February 24, 2010 by Paul Hogendoorn
How will things get done 10 years from now? And will those things even still be done here in North America? So much has changed in the last decade, and if the recent past is any indication, more will change in the next 10 years.
The manufacturing industry is facing many challenges. Some of the current threats have been created by external forces, but some of them are monsters we (the industry) have created ourselves. And most of these threats are nothing more, or less, than attitudes.
Some of our governments’ attitudes have led to the current weakened state of our manufacturing industry. Although most have changed their tune recently, big damage was done in the years leading up to the current crisis. In Canada, employers carry the burden of the cost of public health care, and manufacturers in particular carry a disproportionate share of the cost of our public education system. The laws in most of our jurisdictions are what many would describe as so “pro-labour,” “pro-environment” and now “pro-safety” it leaves many business owners shaking their heads, asking, “Do they think that I don’t care about my employees, or the environment, or safety?” The assumption is that without the government’s enforcement, employers aren’t interested in doing the right things. This attitude has to change — if there is to be a manufacturing industry in North America in 10 years.
I believe a good case in point is the scheduled closing of the Ford plant in Talbotville (St. Thomas), Ont. I’ve read quotes from politicians suggesting that their government offered the biggest incentives they had ever offered before to keep the plant open. And I’ve read quotes from labour leaders saying that they had offered concessions that they never before had been willing to offer. The inference is that these two groups had done all they could to keep the plant open, but that despite that, the company was closing the plant anyway. My point is that if they were doing things right in the first place, you would never have to offer incentives or concessions to get a company to invest or keep it from closing. Ontario has deteriorated from a province that manufacturers chose to invest in to a province where they need incentives or concessions to keep from leaving. This slide didn’t begin two years ago; it began many years before that.
Our governments need to change their attitudes about our manufacturing industry: society owes its economic well-being to this sector, it doesn’t need to be protected from it.
Labour needs to change its attitude, too. Healthy manufacturers, that make a profit and that reinvest willingly, provide more meaningful jobs, and more secure jobs, than manufacturers that need artificial stimulants to do so. Companies with healthy relationships with their workforce are the ones that adapt more quickly (and more naturally, with less need of incentives) than companies with structured and more rigid relationships. The more adaptive companies are the more proactive ones, and the proactive ones are the ones on which I’d be more comfortable betting my family’s future income.
Companies need to change their attitudes, too. Too many companies have placed too much control in the hands of the purchasing department. The engineering department is usually responsible for creating the product that differentiates the company from its competitors, and sometimes for the company’s formation in the first place. And the sales and marketing departments are responsible for the company’s brand acceptance, and for the relationship with the group that matters the most: the customers. Despite this, the purchasing department often has power disproportionate to its real importance in the organization. If cost truly is king (and not a product, or innovation, or customer satisfaction, or anything else), then it becomes a race to the bottom. When nothing has value except cost, we all lose eventually. (Some faster than others, but we will all lose.)
Yes, these are challenging times, with many things outside of our control: the economy in general, the value of the dollar, consumer confidence, the cost of energy. If we want to, none of us will have any difficulty finding a reason beyond our control to explain a failure. The government can point to its prime culprits, the economic crisis or other levels of government; labour will point to bad companies or bad government policies, or both; companies will point to foreign competition, or unfair government policies, or shareholder expectations. But the bottom line is, there is no future for anyone by hanging on to these excuses.
If we are to have a healthy manufacturing industry in 10 years time, it will be as simple as — or as difficult as — changing our attitudes.
Paul Hogendoorn is president of OES Inc. and a founding member and past chair of the London Region Manufacturing Council. He can be reached at email@example.com.