Nice article, Michelle. You hit on all of the points that are enhancing U.S. manufacturing. You mentioned lower energy costs due to shale oil. That part hasn't hit yet. While new oil is coming onto the market from fracking, it hasn't hit the volume needed to drive down energy costs, which are still set by world demand. But it will. Right now the energy savings seen at plants has to do with efficiency. Over the next few years, new oil and new natural gas from fracking will begin to make a difference in the cost of energy. But it hasn't hit yet. When it happens, you'll see the effect at the pump.
I really like the GE water heater example. I am old enough to have gone through the TQM types of programs where the whole team was brought together, including engineering, manufacturing and field engineering. At one company I was assigned a field engineer to do programming. The idea was that, since he was involved in the development of the product, he would be better placed to install, upgrade and maintain it. He also provided valuable information about what we were doing and helped us avoid designs that would be hard to maintain.
Then things went offshore. Companies lost control. I have worked over the last few years on companies that were going out of business becuase of mistakes made by foreign suppliers. These were small companies. Few could be saved. What I found interesting, though, was that one of my small company situations was exactly similar to a large company in the same basic business.
As for efficiency in China, just look at Foxconn. I have heard that they have 1.2M workers. What!! Does anyone think that this is efficient? I am not worried.
One other thing. Those low end industries that the US "gave up" were in some cases where we were the biggest exporters (e.g., textiles). We gave those industries up for geopolitical reasons. In fact, that is why most of our industrial issues have arrisen.
If you look at manufacturing in the US, much of it is owned my foreign companies. Many German and Japanese companies manufacture here. And their presence is growing.
Thanks for the information. I found it especially interesting to read about gaps in communication between American design engineers and Chinese manufacturers. Perhaps that gap, and the problems it causes, are behind so many of the problematic products we've discussed in comments to many Made by Monkeys and Sherlock Ohms columns. Like Lou, I also remember TQM.
Excellent post Michelle. I retired from a GE company; i.e. Roper Corporation, Inc and I can state, at one time, all engineers and purchasing people had as a mandate, to specify and purchase 30% of all components from LCCs (low cost countries). We all felt this was a real bummer and limited our choices considerably. As you mentioned in your post, the tide is turning. There are other reasons for this, namely:
1.) Quality for "commodity" components drops considerably after first piece inspections are performed. It is a MUST that incoming inspections be performed to "cull out" off-quality merchandise.
2.) Communications, no matter what anyone tells you, is an ongoing problem.
3.) The speed at which product and component revision can be made is definitely lessened due to "products on the water". It is very difficult to achieve the number of turns on inventory without creating obsolescence.
4.) Geopolitical issues and instability. (Depending upon the product, there are definitely issues with national security. )
5.) I do suspect vendors in China can count even though it is not uncommon to order 10 and get 8. This is an ongoing problem also.
In my opinion, if we had a government that would keep out of our way, manufacturing could once again be the cornerstone of an economic rebound in this country. This can be accomplished with good environmental policies in place in spite of what you hear. Again--excellent post.
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