Manufacturing in a state of change: Now is the time for leadership
January 25, 2006 by Paul Hogendoorn
There are differing opinions surrounding the state of our manufacturing industries, and mixed messages do little to clear up the confusion. On the one hand, we hear of layoffs, plant closures and threatened closures – General Motors’ announcement that it will close 12 North American plants, cutting 30,000 jobs, is just one recent example. On the other hand, we hear of large, new automobile factories being built (i.e. Toyota) and the influx of new Tier 1 and 2 companies that come along with them. Many employees at manufacturing companies have been laid off and companies down-sized, but at the same time, colleges and universities are being asked to train and educate more students to fill the impending shortage of skilled labour for manufacturing.
Competition from Asia and a falling American dollar are realities, and put incredible pressure on our sector. Despite this, many still believe we are in a time of great opportunity for growth and profit in our manufacturing sector. Although the “demise of manufacturing” messages persist in some communities, optimism abounds in others. So, who is right – the pessimists or the optimists? Which way is the manufacturing sector headed?”
I believe manufacturing is not in its waning years, as some have suggested, but rather, it is in its changing years. Some companies or industries are in decline, but others are prospering. The difference, I think, is between leadership and management. Management’s focus is to do things the right way, while leadership’s focus is to do the right things. There’s no sense in doing the wrong things the right way, yet this seems to be the case in many traditional North American businesses.
Many businesses know that management’s focus is on profitability, while labour’s focus is on job security and fair remuneration. In public disputes, labour is regularly cast as the problem and management as the enemy. What is clearly missing in these situations is strong, clear and convincing leadership.
In succeeding organizations, it is leadership that casts the vision that galvanizes management and labour. Consider Toyota for a moment. Ray Tanguay, the president of Toyota Canada, is an admirer of the Lexus slogan, “Passionate pursuit of perfection.” This attitude can apply to all facets of a company’s operations, including product design and manufacture, as well as throughout all areas of management. If every person was driven to achieve the same unifying goal, each group would then also likely achieve its key specific goals – labour would achieve their job security and remuneration objectives, and management would meet their profit objectives. At the same time, customers would be pleased with the product they purchased, and
shareholders would get a return on their investment.
There are many examples of successful manufacturing companies. From these organizations, you hear phrases like “world-class manufacturing,” “best practices,” “lean manufacturing” and “kaizen blitzes.” The companies using these terms are not intent upon merely doing things right, they are continually seeking out the next right things to do.”
And then there’s China. Some companies say that the key to survival is to sub-contract everything to China or another low-cost region (LCR). Others say that China and other LCRs are to blame for their pending or unavoidable demise. But, again, it’s leadership that sets the successful companies apart from the
misled followers and those expecting their own demise.
When Toyota announced that it would build a plant in Woodstock, Ont., the company demonstrated its commitment to build factories where people are buying their cars, and encouraged its suppliers to do the same. I believe that building the factories where the cars will be purchased, and employing the people that will be buying the cars, is the right thing to do. And when they start doing it, then they will do it right, too.
This is not revolutionary thinking. Although Toyota has demonstrated its leadership prowess, it was not the first. The first such leadership example in the automobile manufacturing world was Henry Ford and the Ford Motor Company. Ford is credited with the invention of the assembly line, forever changing the way the automobile was built. But just as important is the fact that Henry Ford created a marketplace for his product. He paid his assembly people twice the accepted rate, forcing other companies competing for workers to pay comparable wages. He not only found a way to build an automobile cheaper, he significantly raised the standard of living of the working class so that they could afford his cars.
The continued success of our manufacturing sector is dependent on such leadership. As Einstein suggested, continuing to do things the same while expecting the outcome to be different is insanity. Management, by and large, focuses on doing the same types of things, albeit with a focus on trying to do them better. Successful companies will need more than that. They will have to choose the right things to do first, and then vastly improve their ways of doing what they do. To succeed through these changing times, the company’s goal and direction have to be clear, convincing and unifying.
It’s time for the leaders in our manufacturing companies to truly lead.
Paul Hogendoorn is president of OES, Inc. and chair of the London Region Manufacturing Council. He can be reached at email@example.com. For more information about the LRMC, visit www.manufacturinglondon.com.