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.
LeanThink says
I know NAM works for the interests of manufacturing, but they seem to be out of sync with what you are saying: manufacturers of all shapes and sizes should be out to reduce “internal inefficiencies” instead of whining about burdensome government regulations and unfair meddling of foreign governments in their industries.
Employing lean techniques to reduce waste and ultimately cost is the best way to compete with our Chinese competitors. Working with NAM as partners instead of breaking into two camps may be another way.
Who knows? A partnership between a “small” and “large” manufacturer may just be the combination needed to compete with China.
Rotor Clip Company
Bill Waddell says
The article makes much of the NAM rift between Big and Small, but I don’t believe that is the real distinction here. If anyone cares to dig into it, I am sure they will find the rift is actually between Public and Private. The Public companies are the ones leading the offshore outsourcing charge and making a mockery of NAM’s absurd claim to represent American manufacturing. I have called NAM the National Association of Multi-National Outsourcers and the article pretty well validates that charge. Those Publicly held Multi-National Outsourcers are the ones that worship at the altar of Wall Street, use NAM as their lobbying group and dominate the Republican Party economic agenda.
The real disappointment in the NAM rift is that the Domestic Manufacturer’s Group simply does not get it either. Their leader, Nucor’s boss Dan DiMicco, says that unfair trade is the primary cause of America’s lack of manufacturing competitiveness. Nucor is a very lean company that is doing quite well. DiMico surely knows that most of his fellow members in the DMG suffer far more from a failure to manage their business the way he does, and that all the fair trade regulations in the world will not make poor manufacturing management competitive.
The DMG should break away from NAM – they would be cray to continue to support an outfit that undermines their interests. But their agenda should be to promote changes in government regulations to support lean manufacturing – like getting inventory off the balance sheet and putting people on, a sliding scale in the capital gains tax to force Wall Street to look to the long term, etc… Pushing for fair trade while abiding regulations that undermine manufacturing excellence is folly.