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Today’s Hottest Label in China May Shock You

China sweatshopsI’m sure we all know the story.

We know that a few decades back China came after us with a vengeance; that they targeted American manufacturing and started luring many industries overseas.

We know they fixed on price as our area of vulnerability, and came after us using rock bottom pricing as their weapon of choice.  And that was hardly a stretch, given China’s government subsidies and China solar paneltheir millions of laborers willing to work in sweatshop conditions for sweatshop wages.

And we know too that Chinese companies kept their prices artificially low by often slashing quality to the bare minimum; high enough to pass muster but low enough to keep costs well below the going global rate.

QualitySo what did we do?  Well, once again, as is now common knowledge, we punted on the whole price thing.  We knew we wanted no part of a price war, just as we knew actually winning a price war is often the worst possible outcome for a combatant.

So, even as China’s government continued to subsidize its own companies, such as those in the solar power industry, most U.S. manufacturers decided to China middle classregroup, retool and go to war using what turned out to be a far more powerful weapon.

We rededicated ourselves to quality.  And in the process U.S. manufacturers began using the vastly superior quality of American made goods to start kicking China’s low-cost butt in the global market all the way to Katmandu.

And in the course of doing that, and as a result of our country’s vastly superior reputation for quality, a funny thing happened in China.

Chinese middle classAs the size of the country’s middle class continued to explode as the seeds of capitalism continued to take root and flower, those hundreds of millions of suddenly middle class Chinese let it be known in no uncertain terms they wanted no part of Chinese goods.  Now that they could afford it, they wanted only best.  They wanted, in other words, things made in America.

As a result, of all the designer labels in China today, do you know which one continues to resonate most with middle class consumers and which one continues to suck up hundreds of millions if not billions of the country’s Made in USAdiscretionary dollars?

“Made in U.S.A.”

Ironic, isn’t it? That after so many years of fearing Chinese manufacturers, it is China that now represents American manufacturing’s biggest and most fertile market.

China investmentThat’s why China today is investing in America as never before.  It’s why some Chinese private equity firms are building new manufacturing plants here, and creating hundreds, if not thousands of U.S. jobs.  And it’s why others are buying established U.S. companies and leaving their brands and processes intact.

(And for more on that click here.)

Now, I won’t kid you.  It’s not all roses, and some of my peers continue to see China’s escalating investment and the country’s increased presence on these shores (and in our classrooms, board rooms and shop floors) in far more sinister terms, and I will get into some of that next week.

But in the meantime, know this: as a manufacturer committed to making the mfg 3finest specialty couplings in the world, I’m relieved and delighted to say it’s apparently true what people have long been saying.

Quality does, indeed, never out of style.

 

Study Shows U.S. Industrial Output Up, Pollution Down

New Audi A3 ProductionAs anyone who’s read this blog for any length will attest, I am a man who believes in the wisdom of the open market.  And I will argue until I’m blue in the face that a free and open market, especially one prodded by government incentives, spurred by government investment, and unencumbered by limited government vision, is a ticket for game-changing breakthroughs – especially in the areas of product development and that often delicate balance that must be struck between a prosperous nation’s economic and its physical heath.

That’s why I was delighted to stumble upon this little kernel last week.  Turns out a Georgetown economist just issued a white paper on behalf of the National Bureau of Economic Research that says U.S. manufacturing output between 1990 and 2008 had increased by 1/3, yet in that time U.S. industry’s Clean 1pollution had decreased by 2/3.

That, my friends, is astounding.

But more than that, the person conducting the study, Arik Levenson, revealed that this drop in pollution did not come in a way many cynics might have otherwise suggested; namely, because we off-shored our heaviest and dirtiest manufacturing functions to underdeveloped and third world counties.  To the contrary, his study of 400 manufacturers showed that 90% of this country’s collective decline in pollution was a result of manufacturers having adopted cleaner production processes, including greater and more sophisticated efficiencies, recycling programs, and pollution-capture technologies.

