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Smart Manufacturing Starts with Your People

Dec. 1, 2016
In American Manufacturing 2.0, CEO Steven L. Blue says the key to a manufacturing resurgence is creating company cultures where employees are valued and engaged.

Manufacturing in the United States is poised for renewal and growth, says industry veteran Steve Blue, an epoch he refers to as Manufacturing 2.0.  The path to manufacturing resurgence won’t be easy, given fierce competition from China, and domestic challenges such as “onerous regulation and taxes,” says the CEO of Miller Ingenuity, a railway components manufacturer headquartered in Winona, Minn. But in his book, American Manufacturing 2.0 (Praeger, 2016, 158 pages, $37.00), Blue says the “number one threat” to this renewal isn’t coming from Beijing or Washington but “from the corner office of your own company.”

Blue derides “fat, dumb and happy” CEOs who build their companies to a point of comfort and then fail to anticipate, or cope with, change. And he is especially critical of leaders that treat their employees like “dumb pieces of metal” rather than as assets to be respected and engaged.

“Smart manufacturing has to start with the people, not the machines,” Blue told IndustryWeek. “What is the sense in putting in a bazillion dollars’ worth of smart manufacturing machines that are all connected to the internet if the guy in charge of it on the factory floor hates his job and can’t wait to get to the bowling alley?”

Blue says some CEOs brush aside talk of culture as having little impact on a company’s fortunes. Blue has a two-word answer: Wells Fargo. While the company preached that it was an ethical business doing what was right for its customers, says Blue, the underlying “true culture was sales at any cost.”

The blueprint for American Manufacturing 2.0, Blue writes, is founded on what he calls The 7 Values of Ingenuity: innovation, excellence, commitment, community, teamwork, respect and integrity. He argues that establishing a company culture based on these values provides a sustainable competitive advantage more powerful, for example, than faster machines or a new marketing plan. No one value is more important than the others, Blue says. It is the synergy between them that “makes them so powerful,” he writes.

Blue warns that implementing these values is a “long-term process” requiring “significant cost and organizational effort.” It will likely create turmoil in your company, he says, and force the removal of a number of employees.

“After all, it can be a scary thing for some employees to be held accountable for teamwork, excellence and respect (just to name a few) when for years all they have done is walk in the door, punch the clock, go home and complain to the neighbors what a lousy company they work for,” he writes.

Unlike some formulas for revitalizing companies, Blue writes that the process begins with senior leadership. And Blue holds that the process can’t afford one bad apple.

“Some will embrace the new values and some won’t. You need to remove the ones that won’t. It’s as simple as that,” he explains. “If you even allow one holdout the entire effort will have no credibility.”

In my world, respect trumps performance every time. I do not care how well one of my leaders is performing. If he treats people badly, I give him the boot.
—Steven L. Blue

Leadership support of these values needn’t be complex. For example, at one company Blue ran, employees were parking on the street rather than in a parking lot along the side of the building. Blue found that during the winter, the unpaved lot would freeze and cars would slide into the street. When Blue found out what was happening, he had the parking lot paved. It was a small thing, he writes, but it showed employees they were respected.

While Blue holds that culture is the foundation of success, he insists that all employees need to have a single focus: “to make profits.” He says all department goals should be aligned with “meeting the profit budget for the year.” He explains: “If the company hits the budgeted profit number, everyone gets an incentive. If it doesn’t, no one does, and I do not care how well you performed as a department.”

Why should American manufacturers be focused on the long-term? Blue points to the nation’s primary manufacturing competitor, China, which unveiled its “Made in China 2025” plan last year that stressed advanced technology and innovation in industries such as aerospace and power equipment. Your competitors, he says, “understand the value of commitment to long-term success.”

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