect. However, even with data-centric programs such as these, the most critical success factor is properly engaging the workforce and getting them to embrace the changes such programs enforce as part of their day-to-day activities.

Kunst described how success at La-Z-Boy begins and ends with trusting and empowering employees, providing the audience with insights on team dynamics and how to best mobilize a workforce to improve the chance of successful results.

"Every workforce or team, regardless of industry, tends to share a similar composition," said Kunst. "Twenty percent of your workers will be positive leaders, 20% will be negative leaders and the remaining 60% will be neutral and can shift from one camp to another. It's critical that you focus your attentions on the positive leaders and leverage their enthusiasm to sway the 60%."

So the real question is as always: do American's still have the competitive spirit that G. S. Patton described so well.
When you, here, everyone of you, were kids, you all admired the champion marble player, the fastest runner, the toughest boxer, the big league ball players, and the All-American football players. Americans love a winner. Americans will not tolerate a loser. Americans despise cowards. Americans play to win all of the time. I wouldn't give a hoot in hell for a man who lost and laughed. That's why Americans have never lost nor will ever lose a war; for the very idea of losing is hateful to an American."
Interestingly enough manufacturing represents about the same percentage of the economy as it has for the last 50 years. So output is actually increasing to match the growth of the economy. So why all the talk of decline? In a word. Jobs. We are making more stuff than ever with fewer people. Just as the mechanical revolution eliminated farming as a mass employer, automation is in the process of eliminating manufacturing as a mass employer. So the question is - what next?

As usual there is no obvious answer. It is up to you to determine where the economy will go. Your best bet? Join the enthusiastic 20%. Figure out how you can be of service and just do it.

Cross Posted at Power and Control

posted by Simon on 12.12.07 at 06:23 PM


I work with several manufacturing companies, and most are doing record business.

Manufacturing jobs have declined, but we build the most efficient factories.

TallDave   ·  December 12, 2007 8:37 PM

I almost went ballistic reading your post. But to counter the arguments you posted emotion is beside the point.
First, the Lazy-Boy example quoted by you:
La-Z-Boy is now owned by McMahans (or whatever conglomerate that owns that chain) and is in a nose dive. One of my best friends recently was transfered from a managerial position with La-Z-Boy to floor sales at McMahans, at age 62. Not because of his performance, but because the housing boom & subsequent bust (engineered by that fatuous pig, Greenspan) is now running its course.
La-Z-Boy is selling furniture in competition with chains like Ashley that are importing cheap-labor Chinese made crap.
Had I the time to investigate, I could list the thousands of furniture makers in this country that have gone under.
How dare you even suggest that manufacturing in this sector is thriving. Go to North Carolina and ask around. It's pathetic.

Or take another manufacuting sector that has been totally decimated: the American shoe industry. I believe that SAS is the only one left at this point.
Why did this happen? Was it cheap throw away shoes from Asia? Was it Nike first going to Japan, then Indonesia, then Cambodia and Vietnam, and finally China? Why couldn't we compete with 10 cent and hour labor, making a labor intensive product? The answer is obvious, unless you think we should live like Chinese peasants.
But also, there are now NO leather manufacturers left in this country - a country that raises millions of cattle!
The last one went out of business in Maine last year, without notice to its customers.
Little shoe repair shops can't find nails, glue, or leather made in this country anymore.
Leather must be imported from Italy, or Argentina.
I know, because I supply these shops, that they are going to flea markets looking for products no longer manufactured here.

I don't pretend to know all the reasons for this manufacturing decline, but I have read Atlas Shrugged. And the descriptions in that novel of manufacturing decay is what I see, here in the real world of business.
The quotes you have sourced from a magazine are fantasy.

Frank   ·  December 13, 2007 2:09 AM

So, some sectors of manufacturing are in decline? So what.?

Rockford Illinois used to be a center of furniture mfg. All gone. Long ago.

What replaced it? Aerospace. Which brought me here.

As to competing with 10 cent an hour labor? No problem. Our farmers manage. It looks like La-Z-Boy is attacking its mfg. problems. Who know if they will succeed? If they fail it will because they did not improve enough when times were good.

The economy goes through boom and busts regularly. If such a cycle is destroying the furniture industry it is due to mismanagement not Greenspan.

As to shoes? We should buy from the lowest cost suppliers. Then we have more to spend on other things. Like iPods.

As I said. Manufacturing labor is in decline. Manufacturing is not.

So the question is - do we want to compete or not? You sound like one of the negative 20%. As the article points out, those are not the people that should be leading. "We can't..." is the first step on the road to failure.

My motto for a long time has been "I will find a way or make one".

Our chief problems are those Edison pointed out:

"Any extension of the Government into business affairs -- no matter what the pretense and no matter how the extension is labeled -- will be bound to promote waste and put a curb on our prosperity and progress." --Thomas Alva Edison

It is astonishing what an effort it seems to be for many people to put their brains definitely and systematically to work. - Thomas A. Edison

Our greatest weakness lies in giving up. The most certain way to succeed is always to try just one more time. - Thomas A. Edison

M. Simon   ·  December 13, 2007 2:45 AM

BTW we don't make many memory chips in America any more. Yet our semiconductor industry is thriving. How can that be?

Well, we got out of commodity products and moved into a better value added proposition. Like gate arrays. Very good business.

M. Simon   ·  December 13, 2007 2:47 AM

Who said anything about giving up? Not I.
That there are still innovative and thriving businesses making products despite a generally miserable business climate is proof.
As I said, I don't know all the reasons for manufacturing decline.
Were I a conspiracy theorist, I would make a case for a purposful repositiong of manufacturing to third world countries in an orgy of suicidal altruism.
The Marxist case would point to simple capitalist greed with obscene profits built on the backs of slave labor.
Maybe its just demographics with an older retiring population.
Whatever the reasons, the fact of manufacturing decline is all too real.