Clean 2Granted, it was not a soup-to-nuts study of all pollutants, and measured only levels of six of the usual suspects (sulfur dioxide, nitrogen dioxide, carbon monoxide, volatile organic compounds, and two types of particulate matter), but still; those are some incredibly heartening findings.

And it is one more example, of why, for all the U.S. continues to trail China in some instances, we’re light years ahead in others.

Could a government alone have achieved such results?  Not in a million years.

Clean 4But because rekindling this country’s manufacturing fire and reducing its industrial waste was a hand-in-glove effort between a number of responsible and market-savvy individuals in the private sector and one deeply concerned federal government, a little bit of economic and environmental magic was somehow able to happen.

And maybe we owe it to ourselves to take a moment to reflect on that.

A War Waged Abroad, a Victory Earned at Home

WWII 8People who say they’re tired of the phrase “the greatest generation” clearly don’t fully comprehend it. And that became clear to me late this past year when a visit to the World War II Museum in New Orleans – a monument to that global conflict waged by that selfsame generation – opened my eyes like few experiences of late.

You see, having toured the Crescent City’s sprawling, three-dimensional homage to human sacrifice and global commitment from soup to nuts – or, more to the point, from Pearl Harbor to VJ Day – I finally found myself able to wrap my brain around why Tom Brokaw used that phrase as the title of his best seller.

WWII 7I’ll write more about the World War II Museum’s impact on me as a manufacturer, and its direct connection to America’s industrial sector in a later post, but suffice it to say one of the basic differences between that bloody all-consuming conflict in 1940s Europe and the Pacific and every single U.S. war since is that World War II engaged every American citizen – every man, woman and child – to an unprecedented degree and required meaningful sacrifice on every American’s part.

Soldiers and sailors today are no less brave or no less committed than they were 70 years ago. And they’re certainly no less heroic. The difference is us. The difference is the extent to which we on the homefront have been compelled to engage in the war effort.

Our generation of Americans has not been asked to give up, scale back, or in any real way do without. And we have not changed how we live one iota.

WWII 6We haven’t retooled our factories, employed and trained our women or worked to the bone trying to manufacture the armaments and equipment needed to prevail.

We haven’t seen our richest, most privileged children and our biggest sports heroes and entertainment stars march off to war.

We haven’t been asked to ration gas, give up eating chocolate, use pennies made of zinc, or stop wearing nylon stockings because raw materials had reached critical shortage.

We don’t sit at home in the dark at night, or refuse to drive for fear any light could serve as a target for enemy bombers.

WWII 5No, unless we have a loved one on active duty, more often than not our idea of doing our part is applauding uniformed personnel when we see them passing through an airport, going see a Hollywood movie on the subject, writing a check or two to Wounded Warriors, watching a few moments of news coverage, or rising to sing “God Bless America” at a ball game.

But in World War II it was different.

That’s what I was reminded of as I walked through the museum and witnessed the extent to which Americans a few generations ago – soldiers and civilians alike, including thousands upon thousands of factory workers – had been willing to roll up their sleeves, swallow hard, and undergo great personal sacrifice to participate in a collective hand-in-glove effort to beat back Adolph Hitler, Benito Mussolini, Emperor Hirohito and the brand of evil they espoused.

WWII 2As I said earlier, I will write more about this later. But meanwhile – and in anticipation of specific details and how even General Eisenhower once declared the war was not won by a military man, but a single engineer and manufacturer from New Orleans – chew on this one amazing little kernel of wartime factory output.

In 1939, U.S. manufacturers produced roughly 2,100 aircraft, less than half as many as were produced that year in Japan, roughly a quarter as many as were produced in either Germany or England, and less than a fifth made by Russia. By 1945 that number had increased to over 46,000; virtually the same amount of WWII 9plans produced by those other four national powers combined.

The long and the short of it? It may not have been a war to end all wars. But as I learned one eye-opening afternoon, World War II was, indeed, a victory achieved on the shop floor as much as it was one earned on the battlefield.