Manufacturing: Reshoring or Renaissance?

In a recent interview on “60 Minutes,” President Obama said, “Businesses around the world are saying for the first time in a long time, the place to invest isn’t China. It’s the United States.” Last year, Walmart announced a pledge to buy an extra $250 billion in U.S.-made goods over the next decade.

While the tide is turning, there are issues to be addressed. The Wall Street Journal reported that U.S. manufacturing has failed to continue the high level of equipment investments in the past, and today, we find ourselves with the average age of our industrial equipment now over 10 years, the highest since 1938. Walmart discovered U.S. manufacturers were not beating a path to its door in answer to its pledge to buy more homegrown goods.

The factory buildings are still here, but the people and the supply chain infrastructure are gone. Vast amounts of investing, training and rebuilding will be required to fill the demand. With the increased pace of business, all this needs to be done faster and more widespread than in decades past. The good news: there is capital available—the most in years—just waiting to be invested. But, more than money will be required to achieve a manufacturing renaissance.

When I started with Milliken & Company 40 years ago, the term “offshoring” was probably only used for saltwater fishermen. It certainly wasn’t part of American textile industry jargon. In fact, the apparel industry had just seen the peak of its employment numbers in 1973. The U.S. was an economic powerhouse and a world superpower. The catbird seat was secure.

Fast forward to 2014, and the new buzzword I hear in manufacturing is “reshoring.” All those companies who clung to business in the last 30 years by moving their operations outside the U.S. are now investigating the possibilities of moving back.

I, however, am looking at this from a rare vantage point. Milliken & Company didn’t move its manufacturing facilities overseas. We stayed. Unlike many of our domestic competitors, we also stayed in business. We tackled our burning platform and emerged stronger than ever.

The kind of growth we’ve experienced at Milliken didn’t come from offshoring, reshoring, or any other kind of short term “shoring” initiatives. It came from the hard work of benchmarking the best manufacturers in the world and applying what we learned, as painful as it was, to our own processes. The improvements were not realized overnight. Over a decade later, we now recognize not only the changes in our cost structure, but more importantly, the culture of the company.

Consider that over the past several years, Milliken has seen:

  • 5% gains annually in improved manufacturing productivity
  • 88% improvement in breakdowns
  • 80% improvement in defects
  • 30% improvement in process reliability
  • 36% improvement in safety

As the word implies, “renaissance” involves a change in thinking. Bringing manufacturing back to the U.S. on a significant scale is important, but more important is making the manufacturing base sustainable. Just bringing back the same systems and processes that took manufacturing offshore is not a renaissance. Creating the permanent shift in mindset – from quick wins to long term viability, budget approach to zero-based thinking, and much more – is what Milliken sees as our real challenge with every manufacturer we work with. However, without that shift, any other programs might as well be made of sand.

Ironically, the very senior leaders challenged with turning their manufacturing facilities around and pursuing operational excellence are often the ones least willing to change their way of thinking about how they do business. How would you rate your willingness and your organization’s willingness to change?

The data we have collected gives a compelling argument that while there is positive economic momentum for U.S. manufacturing, our managerial approaches are decades out-of-date. For example, we ask our visiting leaders, “Does your company’s solutions to problems come primarily from experience or scientific methodology?” An overwhelming 80% say experience is the approach they use for problem solving, not scientific problem-solving methodologies.

In my next post, I’ll discuss how thousands of leaders who’ve visited Milliken answer other questions and what their answers tell us about how to move forward to truly achieve a U.S. manufacturing renaissance. As Roger Milliken declared years ago, “Management is the problem.” This is still true today. Stay tuned.

This article was originally published on LinkedIn by Craig Long. Craig Long has spent his 40-year career with Milliken & Company in a variety of executive leadership roles. In 2007, Craig helped launch the Performance Solutions by Milliken business to assist other organizations with the same challenges that Milliken has overcome. Craig’s experience includes business management, quality, continuous improvement, corporate education, industrial engineering, product development, and complexity reduction. For the past two decades Craig has led successful MPS implementations within Milliken and with 350 client operations in 23 countries to date. To learn more, visit www.performancesolutionsbymilliken.com.