America's Manufacturing Future

A Wake-up Call From Asia by Patricia Panchak:

China and India very aggressively are pursuing advanced manufacturing. Increasingly, China's exports to the U.S. are composed of advanced-technology products.
...
J.P. Morgan said it would add 4,500 employees in India by the year 2007, mainly by setting up operations in Bangalore to support its growing structured finance and derivatives businesses globally. Such jobs are not the simple, low-value call-center work that up to now we've associated with this developing economy. And J.P. Morgan isn't alone; UBS and Goldman Sachs earlier made similar announcements.

From my previous post, Relative Engineering Economic Positions:

The hope some retained that the United States would retain the highest end work and others would work on the less complex work is not what the future holds. The future will prove to be an international marketplace where the United States is a significant but not dominant player. That future can still be bright but it requires a different vision than one in which American dominance is taken as a given.

The challenges to USA manufacturing will continue. The best hope, as I see it, for retaining manufacturing leadership in the USA is through increasing the adoption of management improvement methods including lean manufacturing.

Even so, I believe it will be very difficult for the USA to remain the leading manufacturing economy; China seems poised to take that position. Still that is not a certainty, even though many act as though it happened long ago. And even if China were to take over the number one position, it is still possible for the US manufacturing economy to grow.

From 1990 - 2001 China's manufacturing output grew by 251%, while world manufacturing output grew by 22%. still the US manufacturing economy grew by 39% meaning we gained a larger share over those 11 years of total world manufacturing - World Bank data)


Related posts:

• Companies Not Countries
  
• Manufacturing and the Economy
  
• Toyota Chairman Comments on India and Thailand
  
• Hopeful About India's Manufacturing Sector
  

Quality, SPC and Your Career

Topic: Management Improvement

Lead To Succeed (pdf document) by Stephen S. Prevette:

* Succeed as a quality professional by branding yourself and providing a service or product your manager and organization deem worth paying for.
* Lead your manager "your customers" by providing the data they need in a form they can understand.


This is a great article on how to apply quality (Deming, Statistical Process Control, Six Sigma, Lean Manufacturing) ideas and move forward professionally; even when those ideas are not always shared by the organization.

I caused this increase by using tried and true quality techniques that are more than 75 years old. My work at Hanford has been noticed favorably by people at the Fluor Corp. They believe I am cutting edge. Hmmm.

I will say yes, I am making use of modern computers and software to implement these 75-year-old techniques.

Of course, I like to see my beliefs cast in a positive light. I believe far too often we look for the newest ideas and miss all the great ideas that have been known for decades but are not practiced widely. The key to success is applying good ideas well - not just applying new ideas.

Transforming managers so they are willing to use SPC is not easy. My first interaction with a Fluor manager resulted in my hearing, "We don't know why Westinghouse employed a statistician. Fluor doesn't do statistics."

Success is not as easy as we might hope. Just discovering the ideas of Deming or Toyota or Ackoff is not enough. The great ideas don't, by themselves, convince managers to try a new way of managing. There is a great deal of education needed for most organizations to get to the point where they realize they could improve by applying "old" ideas such as: control charts, lean thinking, spc, not tampering...

The application of SPC and other quality tools can be rewarding. It can provide both financial and professional fulfillment. I believe my application of Deming's management theories has been crucial to Fluor Hanford's success.

More articles by Stephen Prevette.

Rebirth of American Industry

William Waddell excellent posts on the Evolving Excellence blog are always an interesting read. He, and Norman Bodek, have published a new book, Rebirth of American Industry. Read the full Excerpt from the book. The Evolving Excellence blog also has a post: A New Must-Read Book - From Our Own Bill Waddell.

Norman Bodek has also written: Kaikaku, The Idea Generator: Quick and Easy Kaizen (with Bunji Tozawa) and The Idea Generator: Quick and Easy Kaizen (Workbook) (with Bunji Tozawa). He also recently started his own blog: Kaikaku.