Frank   ·  December 13, 2007 9:59 AM


Marxist socialist economics is zero sum. Real economics doesn't work that way.

I don't know if you remember when "Made in Japan" meant junk. We are getting similar stuff from China these days.

In time the income from "slave labor wages" will continue to lift China out of poverty. Just as it did for Japan.

Capitalism is lifting the world. Something socialism never accomplished.

If you want to know why socialism has such a dismal record may I suggest Hayek, "The Road To Serfdom".

BTW what happens to those amassed "obscene profits"? They get invested in more productive capacity.

As Marx pointed out - if you need to amass capital, capitalism is the way to go. And capitalist will do it for you.

Profit is what allows you to take risks. No profit, no risk, no economic advancement.

M. Simon   ·  December 13, 2007 6:21 PM


Manufacturing makes up 20% of the economy. Just as it did in 1950. Where is the decline?

It is in the labor required for manufacturing.

So tell me. Given the fact that farming once employed 70% of the population and now employs 1% - 2%, is farming in decline?

M. Simon   ·  December 13, 2007 6:24 PM

First off, I don't buy the 20% even manufacturing figure. Does assembly now count as manufacturing? You bet it does.
Change the definition, and of course you will prove your point. And that is exactly what has happened in this country. Goods produced offshore are assembled here and counted as manufactured here.
Just like the doctored statistics about inflation. They are a joke, and we all know it.

What I know would only count by you as anecdotal evidence. It's not in some journal of manufacturing bullshit. But this is it:
I know that paper mills are closing, lumber mills are consolidating and closing. I have watched as whole mills have closed, been auctioned off to Chinese buyers, and shipped out. Virtually all shoe manufacturing has ceased. Levi Strauss doesn't make jeans here anymore. Hell, we don't even make brooms to sweep up after the plants are mothballed. They're now all made in Mexico.
Want to know where those Boeing jet parts are coming from? Try mainland China.

My nephew worked for a company in the SF Bay Area that made the highly sophisticated machinery to make door locks, the kind bought by Slage and others. He was sent all over the world installing that equipment - Belgium, Australia, Japan, Malaysia.
Want to know where that machinery is now made?
NOT in this country. NOT in California.
Asia, that's where.
My sister-in-law and her husband worked for Hewlett-Packard. They were fortunately old enough to weather the offshoring of their positions before retirement.

Please don't BS us with feel good make-believe statistics.
The government does that.

Frank   ·  December 18, 2007 1:19 AM


Of course paper mills are closing. We are substituting electrons for paper.

So if company A assembles stuff bought in America does it count as manufacturing? If company B assembles stuff bought outside America does it cease to count as manufacturing?

The Auto companies have been assemblers for 50 or more years. Do they manufacture cars?

BTW I see you do not get the creative destruction of capitalism.

I'm surprised you don't mourn the decline of makers of horse drawn conveyances and ancillary eqpt. Say buggy whips.

Some where along the way HP screwed up. Maybe getting into PCs instead of focusing on instruments was a bad move.

America has always been marginal when it comes to old technologies. We do much better at doing things no one else has thought of.

M. Simon   ·  December 18, 2007 9:06 PM

Yes, I get the the creative destruction nature of capitalism, and don't regret the demise of candle stick makers. (Oh yes, I've long ago read Bastiat)
But the argument you made is that manufacturing is not in decline in this country, only manufacturing employment numbers.
That is simply not true.
The question is why do we import paper, while closing mills here? Or shoes, or brooms, or clothing, and now even food?
Until you get down in the trenches and actually deal first hand with these lost and declining areas of productive endeavor, you are only repeating propaganda, and generalizations without substance.

Those techies who've made fortunes with digital media are all fine and good. But they don't put shoes on our feet, clothes on our backs, or food in our guts. That's left to us lesser beings who actually work for a living by making a vital product.

And further, why is it so important to you to prove the point that manufacturing is NOT in decline, when even Greenspan says that the industrial age is past, and we have entered the information age?

Frank   ·  December 21, 2007 1:55 AM


You might also want to read David Riccardo on comparative advantage.

We get out of the low profit stuff and focus on the high profit stuff. Semiconductors vs shoes. Software vs steel mills. That is not a sign of decline.

If imported paper costs less and the return on capital for a new more efficient paper plant is low we should get out of paper making.

In fact I think in a round about way you made that very point in your comment.

I read 40 or 50 trade magazines every month. Everything from Modern Metals to Solid State Technology and plenty in between. I see a lot of vigor.

M. Simon   ·  December 21, 2007 2:51 AM

Let me add that the agricultural age is passed.

Is it passed because we are making less food? Or because the labor content is now very low?

Same for mfg.

M. Simon   ·  December 21, 2007 2:53 AM

If I thought that information technology and digital media, robotics, bio-technology, etc. were simply supplanting the aging industrial manufacturing sector, I wouldn't give it a second thought.
But, products produced for consumption, whether foodstuffs, clothing, medicines, or shoes, require packaging. That means paper or paperboard primarily. When you see paper mills closing because of a declining customer base, you know that the domestic production of those goods is in decline.

Comparative advantage my ass.
When artificial, irrational impediments are constantly placed in our faces, here in this country, while production is smoothed along in third world countries, you know that a higher presence is at work pushing production purposely to slave wage areas at our expense.
Is it some cabal of wealthy toadies, some elite club of effete intellectuals with a higher world view, or simply bought for and paid off politicians?
You choose.
But unfettered capitalism at work? -- I don't think so.

Frank   ·  December 22, 2007 2:31 AM

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