How Best to Get Government Involved in Your Business

Jan. 29, 2016
Having the government involved in economic development in your business and community can pay off handsomely if it's done right.

In my previous column a real-life “bottoms up” example of economic development was laid out detailing the stakeholders and their role in the effort. This column will elaborate the rationale about why those stakeholders got involved in the first place. Uber Free Marketeers usually decry the need for any governmental involvement in the economy. After reading this column, make up your own minds about whether government-sponsored economic development can be a good thing or not. The “pilot” detailed in the last column includes the following stakeholders:

U.S. Department of Defense (DOD) and its Office of Economic Adjustment (OEA)

DOD OEA was the primary funder of the Next Gen Lean Supply Chain Pilot. DOD is chartered with the defense of our country. Much of DOD’s strength comes from innovative manufacturers who provide the military with equipment that gives them a fighting advantage. When preparing for and/or under threat, DOD spends a lot of money with U.S.-based manufacturers—both DOD primes and their suppliers. At times, however, the DOD funding spigot can be severely throttled due to reduced Congressional funding (ever hear of sequestration?). This reduction has an almost instant bullwhip financial effect on those manufacturers supporting DOD needs. For this reason, DOD funds projects that offer strategies to keep these manufacturers viable in periods of spending downtimes such that they will be there when the need re-arises.

OEA is chartered with helping regional areas where a significant amount of the local economy is based on DOD business coping with those same bullwhip effects. DOD and OEA hope that their funding will produce strategies and processes that defense industry manufacturers can adopt that will make them both more competitive and allow for transitioning their manufacturing capabilities into commercial markets. Both DOD and OEA closely screen all proposals for funding, and you can be sure that only those with the highest potential for impact generally get supported.

State of Washington Department of Commerce (WDOC)

State economic policy is important to local manufacturing. Many states engage in “smokestack-chasing,” which, if you read my 26 August 2015 column, is a zero sum game for the country as a whole driven by politicians more interested in photo ops than economic development heavy-lifting. In my mind, the WDOC’s involvement in the Next Gen Lean proof-of-concept pilot is exactly the right kind of progressive state-sponsored manufacturing economic development that our political leaders should be developing.

The manufacturing economy of Washington State has been challenged in many ways over the last decade or so. For instance, their largest manufacturing employer decided to relocate their corporate offices to the Midwest. Although this impacted a minimal number of actual jobs—after all, how many corporate executives do you really need, anyway?—the move changed the company’s focus away from the Pacific Northwest. Along those lines, that same manufacturer decided to accept the extravagant incentives offered by one of those previously mentioned smokestack-chasing states and located a new factory outside of its traditional Puget Sound center-of-manufacturing gravity. Not that Washington State didn’t compete for this plant with their own set of incentives but, in doing so, was hamstrung a bit by the State Constitution which places practical limits on this sort of thing—as it should, in my opinion.

So, instead of trying to lure smokestacks away from other states, Washington State decided to get involved by helping its incumbent suppliers remain viable and grow. I have no inside information as to why WDOC decided to take this approach but, in my opinion, it is a wise one given the two cited incidents. And when you think about it, most jobs are not with the biggest manufacturers—they are with their suppliers, with the ratio being somewhere in the range of 10 supplier jobs for every OEM job. And somehow, at least in my mind, it feels better when a state government’s focus is in helping the smaller guys, as opposed to the normal practice of throwing wads of money at the “big boys” hoping to get them to locate/re-locate to their state. Just saying. And, as with the DOD, WDOC scrutinizes all proposals and only elects to support those few that show the highest potential for real impact.

Puget Sound Regional Council (PSRC)

Think of PSRC’s interests as a private sector organization with goals similar to those that the State Department of Commerce has, just with a smaller regional focus. For that reason, PSRC’s support of the Next Gen Lean Supply Chain Pilot was, for the most part, for the same reasons given for the WDOC. PSRC’s private sector contacts are valuable since it gives them a perspective relative to whether something really has the potential to help local manufacturers vs. theoretical or academic reasoning. As implied by their name, PRSC is focused on Puget Sound but, because that area’s economy is critical to the entire state, the work of this organization has a greater Washington State impact in general. PSRC is not so much a funding organization as an organization/coordinating one, which is an essential need to any proof-of-concept effort.

