Some of the more interesting news items over the last few days …
Globalization the right way
People from Brazil, China, Canada, Finland and Australia,the United States, Mexico, Germany, France, Malaysia and the United Arab Emirates came together for an international lean meeting … in Janesville, Wisconsin of all places. Janesville was picked because it is the headquarters for Hufcor, a company into lean up to its neck, and these global folks are all at various Hufcor plants around the world. Global scope, regional manufacturing with each plant aimed at the local market, all coming together to share lean lessons with each other. That is how globalization is supposed to work!
Lean trumps softness
In Australia, the head guy at James Hardie – a manufacturer of building products – "blames the worst US housing downturn he has seen in his 33 years experience for the company's four-fold increase in losses to $US347 million."
Also in Australia, also a manufacturer of building products Boral, "remains on track to deliver a turnaround in annual net profit" – "despite softer than anticipated residential markets in the United States and Australia."
Boral is being run by lean fanatic Mark Selway who says, "I am expecting every operational manager to personally get involved in the implementation of Boral lean processes." No indication the senior management folks at James Hardie have even hear of lean. Seems obvious being lean has more to do with results than the softness of the US market, wouldn't you say?
Goofy Paul is at it again
Always good to see what New York Times economist in chief has to say about manufacturing. This week he has pronounced manufacturing to be alive, well and on the way back in the US. "Manufacturing is one of the bright spots of a generally disappointing recovery, and there are signs — preliminary, but hopeful, nonetheless — that a sustained comeback may be under way," says Paul.
The reasons for the manufacturing comeback: "The main answer is that the U.S. dollar has fallen against other currencies, helping give U.S.-based manufacturing a cost advantage. A weaker dollar, it turns out, was just what U.S. industry needed," sayeth the economics wizard. Funny thing, though, way back in 1994 he wrote something he considered so profound the dust was blown off it and republished in 2008 – namely, that "The manufacturing sector has become a smaller part of the economy, but international trade is not the main cause of that shrinkage." In fact, he goes on ad nauseum about global trade having nothing to do wiht manufacturing shrinking. One has to wonder, if global trade did not cause manufacturing to shrink, how can weak dollars cause it to come back? After all, what difference do weak dollars make to anyone except global traders? hmmm.
The other reason for the comeback? Because Obama bailed out GM. The auto industry "would have imploded if President Obama hadn’t stepped in to rescue General Motors and Chrysler". He says, "Hundreds of thousands of jobs were at stake." Now I would have thought the number of jobs "at stake" is a function of demand – not supply. I mean, Americans are on track to buy about 12 million cars this year. Apparently Mr Krugman thinks we would buy less cars if GM weren't still around. Seems to me we would buy the same number of cars, we would just be buying more Fords and Toyotas if nobody were selling Chevys. Seems to me we would have about the same number of people working – enough people to make 12 million cars – they just wouldn't be working for GM.
A bright guy like Paul oughta know that demand drives jobs – not supply. He does keep us entertained, however. Gotta give him credit for that.
Have a great weekend …