Last July we told you about a duel at NAM, where the Hunter/Ryan bill divided the larger "manufacturers" (primarily outsourcers) and the small domestic manufacturers. The bill would allow manufacturers to petition the government for relief under trade laws due to foreign governments subsidizing their currencies… obviously aimed squarely at China. The small manufacturers were in favor, but the large ones, fearing a trade war that could disrupt their globally outsourced supply chains, were against it. In a minor coup a subgroup called the Domestic Manufacturers Group (DMG) mustered enough votes on NAM’s International Economic Policy Committee to recommend NAM endorse the bill, infuriating the large "manufacturers."
As we pointed out and Bill later reinforced, the truly sad fact is that neither side gets it. The large companies are effectively outsourcers, and the small companies feel the need to blame everyone and everything except their own internal wasteful methods on why they aren’t globally competitive. Regulations, energy costs, currency subsidies, and the like do create competitive burdens, but are far outweighed by internal inefficiencies. There are any number of examples of large and small companies, domestic and foreign, that have attacked internal waste and are extremely competitive on the global stage.
The Manufacturing News brings us the latest developments. On September 28th NAM’s executive committee and board of directors voted not to endorse Hunter/Ryan, thereby voting against the large majority of their membership and in line with the small number of large "manufacturers." NAM defends the vote by saying it was in line with the "dues structure" of their organization, where 70% comes from the few large companies and 30% from the multitude of small ones. Sort of like having different classes of stock… or different castes.
NAM did take some action… they "created a task force" to look at pressuring China. And our friend Pat Cleary at the NAM Blog defends NAM by saying "Everyone knows this is a huge issue for us as an organization and one we’re going to have to continue to deal with." With the dues structure and the polarized and competing perspectives, this did put NAM between a rock and a hard place. It’s hard to come out smelling like a rose no matter what you do.
Members of the DMG are considering their options, which include dropping out of NAM or creating their own formal organization. I won’t repeat all of the great quotes from the Manufacturing News article, but needless to say the small manufacturers are justifiably pretty ticked off. As one small company executive noted, NAM has "worked overtime to frustrate the clear will of the majority."
I’m not necessarily in favor of the bill, and believe as I noted above that currency imbalances are mostly just another excuse to justify poor management, especially since they doesn’t seem to affect true lean-oriented small companies that compete effectively every day. But this is a major problem for NAM.