Life, Liberty and the Pursuit of Manufacturing

The founders of the United States demonstrated quite a bit of wisdom in many areas and it is fitting that one of our our most widely, happily and passionately celebrated holidays is the anniversary of their courage and accomplishments.  Little known, however, is that manufacturing was squarely in the center of the agenda for the American Revolution.

Everyone seems to be wringing their hands over globalization these days as if it is some new phenomena, thrust on the world as a result of the internet and telecommunications.  I am often amused at how our collective ignorance of history and self-centered culture leads us to believe that everything that happens in our world is entirely new, and is the biggest, worst, most stressful, greatest or some other ‘est’ that has ever happened.  It is rarely true.  The guy who wrote The World Is Flat is an excellent case in point.  According to him we entered into a whole new economic era driven by globalization in about 2000.  In truth, absolutely nothing happened in 2000 – or at any other time in the last 100 years that comes close to the globalization challenge British manufacturing faced prior to the American Revolution.

The economic idea behind Great Britain’s colonization of the world was a quest for raw materials.  Colonize North America, have the settlers harvest wood, tobacco, animal pelts and just about anything else that could be found, ship it to England where the British manufacturers could make it into something useful, then sell it to the rest of the world.  That was the grand scheme.  The fly in the ointment was that the pesky colonists kept setting up factories of their own to make things out of the raw materials, cutting the factory owners in England out of the supply chains.  British manufacturing found itself in the crosshairs of globalization pressure such as had never before existed in history.

Just like they do today, business owners tried to overcome poor logistics and lousy cost structures by government fiat.  A series of laws were passed in England aimed at stifling American manufacturing, and especially trying to put a stop to colonial manufacturing for export.  Textiles were especially nettlesome.  The British wanted a sheep to be sheared in Massachusetts, the wool to be shipped to England and made into a shirt or whatever, then the shirt shipped back to Massachusetts and sold to the guy who had sheared the sheep.  The folks in Massachusetts had a different idea – namely cutting out the middle men and eliminating the waste of all that back and forth across the Atlantic Ocean.  For exactly the same reason Toyota builds cars in the U.S. for the U.S. market and in Europe for the European market, the only sensible place to manufacture goods for the colonies was in the colonies.

At any rate, people in the colonies signed up to fight in the Continental Army against the British for a lot of different reasons, but quite a few of them were motivated by what they believed to be a God given right to manufacture without the imposition of regulations and taxes imposed by the British government in their misguided attempt to protect their manufacturing base from globalization.

In retrospect, British manufacturers would have been far better off had they invested in manufacturing in their colonies – especially in North America – and pursued a strategy of manufacturing close to the customer.

The manufacturing and logistics lessons from history are clear, and the internet has not changed any of the fundamentals.  It is dumb to manufacture goods in England for customers in the U.S.; it is dumb to manufacture goods in the U.S. for customers in Asia; and it is dumb to manufacture goods in India or China for customers in England or the U.S.  Local manufacturing inherently has a shorter cycle time and less waste in the process, and – convoluted economic theories be damned – it always prevails because it is always the highest value proposition.

The moral of the story – when you hoist a cold one to salute the founding fathers today, don’t forget to salute the folks who fought and died to protect your right to fire up those hot dogs and hamburgers on an American made Weber Grill.