This article is a web-exclusive companion to Home-Run Hitters: Four manufacturers who are confronting globalization--and winning--by maximizing the competitive advantages of U.S.-based production. Here the leaders share additional insights on maximizing U.S.-based production in a global world. They include the following:
Brian Jones, president, Nypro Inc., Clinton, Mass.
Richard E. Dauch, co-founder, chairman and CEO, American Axle & Manufacturing, Detroit
William B. Stockwell, president, Stockwell Rubber Co., Inc., Philadelphia
Dov Charney, senior partner, American Apparel, Los Angeles
Brian Jones, president, Nypro Inc., Clinton, Mass.
. . . on putting China in perspective: "People forget. All history repeats itself. Everything that they said about Japan [in 1981], they're saying about China now. And it's no more true about China than it was about Japan. To say that China has a very fast booming industrial sector -- yes, they've unleashed in the last 10 years the capitalistic interests and the desire of the Chinese people to improve the quality of their life. There's a billion of them trying to improve the quality of their life, so that should be a positive force, not a negative force, but it is definitely a force to be dealt with."
". . . up until a year ago, the whole Chinese economy wasn't the size of the California economy. So they're gaining a lot of ground and very quickly. Still, the U.S. is the best economy in the world, it's the best market in the world. And the only ones who don't realize it are the Americans. See the plants being built [in the United States] by Toyota, Honda and Nissan?"
. . . on the demand for short supply chains: "We sell to Toyota and their surrogates, and they have a rule that says you can't be farther than 100 miles away from the Toyota factory. They're looking for a supply base that can offer five-times-a-day shipments into the plant, and you can't do five-times-a-day shipments from Asia."
"The biggest marketplace [in the packaging business] is the U.S. The filling plants for shampoo, soap, deodorant, detergent and pills for pharmaceuticals -- all those filling plants are in North America because the marketplace is here. Nobody wants to ship a lot of bulk all over the place, so you need to be in short supply chains."
. . . on maintaining production capability in high-cost countries vs. low-cost countries: "I don't view them as high-cost. Usually, when you have high cost, you have high technology, so I view them as high technology versus the emerging marketplace. It's high cost in the UK, it's high cost in Ireland, it's high cost in France and it's high cost in Germany, but you also have some of the best technology that's applied anywhere. If you look at the productivity improvement range over the last three years, you're going to find out that the U.S., France and Germany are three [that have the] highest productivity-improvement, much higher than these so-called emerging marketplaces. It's because they bring more technology. There is [an] advantage that [they] bring to the game, and you pay to get that."
"If you're going to be a technology innovator and not just a commodity player, I don't think you can be absent from [high-cost] marketplaces. You have to be investing there at the same time that you're investing in emerging markets."
. . . on new product development: "The other thing that's happening in the industries that we're servicing is there's a dramatic increase in the rate of new product introduction to compete in a commoditized world. For instance, Nokia will go from 10 new phones per year two years ago to over 50 new phones this year. Samsung will introduce 70 new TVs this year alone in the 32-inch category and above. So you're talking about a three- four- five-time increase in the rate of new product introduction. We have one major OEM who's looking to do the new product design and full-production launch in 60 to 90 days. So the question is not what's the lowest cost to manufacture it, the question is how do you align -- from a supply-chain standpoint and design standpoint -- on a global basis to support that? How can you go fast enough to support that kind of business model? Otherwise you're going to have your products commoditized, and you're not going to be able to compete in the marketplace."
. . . on bundled solutions: "The business got a lot more integrated, so that you can't sell a single molded part any more unless it's very much a niche part . . . all the big OEMs are going to an outsourced play across all the markets, and they're looking for an integrated solution. So somebody selling just the molded part, just in the U.S.A., is going to have a very, very hard time. And the facts bear that out over the last couple of years."
