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Category: Manufacturing

Manufacturing IS the knowledge economy

Monday, 17 January 2011 21:45 Written by Eric Garland 2 Comments

People have been using the term knowledge economy for decades now, dating back to Peter Drucker and Alvin Toffler when they forecast the emergence of knowledge as the most important resource in all of industry. It seems these days to be a synonym for all-intellectual work: engineers, designers, market researchers, intellectual property attorneys, executives, futurists, and other people with what I call “laptop tan.” Thus, when people imagine a transition to a knowledge economy, it’s like they think about a day when 80% of high school graduates are all geniuses in theoretical calculus and chemistry, moving swiftly to college, then grad school, finally landing in the R&D product design lab of some company that innovates in the West while somebody in the East is getting sweaty.

This is an amazingly limited view. Rarely do I hear people associate knowledge economy with making things. Manufacturing, with its greasy overalls, its calloused hands, its physical exertion, all too rarely is seen as the repository of critical knowledge that we lose at our absolute peril. Consider then, one of the most beautiful films I have personally witnessed, Note by Note: The Making of the Steinway L1037, which is now available for streaming on Netflix. This documentary is a love poem to fine craftsmanship, showing in stage by meticulous stage how the artisans of the Steinway & Sons piano company make their nine-foot concert pianos. In each step, every person who touches wire and wood is the custodian of decades of hard-won knowledge about how a world-class piano is made. Men and women from the United States, Mexico, Croatia and many other nations each bring their own approach to hammering, chiseling, bending, shaping and tuning. Their work cannot possibly be replaced by machines, and while training can get new hires to go through the motions, the film points out that “only time can make you good at your job.”

When we speak of talent crunch, we speak of a global competition for cardiologists and chemical engineers, sure. But the forgotten aspect of the transition is in the unglossy, unhip industrial zone of Long Island City, New York, where years of knowledge are sown into the hands of men and women who did not receive their ticket to the knowledge economy through expensive, debt-laden university credentials. They were earned the only way possible, through strenuous, demanding, meticulous practice of a craft. Day after day, people came to a factory where jobs were not outsourced to the lowest-bidding shop at which workers can’t go to the restrooms when they feel like it. They brought their brothers and cousins to work along side them and pass along what they already knew. Real value was created. That is a knowledge economy.

It is not assured that this tradition will be passed on. The executives from Steinway note that gone are the days when every home needed a piano. They list all of the competing piano companies in New York, each disappearing with shifts in style, emergence of new technologies, migration of manufacturing to far off places. Dwindling companies employ fewer workers to deepen their craft.

If we who speak of innovation and economic development do not focus people’s attention on this potential loss, what is the future of our economies? What will our countries look like if we mistake work in front of laptops for the only repositories of knowledge worth encouraging and preserving?

Listen to a Steinway Concert Grand piano while you think it over.

America prepares to re-shore manufacturing

Tuesday, 11 January 2011 16:24 Written by Eric Garland 0 Comments

We have been following trends in manufacturing in this secret, surprising locale – the United States – for more than ten years. Shocking, avant-garde behavior? It shouldn’t be – the United States remains the world’s largest manufacturer, though statistical debates rage as to whether China has actually overtaken the U.S. for the top spot. Either way, China has been gaining fast, the U.S. is less reliant on manufacturing for it’s GDP, and trends in both countries are fascinating and essential if you want to forecast the future of the world economy.

Derek Singleton at the Software Advice’s Manufacturing Blog sees U.S. manufacturing as resurgent, and that American companies should start strategizing now for the coming wave of “re-shoring.” They report some surprising drivers:

More manufacturers are bringing production back to North America. We think the three main drivers of this trend are:

  • Increases in the cost of ocean freight transportation, which has increased by as much as 150% since the 2008 lows;
  • Longer product delivery cycles that make domestic manufacturers less responsive to consumer demand; and,
  • Poor production quality standards that have resulted in the delivery of defective goods.

The cost issue is really the key trend driver – increasing the price of shipping would be as easy as a spike in oil prices, and cost of doing business in China will no doubt increase as the nation’s infrastructure spending burns along at 10% of its GDP. Singleton’s view on macroeconomics make sense as well:

The rising cost of Chinese labor is prompting domestic manufacturers to reconsider their off-shoring habits. Last year, Chinese inflation rose to 5.1% – its highest level ever. Sure, Chinese manufacturing remains far less expensive, but a trend toward higher costs is clear.

People talk of the Chinese economic miracle – the last bastion on Earth with that incredible 10% GDP growth! Well, that means inflation of prices too – likely some of the same prices that make manufacturing there so attractive.

Our colleague Paul Denlinger told us in his podcast that the Chinese strategy may be to develop a sizeable middle class to buy up its manufacturing output. At the same time, the U.S. could return to manufacturing for its domestic market as well. Very 1970.

This may answer the question, “What will the U.S. do for a living?” Answer: make stuff.

Rebirth of the “made in America” brand

Friday, 09 July 2010 12:28 Written by Eric Garland 1 Comment

Most consumer purchases in the United States, large and small, involve reading the tag “Made in China.” Everywhere. Everything. Baby toys, shower curtains, plastics of any sort, iPods, furniture – it seems lately that the only thing in America that isn’t made in China is AMERICANS. Maybe we’ll even figure out how to outsource that…

A tip for trend analysis – every major trend has a counter trend. The megatrend of Asian manufacturing is now leading to a powerful counter trend of repatriating operations to America, or at least to make it look like it’s a key component of your brand.

You can see this movement in the “manifesto” commercial for the new Jeep.

Will others competitors follow along?

About the blog

This is the official trend blog of Competitive Futures, a management consultancy that provides trend research and analysis for business and government around the world. Here, we update you on interesting trends we see as part of our work for our clients.


For managing partner Eric Garland's new author and speaker blog, please consult and bookmark http://www.ericgarland.co

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