Last month, President Obama appointed a “manufacturing czar.” Ron Bloom is a banker and union advisor, who stated: “As we meet the challenges of globalization and technological change, it is vital to have a concerted effort across the Administration to support an innovative, vibrant manufacturing sector.”
He’s got it right about “globalization and technological change,” but we should all be suspicious of “concerted efforts.” In the most obvious example, concerted efforts directed by government agencies rely on authority and coercion. It’s working in China, but we cannot beat them at that game — and, I don’t want to try. To succeed now, in this era of globalization and technological change, domestic manufacturing must rely on ingenuity, not organization. We need manufacturers who are risk-takers, not aid-seekers.
That’s why it disappoints me every time I hear or read someone wish for a return to a past era of U.S. manufacturing dominance. A lot of smart, experienced analysts and business people subscribe to the idea that because domestic manufacturers once thrived and prospered, we can do so again with just the right leadership.
The idea of a big government push to invigorate domestic manufacturing is exciting to those who promote this “retrospective” view. Of the new czar, one reliable columnist proposed elevating manufacturing to a Cabinet-level position, comparable to the Secretary of Agriculture. He wants an official “to keep the country’s attention on the manufacturing sector of the economy and to sponsor and coordinate research and regulatory reform.” Another business columnist advocates an Apollo-type federal program, to spawn new industries and generate jobs. It’s a clever comparison, but like so many other ideas that try to initiate a manufacturing revival based on past triumphs, it makes too little of the significant ways the world has changed over 45-50 years.
What makes the past so appealing is not just that U.S. manufacturers of that time outperformed their global competitors; the manufacturing sector dominated the domestic economy, too.
From today’s perspective, everything seemed to work smoothly in the 1950s and ‘60s. Companies designed and manufactured cars, planes, appliances, and all types of machinery and infrastructural components, with a goal no more complex than to deliver functional goods that the consumers wanted and needed — and that an organization might rely on for its continued success. A company could produce a single product, gears, for example, and be confident that satisfying the gear-buying consumers would maintain the security of its investors, its employees, and in many cases its community.
But that’s not the world we live in now, and not because the world stopped buying gears, or appreciating the value of a high-quality gear. It’s just that a well-designed, well-manufactured gear doesn’t require the same large organization to produce it, and today’s producers don’t require the same extensive range of suppliers.
In fact, many companies today can produce quality gears or other valuable manufactured goods, but the domestic manufacturers capable of doing these things are simply incapable of making the choices that their competitors are able to make in order to win the purchase orders. To be specific, domestic firms cannot cut their labor costs to subsistence level, as some foreign producers can do. Nor can they ignore workplace health and safety standards, as their global competitors can do. They are incapable, too, of avoiding the costs and/or penalties of not complying with environmental regulations.
The simple point I’m making is that the world we may wish for is not the world we live in. The world we live in is unstable, uncertain, and unforgiving of failure. We have standards to meet, and obligations to uphold.
But, the world is also a much more accessible place than it was 50 years ago. There are more capital resources, more skills, and more opportunities available to more people, which means success in manufacturing relies on ideas more than on circumstances. It may be inspiring to trust the futures to a government program, but it’s not rational. The world in which we must succeed is too large and complex to be influenced by changes in government policies.
The challenges facing manufacturing, which everyone agrees are “globalization and technological change” (at the least), demand multifaceted, adaptive solutions. We can’t afford large organizations; their too costly, too slow to change, and too prone to mistake mistakes. We need to multiply our opportunities, not consolidate resources. We should be looking for multiple routes toward the world that is emerging, not for plans to recreate the past.