Articles by Norman Bodek:

• The Best Factory in the World, from his book, Kaikaku: "Pictures of areas of the factory or the office hung throughout the plant. Workers were encouraged to look at the pictures and talk about them together, then to make improvements."


• Lean Six Sigma - A Perspective, "Lean focuses on identifying value as perceived by the customer and then eliminating everything that isn�t value, the waste, out of the process. Lean comes from the industrial engineering discipline, whereas Six Sigma comes out of the statistical quality control discipline. Six Sigma focuses on reducing variability in the key output variables that are important to the customer."

Should GM be Removed from the DJIA?

Topic: Investing

Should Dow boot GM? by Chris Isidore, CNNMoney.com:

GM's market capitalization has fallen to about $11 billion, less than half that of the next smallest Dow stock...

"It is coming," he said of the idea of a foreign Dow component. "This whole globalization situation is making that more and more likely."

He said he doubts that GM would be replaced as long as it is still the world's leading automaker, but Toyota could claim that title from GM as soon as 2006.

"That would be the time to replace it, not before," said Hirsch.

I agree removing GM makes sense, though I see no reason to wait. Whether to replace it with Toyota (market cap: $167 Billion), DaimlerChrysler or something else is an interesting question. Of course the whole idea of the Dow Jones Industrial Average pretty much outlived its usefulness decades ago. The S&P 500 has long been far better measure of the stock market but still the dow has retained its status as news worthy, for some reason (View the current dow stocks).

As for the S&P 500 it looks like my guess that Google would be added to the S&P 500 by the end of this year is going to be incorrect. I must admit I think that failure was really a mistake by S&P, and not just because it makes me wrong. The market capitalization, trading and import of Google make it an obvious choice for the S&P 500. But I would rather be wrong about that and right to have bought it, than the other way around. Google's market cap: $126 Billion.

I will post more details soon but if you are interested the "10 stocks for 10 years fund" I am managing via Marketocracy has performance results available online.

Investment related:

• Annual Report by Warren Buffett
• Curious Cat Investment Books
• Curious Cat Investment Dictionary
• Curious Cat Investment Library
• Beginning of the End of Housing Bubble?
• 30 Year Fixed Rate Mortgage Rates
  

Planet Kaizen

Toyota has a section on their web site called Planet Kaizen: "what happens when you dig a little deeper and peel back the sheet metal to discover what makes a Toyota a Toyota."

It requires flash to view Planet Kaizen. I think it has amazingly bad visual controls (as do many flash applications). I can't figure out why it would be done in flash - other than some marketing person, or IT person, thought it would be cool. I certainly don't see how kaizen practices could have produced such an application. It seems to me one of the examples of how far Toyota still has to go.

Of course, as an automobile manufacturer failing to develop web applications well, is better than failing at manufacturing cars well. I would guess that this "planet kaizen" was not created by Toyota employees but instead outsourced to someone else. If it was done internally, I think Toyota's management of marketing with technology may be in as much need of help as GM's entire management is. In any case the non-manufacturing parts of Toyota, while some are managed well, still have plenty of room to improve.

• New Toyota CEO's Views
• Flash: Flash: 99% Bad - Flash and Web-Based Applications

Joel Management

Topic: Management Improvement, Lean Thinking

Joel Spolsky writes the excellent Joel on Software blog and runs Fog Creek Software. Recently he has been writing about process improvement of the order fulfillment process for a movie on the experience of interns at Fog Creek Software, How to Ship Anything by Joel Spolsky

Shipping an international order now takes about 35 seconds, down from 3 minutes, and can be done by anyone, whether or not they have SQL and Mail Merge skills. Domestic orders are even faster since they don't need customs forms. Most of all, it's all really fun.

