What if the Work Came Back?

What would you do if all the work your company lost to low-cost countries came back overnight? Besides making a few quick "I told you so" calls, I mean…

Would you approach those returning business relationships the same way you did before the work was pulled? Would you ramp up technology and personnel to match conditions exactly as they were? And more importantly, would you engage and service any legacy customer identically as you did before? If not, what would—or could—you do differently?

These questions may seem like imagining what you’d do If you won the lottery—fun for a minute, but ultimately not very useful. But for any manufacturer that’s experienced losing work based on price, the questions are legitimate. I’ll even go so far as to say this is a valuable exercise for any small or medium sized manufacturer, regardless of its condition today.

There have been several reports lately that suggest buyers of manufactured goods—including discrete parts—have taken to "on-shoring" to offset ancillary costs in the face of the global economic downturn, volatile fuel/transportation markets, and quality issues.

I read a recent column called "Emotional Homecoming," by Pete Zelinski over at Modern Machine Shop magazine that got me thinking about those kinds of questions—because his sentiment toward on-shoring is the same as mine. On the one hand, I’m hopeful that this trend continues and grows. The U.S. belongs in the center of the competitive global manufacturing marketplace.

But wishful thinking doesn’t make it so. I’m pragmatic about the selection of low-cost alternatives to improve profits within a supply chain. The global supply chain genie is out of its bottle, and too many opportunities exist these days for your customers and prospects not to consider improving their bottom lines.

Also in Pete’s column, I found references to other articles that in turn led me to a report from the American Small Manufacturers Coalition (ASMC) titled "The Next Generation Manufacturing National Survey 2009." The ASMC interviewed over 2,500 small and medium-sized manufacturers from 18 U.S. states to determine their "health" in 6 "next generation" strategy categories.

The categories ASMC defined as Next Generation Manufacturing enablers include "Customer Focused Innovation," "Human Capital Development and Retention," "Superior Process Innovation," and "Global Engagement." The study is interesting for many reasons, but I was struck by the disparity between small and large manufacturers when it comes to valuing these strategies.

In every case, small manufacturers showed a strong reluctance to embrace these initiatives. It’s as though they’re skeptical of change, which is what I find most troubling and why I’m asking these questions.

Add to this equation that the U.S. is still the No. 1 manufacturing economy of choice in the world for technically advanced and superior products, and it gets downright weird to me. The reluctance of small manufacturers to pursue new technically advanced markets and processes suggests that whatever work does return may not be sustainable—if value isn’t established and maintained to make it less likely the work will leave again.

The point is, it doesn’t matter if the work comes back or not. What’s important is to set our companies up to win and sustain business in a global supply chain that is reinventing itself and redefining what value is.

In the end, many products whose value could at one time sustain higher functioning businesses and standards of living no longer hold that value. We have to ask ourselves the right questions so that we can change and create more valuable, high-tech products, attracting more of the work that will sustain us and establish our value to the world.

Change is hard, but asking the right questions can be the catalyst for capitalizing on that change and attracting work back from customers whose expectations have changed.

— MFG.com