Just last weekend we told you how Michigan was doing everything in its power to drive the few remaining manufacturers out of the state. Would the last cell leader to leave please turn off the andon light? We mentioned off-hand that they should be looking next door to Wisconsin to learn how to grow business, and now we have more evidence why.
Many manufacturers in southeastern Wisconsin are not only dealing with
global competition, but they are they’re beating it. Select
manufacturers in old-line industries such as investment casting,
injection molding, precision machining and tool-and-die making are
routinely taking business away from their Chinese competitors.
Good for them. How are they doing it?
To effectively compete, many Wisconsin manufacturers have
transformed their operating models using the principles of lean
manufacturing, automation, quality assurance and control, just-in-time
delivery, innovation and technology, said Mike Klosinski, executive
director of the Wisconsin Manufacturing Extension Partnership (WMEP), a
private, nonprofit organization dedicated to the growth and success of
“Many Wisconsin manufacturers have not sat still (in recent) years,”
Klosinski said. “Putting in place lean (principles) has been the
biggest strategy. And by taking on more services around their product,
understanding their customers’ customers and being more innovative and
creative about developing new products, they’ve turned into value
suppliers. As a result, those companies’ large customers are electing
to source with someone they can trust instead of sourcing overseas.”
Signicast [investment castings] has seen significant work increases, said Robery
Schuemann, executive vice president. And much of that work is coming
back from China.
“We are definitely feeling the boomerang effect,” Schuemann said.
“The playing field is changing. Many of the rebates given to Chinese
manufacturers have been taken away. The yuan (the Chinese dollar) has
gone up, and labor costs have gone up there. You’re seeing the people
that went there for price coming back for quality, delivery and price.”
Yes, price. In the past companies have competed against supposedly lower-cost offshore manufacturers by promoting quick delivery and high quality. Now thanks to rising foreign labor costs, a weaker dollar, and especially internal process improvements, you can compete on price from U.S. factories.
But now I’m going to shift gears and say this isn’t that great of a story after all. I do have one major drub against the various companies mentioned in the article: almost all of them have leveraged large amounts of automation. Automation can be a good tool when applied properly, but it can also be dangerous in the long term.
Plastic Components Inc., a manufacturer of injection molded plastic components based in Germantown, competes directly with the Chinese and other emerging markets. The company produces components that are used in a wide variety of manufactured products and has customers around the globe.
“We can go head-to-head with any molder in the universe with our universe,” said Thomas Duffey, president of Plastic Components.
“When we started the company in 1989, the concept was a fully automated plant. The idea was to take human involvement out, and taking cost and variability out.”
Ah yes, the dream of the "lights out" plant. Companies have been chasing that concept for decades. Some have woken up to the reality that it can’t be done but still try to get as non-human as they can. Humans, in their view, simply create "cost and variability."
Others, when they get their noses out of traditional P&L’s and balance sheets, come to a different realization. Humans actually add value. Knowledge, experience, creativity, and ideas are worth something. Processes and methods create variability, not necessarily humans. And robots can simply "automate waste."
Last time I checked, a robot working in a lights out facility had never submitted an improvement suggestion. Meanwhile a lot of Chinese workers, even with increasing labor rates, are working to improve their operations. Who will be around in another ten years?