Sorting Out Survival

Industrial Factory Automation: Lots of jobs have found their way to Mexico and elsewhere for the exact same reasons that they left the U.S. and many blame it on free trade and globalization. But, it's only natural to want to blame someone or something for the way things are going in the manufacturing job market these days.

  Look to Innovation as Your Best Source for New Business

"Unions suck!" he said. "Whoa," I thought, as I listened to a conversation among comrades lamenting the lack of work here (north of the 49th). "Where'd that come from?" Lots of jobs have found their way to Mexico and elsewhere for the exact same reasons that they left the U.S. and many blame it on free trade and globalization. But, it's only natural to want to blame someone or something for the way things are going in the manufacturing job market these days.

But, I don't blame unions. In fact, one could argue that because of the many union-negotiated labor contracts, members were able to obtain a more prosperous lifestyle which allowed them to purchase higher-end products (you know, name-brand and luxury items), often from the same companies that hired them.

So, why are we in this jobless place right now? Maybe we shopped our way into it. It didn't just happen overnight. It's been happening for more than 20 years.

If a consumer values something highly enough, he or she will spend many dollars to obtain it, which creates a lucrative market. One example is the market for TVs in the '60s and '70s. Once the market moved from a luxury to an appliance, no household could do without, the Japanese streamlined production and turned the lucrative TV market into a price-driven commodity--a space where the U.S. just couldn't compete--initially on price, later on quality.

But, something is different now and even Japan is feeling the pinch. China's trade surplus is huge. They export way more than they import--that's not new, but why? Well, for starters we are all looking for the best deal, getting the most for the least.

You may have heard about the Wal-Mart syndrome: A self-defeating cycle where the mania of consumerism in this country pushes people to buy ever-increasing amounts of goods but only at ever-decreasing prices. To meet the high demand for low-cost goods, producers go offshore to produce low-priced goods to meet the demand. As a result, high-paying jobs are lost and only low-wage ones remain.

This all expands the population of low-wage earners who can only afford to buy goods at low prices. Because we can't stop shopping, we are also in debt up to our eyeballs. We all have less to spend, so we shop at Wal-Mart, who through brute market presence forces producers to lower the prices they can ask for stuff which supports the Chinese trade surplus. Circle complete.

This is certainly a generalization, but it fits. And it's likely to get worse before it gets better.

I read an article on Forbes Magazine's website (http://www.Forbes.com) recently that said "The way to avoid being trapped in a spiral of growing business and shrinking profits is to innovate. You need to bring new products that consumers need. Because with those, Wal-Mart doesn't have benchmarks to drive you down in price." The point is that Wal-Mart doesn't have historical data, so you don't have competitors, and "they haven't bid the products out to private-label makers. That's how you can have higher prices and higher margins."

Okay, innovate your way to success, but what's that got to do with jobs? Software jobs are still being lost to India. IBM just did it. Big news, even though the software jobs in India are less than 3% of the workforce. But it's the growth that's getting the attention.

But it made me think that a company can, for example, create a 24/7 software development team? How about manage and develop in the U.S., and use India and Hong Kong just to develop. When the guys in the U.S. are sleeping, the guys in India are working on the task list, and they pass it onto the guys in Hong Kong. By the time the U.S. guys get back to work the next morning, the job's done. Admittedly, a very general plan, but can you see some benefits? Overall, lower-cost development, but you're still driving the bus. And it hasn't been commoditized.

As machine builders, any commodity-based, bread-and-butter business that you might have enjoyed is probably drying up.Innovation and niche-based markets are where you need to put your efforts, unless you think you can survive on the mediocre level of expansion that exists today.

I had many responses to my "Born to be Engineers" column (Control Design December 2003, p13). The problem is that while most agree with my premise, they wouldn't want their kids to follow in their footsteps. Not enough security and stability.

While I have to agree with them, I still yell, "Be innovative!" It's the only commodity that no one can take away from you, or your company. We just have to think differently, because you know what really sucks? Complacency.


Jeremy Pollard, CET, has been writing about technology and software issues for many years. Publisher of the Software User Online, he has been involved in control system programming and training for more than 20 years. Browse to http://wwwtsuonline.com or e-mail him at jpollard@tsuonline.com.