Mark Graban's leanblog.org - Lean Healthcare, Lean Hospitals, Healthcare Kaizen, Lean Thinking, Lean Manufacturing, Toyota Production System

Cars in Indiana and Legos being Outsourced

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Outsourcing continues to be a hot topic. It is especially true in Michigan, where the Governor's race is heating up. It is the topic of the race. Incumbent Granholm is trying to woo Toyota into building an engine plant here along with trying to find jobs in the only state in the union with negative job growth (see one reason why here). But she spends more time blaming the Federal government, even when other states still seem able to attract jobs. Challenger DeVos has, as a businessman, a record of doing his own outsourcing of jobs. I'm sure when it's all said in done, nothing will really change in Michigan.

Here's the real point: if you have strong operational capabilities, whether its based on lean or something else, you can produce anywhere you want. And if lean is a central tenant of your philosophy, then focus on the customer is likely a driving force behind your actions. And where better to manufacturer than where you customer is located.

Toyota is launching a major marketing campaign to convince buyers that they are truly an American company. In one striking example, the Sienna has more U.S. content than the Ford Mustang. Toyota hires American's in West Virginia, Kentucky, Indiana, Texas and Michigan. They will soon produce more cars in the US than Chrysler.

This morning, Honda is announcing their sixth North American assembly plant, this time in Indiana. They had already announced that it would be in the mid-west, the very heart of UAW country. They didn't go as far as put it in Michigan, but they also didn't run to the deep south as most transplants did. Maybe this is where those 35,000 GM and Delphi people that are taking the buyout, already with plenty of skills and knowledge, can find new jobs. In a market where hard manufacturing skills are in short supply, these people if they are willing to move will likely find a home at Honda.

At the other end of the spectrum, LEGO (not LEGOS, they are sensitive about that) will move a large amount of their production (over 900 jobs) to a cheap labor Eastern European country, and will give up control of manufacturing to Flextronics, based in Singapore. Lego was always very bullish on their prospects of staying put, and just as Honda can build cars in Indiana, I'm sure Lego could manufacturing in Denmark if they have strong operational capabilities.

Don't wait for Washington to solve the outsourcing problem for you. I see too many companies waiting for the booming voice from the sky to fix it. The answer is right under your nose. Focus on your capabilities. Get lean skills embedded. More importantly, put those skills to work. The most capable companies write their own tickets, they don't wait to handled their ticket overseas.

UPDATE: Since Wall Street seems to love it when companies announce either downsizing or outsourcing, it is always a little amusing when it happens to them. J.P. Morgan is moving jobs to India. It turns out, from a value stream perspective, that it is EASIER to ship information from India than manufacturered product. Hmm.

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Jamie Flinchbaugh is an accomplished Entrepreneur, Senior Executive, and Board Member with more than 20 years of success spanning finance, manufacturing, automotive, and management consulting. Leveraging extensive operational experience, Jamie is an invaluable asset for a company seeking expert guidance with process improvements, lean strategies, and leadership coaching in order to transform operations, reduce costs, and drive profitability. His areas of expertise include continuous improvement, entrepreneurship, coaching and training, process transformation, business strategy, and organizational design.

3 Comments
  1. Mark Edmondson, Lean Affiliates says

    Dear Jamie,

    Insightful message; great job summarizing the status with the auto transplants.

    For more about LEGO’s offshoring decision the other day, see Bill Waddell’s post
    L-E-G-O: Danish for ‘waste’

  2. Rick says

    Granholm fought to save the Detroit Medical Center, landing emergency funds and saving over 1,000 jobs, not to mention a critical health care center for tens of thousands in Southeastern Michigan. I wonder how hard DeVos fought to save all those folks he laid off from Amway because his profits were in jeopardy.

    I think Granholm will be the better choice for the Michigan economy, honestly. Looking at his (lack of plan) vs. Granholm’s plan, that much is pretty apparent.

  3. Jamie Flinchbaugh says

    Well, Rick has made his politics clear. First, saving jobs is not the same as creating them, and Michigan is the only State with negative job growth. Second, saying one has a plan and the other has none is clearly the kind of absolutism that politics doesn’t need. They both have plans, but at the end of the day…

    …only companies can save themselves! Read the post. This is the main point. Don’t wait for Washington, or Lansing (Michigan’s State capital, for those who don’t know).

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