Earlier this month we told you about the duel at NAM, where the NAM executive committee voted against the wishes of the majority of its membership to not endorse the Hunter/Ryan bill. That piece of legislation would have allowed manufacturers to petition the U.S. government for relief under trade laws due to foreign governments subsidizing their currencies… obviously aimed squarely at China. As we pointed out, neither side really gets it. The large companies are in love with outsourcing, and the small companies that make up the “Domestic Manufacturer’s Group” (DMG) are trying to blame everyone and everything except their own internal wasteful methods on why they aren’t competitive.
Let’s take a closer look at this so-called DMG. The companies often mentioned as being leaders of the ad-hoc DMG gang are Nucor, Russell-William, and Festo. Interesting bunch, and even more interesting when you dig a little deeper.
Nucor is a large steel company, and its stock has been a rather phenomenal performer over the past five years. Lately they’ve been pretty vocal about blaming China for a global oversupply of steel, but when you look deeper into the steel market you learn that demand for steel has decreased rather substantially due to reduced domestic auto production. But while they’re blaming China and advocating as part of the DMG, they are also partnering with Chinese steel maker Shougang Corporation to build a new steel plant in Australia. All those “blame China” comments and press releases must make for interesting partners meetings. Nucor is also involved in a joint venture that operates a pig iron plant in Brazil. The term “lean” is not mentioned anywhere on their website, but it does note that employee bonuses are “not paid if equipment is not operating.” Nothing like incenting one of the core lean wastes of overproduction.
Russell-William, one of the largest acrylic manufacturers in the U.S., was acquired by idX in 2005. idX has seven manufacturing facilities globally, of which four are in North America. Their website touts that “because we’re dedicated to lean manufacturing, we manufacture the highest quality products as efficiently as possible.” But later on they brag about “over 1,000,000 square feet of warehousing space” and how they “drive labor savings.” A company supposedly committed to lean that is in love with warehouses is a company that is trying to look lean, not be lean. No, on second thought they aren’t even trying to look lean.
Festo is actually a German automation equipment company with operations in 56 countries, including China. The first U.S. facility was opened in New York in 1972 to provide parts for woodworking machines. Two other manufacturing facilities were later opened in Illinois and California. There is nothing about lean on their website, although they do talk about “continuous improvement” in their mission statement… a few lines after they talk about the importance of “allocation of capital.” Like Russell-William they also like to brag about the size of their warehouses.
Just for grins I checked the registration list for last week’s AME Conference in Dallas. About 2,000 manufacturing professionals attended, trying to learn more about lean. But no one from Nucor, Russell-William, or Festo. Likewise I checked the Superfactory Newsletter 50,000-strong subscriber list and found the same result. Of course this doesn’t necessarily mean anything; attending a conference or subscribing to an e-newsletter is by no means a requirement to be lean.
I guess just because you have factories overseas doesn’t mean you can’t advocate for domestic manufacturing. But let’s call them what they really are… multinationals. Our friend and occassional target Pat Cleary at the NAM blog had a good post last week titled Behold the ‘Multinationals’. He takes on the common misperception of the term, oft promoted by the likes of Lou Dobbs, that a "multinational" is an "evil large corporation." As he points out, there are many small manufacturers, such as Quality Float Works, Al-jon, and Pacific Plastics that happen to also have factories overseas. I’m guessing that most of them are chasing cheap labor, but perhaps, hopefully, some are truly trying to be closer to their new overseas customers.
We’ve said it before. Many times. There are hundreds of truly domestic companies, of all sizes, that compete globally by focusing on eliminating their internal waste. These companies know that the magnitude of that waste is far greater than other "competitive burdens." These are the companies that will survive while those that simply complain will fail.