Smart Business Magazine, Oct 2012

October 2012 Smart Business Indianapolis 17 technology consequent gains in productivity and decreases in costs particularly energy costs We definitely have seen a little bit of a sea change in terms of the overall competitiveness of U S manufacturing Moutray says Nearly every manufacturing sector is becoming more efficient by using technology Thats why weve seen such huge gains in overall labor productivity the last few years U S labor productivity grew more than 5 percent in the first quarter of this year In the durable goods sector it was almost 10 percent Those are unheard of levels of labor productivity growth and as a result weve seen the overall cost of labor per unit fall dramatically That has helped keep U S manufacturing more competitive Declining energy costs have also been a boon to U S manufacturers attractiveness relative to foreign competition Another key reason why weve seen this boomlet in manufacturing is that energy costs have come down with so much natural gas coming online Paul says That in itself has spawned an industry supply pipe that goes into the natural gas But more broadly for manufacturing in general especially energy intensive manufacturing sectors it has helped to bring down their energy costs And I see that continuing to be a very strong factor Reshoring is another trend expected to have some durability and thus continue to help U S manufacturing sustain its recovery to some degree Waldman says What appears to be happening and underline appear because its still in its early stages is that for global manufacturing supply chains which are spanning many countries these days the U S is playing a somewhat better stronger role in terms of production in those global manufacturing supply chains Waldman says Its being driven by multinational decision makers When they look at the map of their world U S manufacturers are looking more attractive Thats because there are a lot of hidden costs to doing business and to having a production presence in a low wage economy and those costs are now becoming less and less hidden And while the benefits of market potential in emerging economies are tremendous and always will be these multinational decision makers are beginning to realize that the costs are a little higher than they thought so that puts the U S and North America in a better position This is clearly a positive for the strength of U S manufacturing and its something I think the United States needs to see as a glimmer of light and to capitalize on Policymakers are expected to play a crucial role in the coming years in terms of whether the manufacturing sector continues to recover and perform well Were in a time thats somewhat similar to just after World War II in the sense that policy matters a great deal these days Waldman says And not just U S policy central bank policies and fiscal policies around the world are absolutely crucial now Were also in a time where you have to watch policymakers Manufacturers in the U S might have thought some time ago that monetary policy in India or in Europe or even in the Federal Reserve was a bit removed from their business a bit arcane Not these days They need to follow it Its crucial And the same holds true for fiscal policies Over the long term getting past the sluggishness and the challenge of this year and the next couple of years we need to make policies that engender long term investments in our workforce in innovation in technologies So policy around the world matters more to manufacturers now than it has in a generation In the big picture the resurgence of U S manufacturing during the last three years has changed the way the public and political leaders view manufacturers and their role in the economy and in society and that bodes well for the future of the domestic manufacturing sector I think its healthy that were hearing more talk about the importance of manufacturing than we have in the past by everyone Paul says Theres this realization that it has to be part of our future and everyone particularly those in leadership positions seems to be embracing that I think thats a very good thing HOW TO REACH National Association of Manufacturers www nam org Alliance for American Manufacturing www americanmanufacturing org Manufacturers Alliance for Productivity and Innovation www mapi net Chad Moutray The Toyota Way to Lean Leadership Achieving and Sustaining Excellence through Leadership Development Jeffrey Liker Gary Convis McGraw Hill 272 pages Many companies across the globe have adopted lean manufacturing practices but few have attained or maintained the levels of excellence that Toyota has The Toyota Way to Lean Leadership sheds light on some of the reasons for this Liker and Convis the former is the author of the popular Toyota Way series the latter a former executive VP and managing officer of Toyota offer practical ways for executives to spur their employees to focus their efforts on collaborating with co workers to drive continuous improvement throughout the organization Case studies demonstrate the methods Toyota uses to produce powerful capable lean leadership Supply Chain Transformation Building and Executing an Integrated Supply Chain Strategy J Paul Dittmann McGraw Hill 256 pages As manufacturers expand their offerings and look for new ways to lower their cost structures the complexity of their supply chain naturally increases Supply Chain Transformation tackles this issue head on introducing a strategic framework aimed at helping manufacturers develop a first class supply chain strategy Dittmann presents nine clear concise steps for manufacturing executives to follow as they retool to improve their companys management of supply chain dynamics The book contains numerous real world examples that illustrate the difficulties inherent in gaining organizational support for the major investments involved in reworking a companys supply chain strategy