By January 22, 2007 0 Comments Read More →

WSJ is STILL Shocked We Build Stuff Here

For Some Manufacturers, There Are Benefits to Keeping Production at Home –

This really is a recurring theme in the WSJ, this article starts:

“It has long been an axiom that U.S.-made consumer goods such as TV sets and kitchen appliances can’t compete in a world where cheaper labor can be found elsewhere.”

OK, sure, most of the business world thinks so (the non-Lean thinkers), but don’t you think a certain influential newspaper has had just a bit to do with that, reinforcing the Business School notion that labor costs are the only things that matter?

The article wouldn’t have any thing new to a Lean thinker, that certain types of products should obviously be made in local markets, for local markets:

“If the thing being sold to the U.S. market is locally customized, delicate, or very large, chances are it’ll continue to be produced in the U.S.,” says Bruce Greenwald, professor of business and economics at Columbia University in New York. The same, he says, is true “if the manufacturing process itself involves almost no labor, like medical testing or like some very automated electronic-component manufacturing plants, chemical plants and metal-fabricating plants.”

I wrote before about how some Olevia TV’s are made near LA, this article highlights how some large Sony sets are produced near Pittsburgh.

The TV sets employ cutting-edge technology and tend to be large, with screens ranging from 42 to 70 inches. Their size and the sensitivity of their electronics make proximity to the consumer a meaningful advantage, as does the ability to react quickly to changes in tastes for high-end equipment.

“It is important for us to produce these sets close to most of our customers,” says Stan Glasgow, president and chief operating officer of Sony Electronics Inc., a Sony unit that also assembles customized VAIO computers in San Diego. Proximity “gives us a distinct advantage with our retail partners across the country, as we have the ability to quickly fill the channel with specific products.”

There’s a nice example of using a strategy other than low cost, namely fast cycle time and fast response to customers. Imagine that. Even in the face of high labor costs! Shocking! Does the WSJ think Toyota is stupid for building more factories in North America when they could have cheaper labor costs in Mexico or Vietnam?

The article mentions how manufacturing is down to being only 12% of the U.S. economy. As someone who believes that manufacturing is one of the true Value Adding sectors of the economy, this is troubling. Everyone else lives off of the value created by building products. I wish the manufacturing world would get a little more respect from the WSJ.

Does anyone else see this pattern in the WSJ, or am I oversensitive about the lack of respect that manufacturing gets sometimes?

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an book titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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