Thursday, January 14, 2010

Globalization and Manufacturing – 1 /14/10

Manufacturing today is far different than even 10 years ago. There is not one single factor that has driven change but rather a series of events and factors that by themselves may have little impact but when applied at the same time or within close proximity have changed manufacturing for ever. I believe these changes will continue to evolve for many years.

In print manufacturing during the 70’s and 80’s it was common for a business to earn 20% to 30% Gross Profit. Today they are lucky to get 10%. The margin for management or production error is slim. As a customized manufacturer of a subjective product it is common practice to re-print jobs. Again, 20 year ago this could be done with the job still earning a profit. Today it will take the average printing company three jobs to recover the losses of re-printing.

Technology, largely the internet, databases. MIS have given us volumes of data to analyze to make better decisions. I tend to think we have too much data that prevents us from making decisions. However both labor and management must establish processes that first collect the correct data and then be able to use that data in their daily decision making processes.

Free trade legislation, technology again has allowed many intellectual and manufacturing functions to be outsourced with ease and without traditional quality or performance concerns. As a USnd or even third after services. It is now easier and more advantages or profitable to make transactional revenue than it is to make a product – we can subcontract the making of the product to the cheapest bidder. economy that has driven business ownership to place all emphasis on the financial side of the business leaving the manufacturing side a distant 2

I have grave concerns about the financial systems around the world, typically lead by US policy further restricting manufacturing in this country. We continue to see extreme difficulty for manufacturers to secure credit for daily operation or capital upgrades and expansions yet the financial executives continue to be incented by huge bonuses to generate profits through the manipulation of financial transactions and not the manufacturing of products. The next five to ten years will be bleak if credit does not begin to flow soon.

Michigan manufacturers must continue to support the auto industry while they enter new and emerging markets such and energy and health care. Before our state education systems, both K-12 and higher ed, can prepare a stronger employee, the Michigan culture must change to realize ALL manufacturing jobs require a much higher level of education than in the past. Unfortunately, I believe it will take this significant recession, the inability to find work, to afford housing or food for people to realize this paradigm shift.

Ferris State University has a unique ability to be a leader in this needed transformation. Because of Ferris’ historic root mission, we have the programs in place that are needed. As the public receives the wake-up call for change, they should be headed to Ferris for a breakfast of new career preparation. Ferris however must also change radically to become a much more dynamic and proactive institution to assure we are ahead of the change curve.

Students who wish to be successful in manufacturing now and in the future must be proficient in finance and financial accounting. They must able to analyze manufacturing processes for cost effectiveness debate with confidence the advantages of local manufacturing over outsourcing to an over seas supplier. Along those same lines statistics and process improvement is key. Students must learn to think about sustainability of our environment and resources in the products and manufacturing processes they design. Lastly, respect for a culturally diverse mix of professional business and technical partners. We are collaborating and competing in a 24/7/365 world, not just Big Rapids, or Michigan or even the USA.

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