Lean Manufacturing principles are really the buzz amongst people who are employed in the auto industry. In fact, there are also interesting synergies relative to Information Technology, An excellent text,"The Cluetrain Manifesto", echoes the sentiment that our manufacturing base must radically change to compete on a global market. A common theme in the text is, "Adapt or Die." It has become apparent that the manufacturing base is leaving North America, particularly in the auto industry. So, I'm dumbfounded as to the reaction and the general paralysis of some of the major players in this space. Regarding the auto industry, it is clear that some will survive despite the tough landscape. The Asian auto industry seems to have some of the same challenges, but have emerged in better shape than their American counterparts. Although, the symptoms are well understood, methinks folks get caught up in a fervent debate over 'equivalent wages'.
That is, "How can the US blue collar workers compete against foreign labor force getting paid $0.23/hr.?"
The problem is much, much, deeper than the question above. In fact, you really need to go back and look at the US and UK historical political agendas to really understand how history repeats itself. Clearly, Americans have long prospered from a very imperialistic, resource grabbing culture. We've commandiered the wealth and sustenance of many nations as our infrastructure has flourished. If you look back at the Industrial Revolution, you'll note that power grab that ensued took place largely at the expense of nations ill-equipped to compete globally against the US and UK. Steel and other raw materials were used as leverage to control the global economy. Steam engines helped the shipping business grow exponentially, and pushed the US trade influence overseas. Of course, you must also not forget the advantages that the railroads afforded the US.
Now fast forward to the 21st century, US steel industry growth is non-existent. In fact, it was only a matter of time before other countries perfected metallurgical science. After many years of isolation and suffering at the hands of imperialistic nations, Japan and China have emerged as chief competitors in the global marketplace. So, what does all of this mean??
Well, it means that the US will have to figure out a means to strengthen its ever shrinking manufacturing base or learn to prosper in a service based economy. If the US is to fortify its ailing manufacturing base, it must first place an emphasis on educationg its people. Particularly in the areas of science and engineering. I discussed this phenomenon in an earlier essay. Arguably, the majority of the most far reaching innovations and disruptive technologies (ie rapid prototyping, nanotechnology, etc), have been fostered by overseas corporations.
Regarding the service economy, it will has become painfully obvious that US workers will have to begin to accept lower wages. I see it as simple mathematics or regression to the mean. You really cannot sustain a largely unskilled labor force with inflated salaries over the long run.
It simply doesn't scale very well. Many of these manufacturing workers will be forced to re-educate themselves. Learn new skills (ie computing, etc) Adapt or perish. I do not fault the laborers at all. The problem was created by a system that never asked very much of the line operator. I would argue that the assembly line operator was viewed as the most non-essential component of the entire assembly process. In retrospect, this was a huge error in judgement. If you're going to base your livelihood on a manufacturing base, you're line worker must play an intricate role.
History has shown that many blue collar workers earned lower wages for hundreds of years without much ability to increase their salaries. I'm sure it can be done again. The bigger problem is that Americans are generally a glutonous people, and most live well beyond their means. However, I digress.. I can expound on this matter in a future post.
I'm not at all certain that American automakers and their respective suppliers have actually figured it out. I had the opportunity to listen to a talk given by the CEO of a Tier I auto supplier. He addressed the following questions:
- China's impact on the global economy
- Collaboration of historical domestic competitors
- Diversity of thought
He asserted that the above concepts were critical to understanding the mess that has become the global marketplace. I'd have to agree that most collaboration and diversity will help the US market compete globally. However, I am uncertain that we really understand the urgency.