Keeping manufacturing in North America purely for the sake
of manufacturing jobs itself is unfortunately a tough sell. When I looked on the internet I found a lot
of internet resources and articles dedicated to creating business plan to
justifying on-shore investment. They all
focused on points such as:
- Reduced transportation costs
- More efficient production lines
- More market flexibility (assuming your target market is NA alone)
- Protection of your intellectual property rights
- Quality control and product branding
- Product safety
- Improved communication
- Savings from reduced errors, reduced breakage and handling product returns
While there are a number of points on this list that can
help you create a business case for manufacturing in NA there is still no
compelling reason to invest in NA that will boost your company’s competitive
advantage. For example, anywhere in the
world you can conceivably setup a very efficient production line and with the
right management and people quality, product safety, errors etc can be
controlled with a longer-term effect of a strong product branding. All this in a low-cost country it is conceivable.
Two great examples would be Singapore and Poland for the
aerospace industry. Both have labor
rates far below North America and both have the education base and people to
support a high-tech manufacturing structure.
Still I don’t accept the notion though that we are
doomed. Look at Germany, one of the
great manufacturing power-houses in Europe does it with a high standard of
living. When you think of German
products though you think of German engineering and ingenuity so already you’re
prepared to pay a little more. Nice
branding!
For a company to stay competitive in North America it needs
use the strengths of North America to offer products that are innovative and
unique in their industry. The picture that
is becoming clearer to me is that the focus needs to be on ensuring companies need
to ensure they have products and manufacturing that is innovate and
unique. An innovation plan needs to be
crystallized and flow through all levels of leadership, design, engineering, manufacturing
and marketing/sales. To have all these
elements focused on the right strategy and immersed in an environment where
other companies and opportunities for interaction become something that can be
leveraged to create products and innovations which lead industries. Creating a network which is unique in the
world is something invaluable and strategic which will differentiate a company
from its competitors and attract long term customers.
There are a number of books that all touch this subject from
different viewpoints. Design Driven
Innovation by Roberto Verganti , Inside the Tornado by Geoffrey Moore or Blue
Ocean Strategy by W. Chan Kim and Renée Mauborgne which look at companies
like Apple and Nintendo created innovative products which generated a momentum
that differentiate themselves from their competition and generate valuable
jobs. These companies use their vision, networks and
relationships to innovate the meaning of their products. The networks are both internal and external.
Staying competitive by reducing costs is only half the
picture since eventually the market will force you to eat your own lunch
anyways, never mind if you have strong competition. A strong innovation plan allows your company
to continue to ask for the margins to grow your business. Why do people still pay $600-700 for an I-Pad
when you can buy a tablet for $100 now?
Speaking only about manufacturing now because that is where
I am focusing my help it is unacceptable to not be lean and know your process
strengths and weaknesses top to bottom.
A continuous improvement structure is imperative to ensure you are
moving forward. Giving your
manufacturing a R&D budget to try new things is critical. Many times I’ve been asked to push the envelope
on a process that has never been tried before.
When a company doesn’t have the leverage to put a smaller project
together to test with a high technology risk but minimal financial risk good
ideas and game-changers get put on a shelf.
Or the partner gets put in an uncomfortable position and often has to
risk their reputation and profitability if they want to pursue the business.
To take advantage and leverage innovation it requires three
levels of coordination. Industry,
governments and universities/colleges all need to work as a network together to
create a region that is unique in the world.
As a real-world example of this network in Quebec we have a
number of initiatives. Techno Croissance
is a program subsidized by the provincial government focused on creating
entrepreneurs which understand technology innovation and how to grow a
company. The CRIAQ is another government
organization which matches up industry and universities on development
programs. In addition there are other federal
and provincial government programs which create a framework for companies to
work together on advance technology programs offering tax credits and creating
a fair framework which allows all parties to benefit from the intellectual
property and technology generated. This
is often a great place to be if you are a small company with a great technology
but not much leverage with the big companies since your technology is new.
I’m still not convinced I’ve got all the pieces of the
puzzle. Let me know if anyone has any
books or resources that have great information on this subject!
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