Manufacturing: A lesson in US competitiveness
The United States is still the world’s largest manufacturing economy, producing $1.6 trillion of goods each year, or 21 percent of global production. That’s nearly as much as Japan (13 percent) and China (12 percent) combined.
July 07, 2010
Last week, I wrote a story for CBS MoneyWatch, the personal finance website for CBS News, about ten great products still being manufactured in the USA.
While the products were the focus of the article – everything from Harley-Davidson motorcycles to Allen Edmonds shoes to Tibor fly-fishing reels – I ended up talking to a number of CEOs about why they still make things here, rather than ship their production overseas, and what makes them competitive. Despite the diverse nature of the products being built, there were some commonalities:
At $120 or so, a Maine hunting boot from L.L. Bean isn’t a lot of money, until you compare it to the price of the winter boot that you buy at a big box retailer. Still, plenty of people are only too happy to shell out the money for a Bean boot.
Why? The boot from Bean, still made in Maine, is built to last. If you do manage to wear it out, well Bean will repair it for you. The company has customers who have gotten decades out of one pair of boots, which makes it highly valued. When quality counts, American manufacturing still shines.
Value-added counts: Mortara Instrument makes ECG equipment in Wisconsin, competing against global manufacturers like GE and Philips. How does it survive in a commodity business? “We’ve had to develop innovative niches where we can be the best at what we do,” says Brian Brenegan, vice president in charge of finance. Examples: While GE and Philips have focused on the devices, Mortara has also developed a software platform that allows researchers to deposit the ECG results they collect during clinical drug trials to the FDA. That’s innovation.
Service counts: Bean wasn’t the only manufacturer I spoke to that prides itself on customer service. Paul Grangaard, the president and CEO of Wisconsin-based shoe maker Allen Edmonds, took real pride in the fact that the average tenure of his customer service representatives is 16 years, taking an average of 45 calls a day. Some of the fitters working in Allen Edmond shoe stores have fitted over 100,000 customers.
Community and family counts: Most of the companies I spoke to were closely identified with a geographic area and family owned. The Juracsik family still makes Tibor fishing reels in Florida; Fred Carl still has a personal stake in how things happen at Viking Range’s plant in Mississippi; and Joe Wells III is adding jobs and manufacturing capacity at Homer Laughlin China because his grandfather and father thought it was important to help the economy in the Ohio Valley. Ditto the Stephen family behind the Illinois-made Weber grills. It’s harder to lay off employees and send production off-shore when you live in the community where your company is headquartered and employ your neighbors. Even publicly-traded Harley-Davidson told me that being made in America is part of the mystique behind owning a Harley.
Lean manufacturing counts: A lot of craftsmanship goes into making a Tibor Reel and there are 212 steps involved in a pair of Allen Edmonds shoes. But several of the mainstream manufacturers I spoke to, from Harley-Davidson to Herman Miller to Viking Ranges to Homer Laughlin China, credited lean manufacturing and continuous investments in their facilities, to maintaining their competitive edge.
At a time when American manufacturing is challenged to keep pace in a global economy, I thought those were important lessons for our industry.
About the Companies mentioned in this article:
Allen Edmonds Shoe Corporation
Homer Laughlin China
Tibor Reel Corporation
Viking Range Corporation
Weber-Stephen Products Co. (Weber)
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