Productivity - America's epochal global business development chance

Ed Marsh | Jun 13, 2012

Threats on the horizon....and Global Business Development Opportunities

"In 1949 an MIT professor named Norbert Wiener wrote a letter to Walter Reuther, president of the United Auto Workers (UAW).  It contained a darkly prophetic message:  within a decade or two, Wiener wrote, the advent of automatic assembly lines would results in "disastrous" unemployment...Wiener wanted to give Reuther advance notice so that the UAW could help its members prepare for, and adapt to, the massive displacement of labor that Wiener saw on the horizon." from Philip Auerswald's (@auerswald) The Coming Prosperity: How Entrepreneurs Are Transforming the Global Economy

The warning was early, but it was prescient.  The consistent decline in American manufacturing employment, against consistent growth in manufacturing output, confirms the research by BCG's Justin Rose which finds that American companies are rapidly establishing a preeminent competitive posture in the darwinian world of global manufacturing.  And they are succeeding not by simply relying on the cachet of "Made in America", but based on an unforgiving bottom line analysis.

American companies are extremely efficient and productive.  Those attributes allow them to compete effectively against low-cost manual labor manufacturing markets.  And America's position is built on decades of innovation in theory and practice.  In contrast, the low-cost position is a fleeting one; and countries which rely on abundant low-cost labor and eschew capital investment in productivity will soon cede their position to another...temporarily.

Herein lies the "epochal opportunity"

Strong language?  Absolutely...yet perhaps understated!

The American preeminence in manufacturing productivity and efficiency is built upon a foundation of products, services, experience and grit - and it is a valuable, marketable asset.  Now is the time to take those products and services to the global market as the demand for manufacturing efficiency is ready to explode.

Countries which have been touched by manufacturing growth and opportunity will be loathe to simply allow that experience to slip away.  Faced with rising costs and inherent productivity limitations they will be forced to embrace the methods, and in fact the very automation tools and services, which originally enabled American manufacturers to challenge them.  And of Japanese, German and US vendors, the latter are strong favorites in the battle to win broad swathes of the automation marketplace. 

The potential customers don't need a stern warning like Wiener's to Reuther.  They intuit what is happening and are moving aggressively to respond.  Many customers will seek vendors, as this recent article from MSU's globalEDGE blog describes Chinese companies are doing, but American vendors must have a receptive mindset, and with some judicious international business consulting can quickly position themselves to proactively pursue the international sales opportunities.

only if they pursue it...

Global business development remains a daunting prospect for many American companies.  But so were efficiency and productivity - necessity helped to overcome hesitancy in those areas, and the compelling opportunity can here.

There's a window that's open now.  China is automating as production costs near US levels.  Vietnam and India aren't far behind and Indonesia and Western Africa will all find their low cost position even more ephemeral as change accelerates.

I've banged this drum before (here, here & here) and will continue to.  This is too enticing an opportunity for American manufacturers, facing stagnating conditions at home, to ignore.

Want to talk about how Consilium Global Business Advisors can help you quickly position your business to leverage this enormous opportunity globally?  Contact us today.

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