Brandt On Leadership -- Manufacturing Does Matter

Dec. 21, 2004
Recent events punctuate the importance of the art and science of making things.

One of the constant frustrations of leading a manufacturing company is listening to otherwise intelligent people -- pundits, golf partners, brothers-in law, and sisters-in law -- opine that manufacturing no longer matters. "In a post-industrial, service oriented economy," they'll begin with pompous erudition, "manufacturing jobs are an anachronistic link to the 19th century. Surely we have better uses for valuable human capital than merely standing around, staring at an assembly line." Before you stuff the olive from his or her martini up his or her nose, take a breath. And before you launch into all the usual arguments -- about manufacturing's higher wages, about the dominance in R&D spending by manufacturing firms, about the multiplier effect of manufacturing investments -- take another breath. These self-appointed economic experts already have proven themselves immune to facts. So appeal to them on a different level. When they say, "Manufacturing no longer matters," ask them if they think the art and science of making things still matters to: L.M. Ericsson Telephone Co.: The world's leading manufacturer of cellular networks and the third-largest maker of mobile-telephone handsets announced in January that its mobile phone unit had lost $1.1 billion in the fourth quarter of 2000 alone -- largely due to manufacturing problems. A shortage of components caused by a fire at one of its major suppliers bedeviled the mobile unit throughout most of 2000. Combined with a lackluster product mix, the manufacturing and supply-chain issues helped Ericsson lose market share not only to world leader Nokia Corp., but also to fourth-place Siemens AG. In an effort to staunch the bleeding, Ericsson has outsourced all handset manufacturing to Singapore-based Flextronics International Ltd., which will assume control of plants in Latin America, Asia, Europe, and the U.S. -- along with many of their employees. How important, you might ask, do the investors and employees of Ericsson think that manufacturing is? On the other hand, you could ask: Bridgestone/Firestone: The tire maker has now recalled 6.5 million of its Wilderness AT tires and related models, replacing some 6.1 million. The tires allegedly implicated in 148 traffic deaths due to sudden tread separation, mostly on Ford Explorers -- were prone to failure for a variety of reasons, according to Sanjay Govindjee, an associate professor of civil engineering at the University of California, Berkeley, who conducted a five-month study on behalf of Bridgestone/Firestone. Chief among those reasons were differences in how those tires were manufactured -- with the tires created at Firestone's Decatur, Ill., plant being significantly more likely to fail. How important do you think quality control is to Firestone and its investors -- or, more importantly, to the families of those 148? Of course, if that isn't enough, you could always ask: Anyone who waited for a flu shot last fall: The FDA was forced to shut down production at three of four manufacturers with licenses to produce influenza vaccine in 2000 because of variances from good manufacturing practices. A late start to the 2000-01 flu season meant that the resulting shortage of flu vaccine wasn't a disaster, but it could have been. According to Centers for Disease Control estimates, every 1 million doses of flu vaccine delivered to the elderly translates into the prevention of some 900 deaths and some 1,300 hospitalizations. How important do you think efficient manufacturing of vaccines is to those 2,200 people -- or to the thousands more who love them? So the next time one of these well-meaning "experts" pops off with his or her opinion that manufacturing is irrelevant, hand him or her this column. If that doesn't shut them up, say that you've found them a good deal on some used tires -- only you're not quite sure where they were manufactured. But hey, since manufacturing doesn't matter, why not save a few bucks, right? John R. Brandt, formerly editor-in-chief of IndustryWeek, is now editorial director of the Chief Executive Group, publisher of Chief Executive magazine.

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