Joel is a great writer and tells a interesting story about of how they improved the process. This is one of a series of articles on the process improvement around order fulfillment for the documentary made of "project Aardvark":

Four interns are brought into Manhattan and given 12 weeks to design, develop, debug and ship a program that will change the way computer geeks around the world fix their friends' computers. Boondoggle Films presents a journey through the world of software development from the perspective of a unique upstart, four quirky interns, and the world of The Geek.

Shipping Update: "We discovered that 2 people working in tandem can ship an order every 12 seconds using the new system."

The level of detail in his posts is great. Aardvark'd DVDs Ship; Final P&L:

Incremental Expenses (per unit)

$2.00 - DVD production and delivery
$5.00 - Royalty to filmmaker
$0.30 - Envelope for shipping
$2.52 - Postage (weighted average)
$0.20 - Other supplies for shipping (labels, paper for packing slips, toner, boxes, etc)
$1.00 - Shipping labor (estimate, since most labor came from Fog Creek employees on the payroll anyway).

Total per unit: $11.02. Since we're selling at $19.95 that's $8.93 gross profit.

Fixed Expenses:

$5,000 - Stipend paid to Boondoggle Films
$5,000 - expense reimbursement to Boondoggle Films
...
So we need to sell 1694 copies to break even. As of today, we've sold 2595, so we made a profit on the movie of about $8048.

And he really understands the value of the movie to his company, which I agree with:

Not bad! I was hoping to break even on the movie, and make a "profit" through more applications to our summer internship program from people who saw the movie and were inspired to work for Fog Creek.

I want to work for them. More reasons to work for them:

• Fog Creek Software Management Training Program - our previous post on the Management Training Program


• Fog Creek Compensation
  
• Bionic Office


• Incentive Pay Considered Harmful - "If you're in this position, the only way to prevent teamicide is to simply give everyone on your team a gushing review. But if you do have any choice in the matter, I'd recommend that you run fleeing from any kind of performance review, incentive bonus, or stupid corporate employee-of-the-month program."
  
• The Joel Test: 12 Steps to Better Code

Engineering Education: China, India and the USA

Topic: Engineering Education, curiouscat.com

I just added a post, USA Under-counting Engineering Graduates, to our Curious Cat Science and Engineering Blog on a new report from Duke concerning data on engineering degrees from China, India and the USA: Framing the Engineering Outsourcing Debate. I think it is a great report. If you have any interest in this topic I strongly recommend it.

Related posts:

• Worldwide Science and Engineering Doctoral Degree Data
• Engineering Education and Innovation
• Joint Singapore MIT Degree Programs
• USA Science and Engineering Doctorates Hold Steady
• Engineering in America
• GAO Report: Federal Science, Technology and Engineering Trends
• 200,000 science and engineering doctorates in China by 2010?
• Science and Engineering Doctoral Degrees Worldwide

Poka-Yoke Assembly

Got Boondogle asks, Do you Read Instructions Carefully Before Assembly? Nope, I don't. I expect I can make a quick judgment if I really need to or I basically get it and can put things together well enough. I expect the supplier to make very obvious anything critical.

I am much less likely to read instructions that seem to be written by a lawyer, as I imagine are many others. If they provide simple, clear instructions I will use them (like Ikea provided for this desk I am using now). I find many good instructions require almost no words (they use pictures very well).

As Mike Wroblewski stated in his post:

Good manufacturers will recognize that there exists in our world this great divide between the instruction readers and the intuitive assemblers. Great manufacturers will put a system in place to prevent operator errors for both groups.

Poka-Yoke (mistake-proofing) is one of my favorite ideas. I just love the idea of not only making something that works well but making something that is difficult to have work badly. I encourage you to follow Mike's advice: "Look at your processes and products. How can operator errors occur? Think how a simple poka-yoke can eliminate the error and make it mistake proof."

Web site: John Grout's Mistakeproofing Site provides some everyday examples.

Book: Poka-Yoke : Improving Product Quality by Preventing Defects by Nikkan Kogyo Shimbun.