|
Surviving “The Crisis”, by Gary Mintchell
During the first week of July, I toured the north of Italy as a guest of the Italian Trade Commission.
It was not Italian wine I was sampling, but a variety of Italian machinery builders. I was off the plane in Milan at 8:15 a.m. and by 9 a.m., was perched on a chair along with three colleagues in the conference room of the first visit of three that day, and 13 overall.
Italy has been the third-largest exporter of machines to the United States, but it has recently faced severe competition for that spot from China. The country has several areas of unique expertise, and we were treated to a sample of the variety during the tour. We saw huge presses that formed ceramic tiles, huge metal-working presses, small high-speed folding and sorting machines for the printing industry, packaging machines, leather-working machines, pasta-making machines and even a wood-recycling machine.
At every stop except two (there is still a big demand for pasta) the talk was about “the crisis.” The economic downturn we are feeling here in the United States is truly a global event. These companies are surviving, but a few are really hurting. A couple of stops were downright gloomy. But there was another key factor at each stop. These were all entrepreneurial, engineering-driven companies. Of course, they are trying to make a profit. Management in every case was focused on a single idea for survival—innovation.
Rigatoni anyone?
We saw two pasta-machine makers. Each has picked a part of the process on which to focus innovative engineering efforts for competitive advantage. Same thing with the two leather-finishing machine companies—one focused on applying dye; the other on drying. Some are still building on the founders’ innovations, while others have shifted direction to entirely new fields. These are warm, friendly people who are just trying to survive.
Few of the Italians we met were sanguine about the Chinese threat. China is at least the fifth country in my lifetime about which I’ve heard the charge, “They just copy our stuff.” We used to say that about Japan. Then the Japanese said it about Korea. Next was Taiwan, then Southeast Asia...
Read more
» PINTO’S PROSE: Fundamentals: Manufacturing Innovation, by Jim Pinto
Over the past century, manufacturing has driven America’s growth and provided the world with some of the best products ever created.
Manufacturing is a primary wealth-producing sector and is historically responsible for this country’s relatively high standard of living compared to other countries.
The current recession has stimulated a review of the fundamentals. It’s being recognized that major parts of the economy—government, banking, insurance, health care, consumer services—use physical wealth, but do not create it. Financial services now comprise 45 percent of earnings of companies on the S&P 500 index, up from 10 percent a quarter-century earlier.
General Electric, the fifth-largest company in America, has apparently learned that lesson; its shares have lost some 58 percent of their value over the past year, largely the result of falling profit at GE Capital, its finance unit that generated 50 percent of its profits before the downturn. GE Chairman and Chief Executive Officer Jeffrey Immelt has stated, “Real engineering was traded for financial engineering. In the end, our businesses, our government and many local leaders lost sight of what makes a nation great: a passion for innovation.” Immelt is now restructuring GE so it will count on finance for just 30 percent of its profit, down from half before the downturn.
Immelt publicly admits that, like many U.S. companies, GE has turned too many core technological functions over to outside contractors and foreign operations. He insists that the United States should now aim for manufacturing jobs to be at least 20 percent of total employment, about twice what it is now.
Coincidentally, Harvard Business Review (July/August 2009) makes the same case about the importance of manufacturing. It warns that the erosion of the U.S. manufacturing base is seriously undermining the country’s ability to innovate. We cannot succeed by letting other countries manufacture the products we supposedly invent; sooner or later, they’ll “invent” their own products, and we’ll be left behind...
Read more
|
