If you did not know this already, 80% of the world’s population lives on $10 a day or less. That’s 5.6 billion people on this planet earning about $10-$15 a day or less while many of us are probably earning 1600% of that ($2/hr *1600% = $32/hr) more or less.
I’ve been internalizing this sobering truth because I’ve lived in the poorest country in the Americas, Nicaragua for eight years. I’ve built a business there, employed workers and lived third world life with a serious advantage. Boy, was I an ignorant American. Every day now, I can’t help but feel guilty, lucky and grateful for everything.
It’s embarrassing to watch so many spoiled Americans protesting in the name of inequality stateside when there is so much inequality between us and 80% of the world. We are ignorant and we show it when we make protest signs with felt-tipped ink markers that were manufactured overseas by people earning a $10/day wage or less.
However, I believe we must follow the example of our marching brothers and sisters last week. They got one thing right for sure, amazing things can happen when people come together for a cause.
If we follow the example of our marching brothers and sisters to come together and work together, then manufacturing vendors can better compete working together than alone and customers can lower costs by design when working with manufacturers; it’s up to us.
American Manufacturing output has been strong because of automation competing against a global low-wage labor force. Our American lifestyles, infrastructure, taxes and more require high wages, which result in high overhead costs, which then enables the buying power of the populace that fuels the consumerism machine to run.
Automation isn’t going away stateside either, it’s part of our manufacturing DNA now. The American Manufacturing issue isn’t about bringing jobs back. Those jobs are long gone and never coming back, we need to bring the work back and new jobs will follow.
The graph above, clearly shows Manufacturing Output has been rising aggressively since 1947 as jobs transition from manual labor to more cerebral labor. If anything, automation has raised the quality of daily work life for the American manufacturing worker; 7 million jobs covering a span of 60 years were traded in for it.
For us, a mid-sized machine shop, the issue truly is costs of labor, taxes, costs of medical benefits, costs of facilities and just high costs all around; it’s extremely difficult to compete because higher prices are needed to pay for it all!
The more I automate every single activity of operations from online quoting to ordering tools, the more competitive our business becomes. Automation has been and will continue to enable us to compete.
So if automation isn’t going away and 80% of the global labor force is up for grabs at a 1600% discount to the American worker, how do we bring anything back?
We start by working together. You, the engineer, the designer, the buyer, the purchasing manager or the VP of engineering do your part by developing solutions and parts that are cheap and easy to manufacture. You choose to buy American made, you choose American partners, vendors and sub-vendors to work with.
We as your vendor work with other vendors, to do everything we can to provide competitive pricing and short lead-times.
We do it all together.
More specifically, we the manufacturer have to provide a higher value of service for our customers. First, we must help customers learn how to lower their costs through design (DFM). Second, we must deliver quickly (2 weeks or less) and thirdly our pricing has to be competitive.
This is a tough nut to crack because customers are constantly under the gun to deliver quick solutions regardless of whether the design is cheap to make. The majority of designs we make for our customers are unnecessarily expensive by design and wasteful, which defeats our common goals of low prices and quick deliveries.
What’s happening is that we develop designs that waste time and materials to manufacture…and then because we can’t find anyone stateside to make it cheap, we have it made overseas by a low-wage workforce to solve our problem. For example, if all of our customers elected to do the right thing by using an American manufacturer, then it would be a top business priority to design their parts to be as cheap and easy to make.
I don’t know what the number would be, but I’m guessing in the tens of billions of dollars wasted annually on part designs that are unnecessarily expensive to manufacture. It’s crazy, it’s supposed to be a top priority, but it’s resolved overseas with a low-wage work force.
We have always helped customers design parts that make it easier for all of us to win by making simple DFM (Design for Manufacturability) suggestions to their RFQs; rarely do they implement them. Once, I showed a customer how to save $80k across about 12 different part designs by making simple and easy design improvements, yet they did nothing about it?
Hence, I am trying to do more with our Sunday Dispatches newsletter and our Learn DFM Best Practices articles to educate and show what can be done. I’m also sharing stories and strategies to help each other advance our careers and quality of life by sharing the savings and extra value created by designing cheap and easy parts to management. Amazingly, it adds up to tens of thousands of dollars after just a couple of projects and that’s the kind of thing that earns dramatic pay raises, privileges and management opportunities.
If you want to advance your career quickly, then start developing parts and products that are cheap and easy to make by design and tracking the dollars you save. We will post more articles to help those who “get it” because it’s the right thing to do and good for business. That’s working together, customer and vendor.
How do vendors like us work together rather than against each other? Rather than turn orders away when we are over booked, we can pass them along to other shops that may be scaling back labor to deal with their inevitable slow times and vice versa.
This month, I dared to launch a Bring it Back 2 America network of machine shops that will work together to provide shorter delivery times and simultaneously help our businesses normalize our sales flow to better handle the inevitable ups and downs of our industries. Just two days ago after the original newsletter, an inspired reader contacted me to investigate what I can do to possibly manufacture one part here rather than in China for their product.
This is how we all work together.
This effort will allow more vendors (including us) to deliver quickly and reduce our pricing over the long term for you, the customer. Vendors working together to compete against a global low-wage workforce is a good thing. Why haven’t we done this sooner? And so far, we have 4 shops signed up, 3 new orders that I’ve passed along to those shops that joined the cause and all in the first week.
Hrmmm…working with my competition rather than fighting against them is making a positive difference? If putting extra work upfront in this way helps, then I’m more motivated than ever, to dig deep to execute the following and create a more positive difference.
- Shoring up our in-house, quick-turn prototyping department to provide more design feedback, lower pricing and two weeks or less delivery by creating a new job here for this sole purpose.
- Create an online quoting tool for our customers similar to the 3D printing industry. Upload your 3D file, select a few options and whallah, you have an instant quote.
- Automate all business activities with a custom cloud-based ERP software. We have partnered with a leading MRP company to co-develop a new Job Shop solution that can be shared with other shops that join the Bring it Back 2 America network to help them save time and money too.
- Continue to help customers develop parts that are cheap and easy to make, advance their careers and improve their quality of life.
Dear customers, colleagues, and professionals…let’s work together to bring it back on all fronts. We’ll take the leadership position to find ways to offer lower pricing and shorter lead times and you can start to help American Manufacturing by developing parts that are cheaper and easier to manufacture; please let us help you.
Here is an article that can quickly help engineers and designers bring it back to America: Engineer like a Boss
Let’s do this! If you are a machine shop or other manufacturer where this makes a whole lot of sense to you and want to join us in our efforts, check out our Bring it Back 2 America landing page for more information and let’s work together. We are already making a positive difference.
If you are purchasing manager or buyer, take a moment to consider that you can track and save dollars for your company that will empower your career if you are open minded to a conversation of design improvement rather than demand lower pricing or sourcing overseas.
If you have friends that are engineers, designers, manufacturing experts or involved in the production of a product, please share this with them so they can learn how to advance their careers by designing low-cost parts and put a few new career tricks up their sleeve while working together to shore up American Manufacturing.
And don’t forget to buy American made!
Parametric Manufacturing Inc.
Originally written and edited from our exclusive email list, The Sunday Dispatches, Edition 08.