The Challenge From China – WSJ.com:
The above linked article is pretty wide-ranging, written by a political guy, mostly about the growing military threat from China. He dabbles a bit in long-term (China) vs. short-term (U.S.) thinking… how China's economic growth is fueling their military power. He adds:
“In the past we have been able to outwit both more advanced industrial economies and those floating upon seas of cheap labor – by innovating and automating. Until China's labor costs equal ours, the only way to compete with its manufactures is intensely to mechanize our own. Restriction of trade or waiting for equalization will only impoverish us as we fail to compete in world markets. The problem is cheap labor. The solution, therefore, is automation. Who speaks about this in the presidential campaign? The candidates prefer, rather, to whine and console.”
Why aren't candidates mentioning this? Well, for one, robots don't vote. But seriously now… this is a very traditional business view, that automation is the key. Automation can help, when used appropriately, but it's not the WHOLE solution.
Where is the candidate talking about the need to change our business cultures, our management systems? If automation were the key, GM and Ford would still be on top of the automotive world. If you're a regular reader here, you know all about the examples of factories, here in the U.S., using Lean methods (a new management system) to effectively compete against companies who are chasing cheap labor around the world (China and now Vietnam).
The author is right that we have to avoid whining – as politicians or as business leaders. Your competition is using cheap labor to ship from China? Then change the game!! Be like American Apparel and compete based on speed and design.
Quit whining, change the game… but you can do more than spend $$ on automation. You can manage differently and you can ENGAGE your people in continuous improvement. You get what you pay for with labor… do you want $2/hr people who you aren't asking to think, or maybe a $12/hr person here can work with you to provide value (physical AND mental) greater than their cost of labor?
A week after this commentary piece ran, there was a letter to the editor worth noting:
When Henry Ford developed his production line for automobiles, the pay for American workers on that assembly line was the highest in the world, yet by the marvel of automation the labor cost per car was the lowest in the world. We had, in effect, the world's cheapest labor with the world's highest living standards.
But the assembly lines that turned out Model Ts in 24 seconds and World War II liberty ships in 42 days were made possible by a management that took responsibility for engineering, development and production techniques. Today's management is educated to be responsible for mergers, acquisitions and gamesmanship. For the hard part of Mark Helprin's automation solution, managers are taught to put in a call to China.
That is true about Henry Ford. But, again, look how Toyota surpassed them — it wasn't because Toyota was MORE automated. It was because Toyota engaged their people. The letter author IS correct that today's management tends to be focused on finance — when we could really use some people focused on operations, processes, and people. That would be the “hard part” also, don't you think?
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Great post. I work in healthcare and we have a competitor hospital opening in a city where our system has pretty much owned the market until now. So, the mantra from our management is that “we will lose up to X% of our patients when the new hospital opens.” Instead of responding to this market disruption, the system has accepted the fact that we will lose business and has started the cutting process. I am very disappointed in the response and it has become a self-fulfilling prophecy. I’d like to see management that really took on the challenge and innovated rather than retreated. The energy spent on whining could be used to outperform the competition and rapidly improve.