More Problems for NAM

Over the past year we've been telling you about the duel going on at the National Association of Manufacturers.  The NAM executive committee sided with the large company minority of their membership when deciding not to endorse the Hunter/Ryan bill, over the wishes of the small company majority. 

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 December we told you about how the smaller companies were creating a coalition with farmers and labor officials in a direct affront to NAM.  The January 5th issue of Manufacturing & Technology News now tells us about another coalition being created to take on NAM and free trade proponents.

The 670-member Michigan Tooling Association has voted to change its name to the Tooling, Manufacturing & Technologies Association (TMTA) in an effort to create a broader and more politically active organization.  The fighting words are already spewing forth...

Right now, trade policy is not dictated by Congress.  It's dictated by the multinationals based on making a quick buck in the short term. You're talking about losing 3.2 million manufacturing jobs.  Lord, stone the crows.  How bright do you have to be to figure this one out? - Rob Dumont, President & CEO of TMTA

There's probably an element of truth in that politically, but that's not the point.  And after pushing the claim that outsourced subsassemblies created distorted productivity numbers, we've had to admit that productivity improvements have led to most of the job losses.

We've decided to draw a line in the sand and demonstrate resolve not to fade into economic and political irrelevance.  - Brian Sullivan, Director of Sales & Marketing of TMTA

They are openly courting dissatisfied members of NAM and have begun wading into the political waters.  If enough companies jump ship then NAM could rename itself the NAO - National Association of Outsourcers. 

The problem, as we've mentioned time and time again, is that they both miss the mark. The large company outsourcers are chasing cheap labor to China and beyond, and the smaller companies want external subsidies and barriers to provide a shield against supposed "competitive burdens."  As Curious Cat pointed out, China is becoming a problem... for companies that manufacturing in China.  Manufacturing output in the U.S., even net of outsourced subassemblies, continues to rise.  Chasing cheap labor, like Whirlpool and NCR, will just lead to expensive globetrotting.  At the same time, it's time to wake up to reality and realize that globalization has occured.  Creating artificial barriers and market distortions will just mean that some other company, someplace else in the world, will take your place. 

The only solution is to look internally and get better.  Streamline, remove waste, and focus on customer value.  Understand what your true cost and value is, not just what shows up on a traditional balance sheet.  If a low margin t-shirt manufacturer and a high-end apparel manufacturer can be successful in the U.S., then pretty much anyone can.  Companies like Danaher, Parker-Hannifin, and Toyota are successful manufacturing for global customers from U.S. factories.

Comments

[Craig Woll]

Excellent post Kevin! So a question keeps coming to mind for me as I read articles like these.

What can be done to change the direction of these small manufacturers?

It seems like they are struggling and have a real need to make some incremental or radical change in their business and mindset.