Finally, the U.S. electorate and potentially the U.S. Congress have awakened to the fact that Manufacturing is the foundation of a growing economy, but is it too late?

An article featured in CNNMoney.com notes that a political poll conducted in the spring of 2010 found “deep popular angst with the decline of America’s manufacturing might.”

Nearly four in ten respondents indicated that manufacturing based industry is the most important to the overall strength of the American economy, and 78% want the U.S. to develop a national manufacturing strategy.

While Supply Chain Matters applauds this effort, we cannot help but remain skeptical as to whether any substantive strategy will ever come forth.

U.S. Democrats, who face serious hurdles in the upcoming Congressional elections in the Fall, are apparently positioning to have various legislation addressing U.S. manufacturing introduced, but this article notes that some of these efforts may turn out to be political posturing in order for Democrats to have a rallying cry in the Fall elections.

One of the most interesting bills being proposed is the so-termed “The National Manufacturing Strategy Act” which directs the President to create a manufacturing strategy every four years.

The complete void of a manufacturing or supply chain capability strategy for the U.S. has been a constant rant within the Supply Chain Matters blog. Our latest rant in February noted that if an economy doesn’t build value in the manufacture of goods, which in-turn drives the need for robust supply and value-chain capabilities, than we may as well all get in line for those very few service jobs left in retail, financial services or restaurant sector.  The world economy, and particularly China, continues to up the ante on world class competitive manufacturing and supply chain capabilities, and the U.S. muddles along with both political parties stalemated.

For what it is worth, we should all pass along some stern advice to our U.S. Congressional leaders.  If readers will indulge, let me start the ball rolling:

Yes, the U.S. lacks a strategic manufacturing strategy, and the proposed bill to create one should pass post haste.  By the way, include in that bill that the strategy needs to be delivered to the President in less than six months, since it is way overdue.  The President should appoint a commission that is balanced among senior executives of well known manufacturing focused companies such as Ford, GE, Caterpillar, 3M, and others.  The commission should also include people who understand the importance of building supply and value chain capabilities to support strategic industries.  Andy Grove should chair the Commission, since he has already nicely articulated the challenge and the need. While the U.S. is addressing supply chain capabilities in alternative energy vehicles, it probably needs to address other strategic industry as well, and please Mr. President, refrain from appointing anyone from the Wall Street insider community on this commission.

My observation is that Americans are highly frustrated with their political leaders because of a lack of movement in the economy and in the longer-term economic welfare of their families. Posturing and bickering only adds to the frustration, and quite frankly, if Republicans and Democrats really believe in the vibrancy of private enterprise, they should be enthusiastically sponsoring and supporting a strategic manufacturing and value-chain strategy for the U.S.

A message to Republicans- your stance of do-nothing for the sake of political posturing or protecting against the deficit has little meaning if the U.S. cannot revive its economic and job growth.  These are hollow without a vibrant U.S. manufacturing resurgence with a strong U.S.-based supply chain.

A message to Democrats- advocating for a comprehensive manufacturing strategy is the right issue, but please, please do not give it the lip service.  Provide leadership and substance and actively work with the opposition to get it done.

For the health of the American economy, don’t waste time.  The stakes are very high, and supply chains do matter.

Bob Ferrari

I came across a Wall Street Journal article, Chinese Firm Meets Global Branding.  This article outlines the market strategies of Chinese firm Changzhou Asian Endergonic Electronic Technology Co., or its English brand, Züuma (pronounced zoo-ma), a name created by its U.S. partners. This firm manufactures the portable dashboard mounts that house many of our portable GPS units, and the article hit home with me since I actually purchased one of these mounts about a year ago, but it carried a private brand label from a well known electronics retailer.  By the way, the mount is very stable and works well on my car dashboard. By creation of the Zuuma brand, the company will offer a higher featured mount for the U.S. market. If successful, more product margin will be able to be garnered.

The article further notes through an interview with the CEO that Chinese companies have difficulties understanding the implications of fostering global brands. We should add that understanding global market needs also connotes having agility and flexibility in one’s supply chain planning and fulfillment capabilities. Zuuma, however, wisely engaged the assistance of two U.S. partners who provide branding and distribution services.

I recall surveys conducted of Chinese firms as much as five years ago that also pointed to the fact that in order for China to succeed in the global marketplace, management skills in global product marketing would be a necessity, and were in very short supply. The Journal article notes that the Chinese government has loosened rules for foreign investment and now offers education to encourage Chinese companies to develop their own brands and move up the value chain, just as Japanese and South Korean companies had.  Make no mistake, Chinese government officials understand the tenets of moving up the supply chain.

The Journal accurately notes that few Chinese companies have truly developed a full global brand presence, and cites Lenovo Group Ltd. in computing, Haier Group in appliances, Sany Group in construction equipment, and Mindray Medical International Ltd in medical devices as on the threshold.  Lenovo itself gained its global marketing guidance from its previous owner, IBM, who spun off its Chinese manufacturing partner, and today the Lenovo brand has become much more recognized by consumers.

My sense is that Chinese companies mastering global branding is much closer than one thinks, and will be achieved via acquisition of certain global brands.  Community readers may want to refresh their memories regarding the announcement of  Volvo being acquired by Geeley Holding Group, and Geeley’s management announcements that brand management will remain in Sweden.  Little-known heavy machinery maker Sichuan Tengzhong Heavy Industrial Machinery tried to buy GM’s Hummer group, but that attempt failed.

There will no doubt be other announcements in the coming months. Think of contract manufacturer Foxconn’s tremendous production and supply chain capabilities being married to a noted brand.

If your professional skills lie in global product marketing and/or global supply chain fulfillment, you might want to consider a mastery of Chinese corporate culture. Your skills are going to be in great demand.

Bob Ferrari