For decades American manufacturing companies have been sending production outside of the country. It started as a trickle, then soon became a flood, because success stories in some types of products led everyone to believe that an outsourcing strategy would work wonders with just about anything, automatically. The trend became so en vogue that CEO’s couldn’t crow loudly and frequently enough about their plans to take advantage of cheaper labor and reap massive windfall gains for their investors.
And just like the housing bubble that was a major contributor to the recent economic meltdown, the bandwagon mentality of our captains of industry has made us a manufacturing shell of our former selves, in many cases for no good reason.
Here’s how the scenario often (still!) plays out:
A competitor (or even a company in an only vaguely related industry) announces plans to move production offshore and claims significant potential savings.
The CEO announces to the Board that he/she has been studying the same kind of strategy and that plans are being formulated to execute such a strategy and achieve savings at least as great as what the competitor claims.
The financial analysis is done, and if the results don’t meet expectations, the assumptions are massaged until they do (yep, that happens sometimes - we're all tempted, right?).
The production is moved, and while only a fraction of the savings are achieved (if any are achieved at all), and both quality and customer service often suffer, success is claimed by finding another “scapegoat” within the business that must next be remedied.
Someone usually leaves soon afterward, but that person generally receives a nice separation package.
This scenario occurs much more frequently than you might think, and few are the business leaders with enough courage to admit to making a strategic mistake and then endeavoring to fix it; in fact, many spend the majority of their time trying to save face and craft stories to make their strategies look brilliant and/or innocent no matter how badly they’ve blundered. At times, it really is no different than politics.
But we shouldn’t settle for that, should we, as citizens and investors? We need better, smarter, more courageous leaders, willing to attack problems in bold but practical ways, and willing to take responsibility for their actions as they learn and adapt.
Of course, that seems a pretty impractical thing to hope for, so maybe the approach of the Chicago Manufacturing Renaissance Council (www.chicagomanufacturing.org) will at least help educate people on the ways in which keeping manufacturing jobs here in Chicagoland and in the U.S. can be beneficial to all. And the word “educate” really is the key. We need more people educated in manufacturing and engineering, which is why the CMRC supports organizations like the City Colleges of Chicago, the Austin Polytechnical Academy (APA), and the Chicago Academy for Advanced Technology (CAAT).
The CMRC is also trying to find more business leaders and politicians willing to step out of their cocoons and recognize what’s really happening. Have you seen a factory in China? Most are high-tech marvels with cutting-edge equipment that require very few workers. So why didn’t we build that factory here, and save the expense of freight and the difficulty in controlling quality across an ocean? Because only idiots don’t outsource as much as they physically can, according to common corporate wisdom.
We are too often sheep – bleary-eyed sheep who are just about to run over a cliff because we don't have good leadership. Now is the time to start bringing manufacturing back to the United States and quit kowtowing to foreign countries and their often mythical competitive advantages. Outsourcing might sometimes be the answer, but it isn't always the answer.