Impact Washington (IW)

IW is the state’s Manufacturing Extension Partnership Office. IW—as all MEP state offices and the national office should be—is always looking out for new strategies that will position it to be more effective in supporting the small and medium-sized manufacturers of Washington State. Like many MEP Offices, IW has a primary focus on providing manufacturers with Lean implementations and they have a great track record of make companies more competitive through Lean. There is, however, a problem, with Lean… not Lean per se but the perception of Lean in industry. Let me explain.

When it comes down to it, to experience the potential benefits of Lean an organization must commit to pretty much a complete implementation, which involves both a lot of heavy-lifting and cost. IW is positioned to support this very thing and they do it well, with a great set of Lean consultants that have impressive track records. Over the last 15 years the practices of Lean have become a bit “commoditized” as a lot of “Tom, Dick or Harry” service providers have put up a shingle calling themselves Lean consultants while only really having a superficial understanding of what is needed. You probably have run into guys like this and know what I mean. These self-described Lean consultants typically go in and implement localized project work which, on its own, just doesn’t deliver real Lean impacts. Manufacturers engaging them are treated to a series of disjointed Kaizen events that, when all is said and done, don’t measure up to their expectations. This has resulted in a “dumbing down” of people’s perception of Lean.

Consequently, IW is looking for a process that seems to be a “middle ground” between complete organizational implementations and the Lean-lite approach. Next Gen Lean, with its focus on Manufacturing Critical-path Reduction, focuses on part families. The key here is that while focusing on part families does not result in complete organizational transformations, the entire processing of a complete family of parts is impacted with the results of these Next Gen Lean engagements offering the implementation-type impacts for the part family involved. Impact Washington is a non-profit organization needing financial support to prove-out enhanced support processes, hence, the need for funding support.

Supplier Participant

As I described in the last article, the idea came from the owner of a small machine shop in Hobart, Wash. Rosemary Brester participated in a Next Gen Lean Proof-of-Concept Supply Chain Pilot sponsored by one of their OEM customers. She could have left it at that but instead decided to contact someone in her network—who happened to work at the PSRC—and plant a seed. That seed has now come to fruition. I mentioned the academic report that is being written about this pilot in the last column, and I’ve now had a chance to see its first draft. Rosemary will be proud of the result of her effort. When the final report is released I’ll write a column on it.

Up to this point I feel I’ve laid out pretty well the motivation of the stakeholders involved in setting up and delivering this pilot. I’ve only met Rosemary once, however, and that’s just not enough face time to understand the “whys” of what a person decides to act on, so let me conjecture at bit. I believe Rosemary Brester is a responsible person who is both interested in helping other manufacturers like her and her husband as well as maintaining the standard of living in the community she lives in. She is also patriotic enough to want to do something that will help her state and country remain strong. Anyway, that’s my take. Wouldn’t it be great if we all acted like Rosemary did?

I’m going to direct my closing comments to the Uber Free Marketeers. First, realize that the Next Gen Lean Supply Chain Pilot would not have happened without governmental support. Second, is there really anything to criticize in this sort of governmental involvement in our economy?

My next column will be about a something that at first blush doesn’t seem to make much sense, namely, the similarities between Marketing and Supply Management functions.

About the Author

Paul Ericksen | Executive Level Consultant; IndustryWeek Supply Chain Advisor

Paul D. Ericksen has 40 years of experience in industry, primarily in supply management at two large original equipment manufacturers. At the second he was chief procurement officer. He then went on to head up a large multi-year supply chain flexibility initiative funded by the U.S. Department of Defense. He presently is an executive level consultant in both manufacturing and supply chain, counting Fortune 100 companies among his clientele. His articles on supply management issues have been published in Industrial Engineering, APICS, Purchasing Today, Target and other periodicals. 

Read Paul's articles

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