All of mankind benefited from the advent of the automobile, but the poor blacksmith was, of course, made obsolete. Thus certain inevitabilities are present in a dynamic economy, and though it may sound noble to protect the figurative blacksmith, at what cost would such protection come? Daily the media proclaims manufacturing’s miserable lot, oftentimes in contradiction. “Manufacturing jobs heading overseas,” in one newspaper, while on the radio, “Job openings resulting from workers leaving the manufacturing field.” What is the reality concerning our manufacturing and fabricating industries? Since obsolescence and change are part and parcel of business, how business deals with these intrinsic factors then is paramount. In other words, where are today’s blacksmiths, what industry or practice is the art of blacksmithing, and what will remain?
Manufacturing Employment
The typical manufacturer in America today is not the behemoth of yesteryear, employing half of a small town’s population. It is a small company working out of a one-level building in a nondescript industrial area. It produces orders from 50 to 50,000, meaning orders that can be filled in an hour to perhaps six months.
In the manufacture of auto parts, 89% of the manufacturing firms employ 26% of that particular industry. That means that the older, larger manufacturing firms still employ thousands, but the vast majority of automotive parts companies employ 250 people or less. [1] Even among old-line manufacturing giants, industry is lean and getting leaner. The New Yorker recently reported that General Motors is making more automobiles today than it did in the early 1960s while employing about a third as many people. Elsewhere it’s the same story. According to steel-industry consultant, Michael Locker, “We are making as much steel as we made 30 years ago with 25% of the work force.” [2]
While the total employment for all industry sectors in the U.S. is projected to increase by almost 15% over the 2004–14 period, manufacturing is predicted to decrease 5.4%. [3] On the surface this looks glum, and while it is true, there are many facts hidden between the lines of statistics. Employment in the automotive parts industry is looking at a projected 6% growth over the same time period. [4] Aerospace parts and products manufacturing employment is looking at an estimated 8% growth. [5] Machinery manufacturing employment, however, is expected to decrease 13%. [6] It should be noted, though, this last group mentioned has seven subcategories and is a rather large classification, even by government standards. Such divisions need to be looked at more closely for each company or individual’s informational needs. For example, employment in mechanical engineering is expected to slow in the machinery industry, while growing on average overall. [7]
The Importance of Business Strategy
As for the noble blacksmiths, their history up to their professional extinction coincides perfectly with the birth of our modern economy. One of the main ingredients to the industrial revolution was the specialization and division of labor. The smithy, however, did everything: fabrication of pots and pans for the local townsfolk, shoeing of horses, repair work of all kinds on wagons and carriages, and fabrication of tools and farm implements. All the while, the world around him specialized at a breathtaking rate. Smithies would steadily lose business to the factory that made nothing but pots and pans. They would lose out as men like John Deere, himself a blacksmith, specialized in making just one thing. Although the art of the farrier will, of course, always be a hand craft, even today, automobiles have certainly made the horse and buggy obsolete as practical transportation.
Foresight or Obsolescence
Using history as a guide, then, the goal for manufacturing professionals is to figure out whether or not they’re fulfilling the pattern of economic obsolescence. The business owner that insists on staying with the forge, figuratively speaking, will eventually lose out to the new business with state-of-the-art extrusion capabilities. There are still machine shops in existence that operate with one expert machinist and two or three junior operators, making precision parts, mostly on old manual equipment, for such big names as Boeing and Raytheon. However, these shops live and die on single contracts – orders for close-tolerance parts produced 150 at a time. While there is still a place for such shops, their situations are unique and cannot be relied upon as a practical business plan.
Along the lines of such small enterprises, a full 83% of the aerospace parts industry is made up of establishments that employ 99 workers or less. [8] It may not be a business plan to model a wide variety of ventures on, but the 40-something-year-old welder who leaves Boeing to become a small supplier to his old company is still a viable player in the American manufacturing scene. Then there’s the man in his mid-20s with no college but good mathematical skills. He starts as an assembler in an aerospace machine shop, moves up to a low-level machinist position, takes a few CAD classes at the community college, and within 10 years is the No. 2 man in the local operation of a small but national firm.
Point being is that manufacturing is alive and well, if the focus is fixed in the right place. Crises and bad tidings make the news, but the newsmakers sacrifice real content in order to create their needed drama. The machinery and chemical manufacturing sectors are looking sickly at projected losses of jobs at 13% and 14% respectively. [9] There’s the drama that normally makes bold print in the newspaper. The rest of the story, though, says output in chemical manufacturing is expected to grow, so there would seem to be opportunities for high-level skills and in the professional ranks. The outlook is different in the pharmaceutical industry, however. (Although this group actually has a very small percentage of the type of production workers that one would normally associate with manufacturing, there are assembly lines, factories and large-scale processes at work here.) Unlike the machinery and chemical sectors, pharmaceutical and medical manufacturing is actually predicted to increase its wage and salary employment by 26%. [10] With this presence of typical manufacturing processes, the sector offers opportunity for manufacturing professionals from the highest skilled to the lowest skilled.
Taking the Right Risks
One Midwestern factory whose business was the manufacture of automotive gas caps was able to take a process involving nearly 70 people over the course of two shifts, and condense the procedure so that seven low-skilled people could accomplish the same amount of work. This particular example was in the mid-1980s when foreign competition was seemingly tolling the death knell for American manufacturing. A small team of engineers with an idea for automating the existing process went to the now-retired chief financial officer for the go-ahead approval. The new process would incorporate CNC machinery to replace the layers of manual labor, but would come with a very large price tag. Fear of the unknown and untried loomed, and the CFO could have shot the idea down in its earliest stages. Instead, he took it upon himself to learn as much as possible from the engineers to better assess the viability of the plan.
The next hurdle was dealing with the workers’ union. According to the CFO, “No one wanted to cut jobs; it would’ve been nice if we could have just kept on going, just like normal, but foreign competitors had already made our choices inevitable if we were to survive.” The new CNC process would effectively make the existing jobs obsolete, and what labor was still required was of a lower skill level and would have to be for proportionately lower pay. The decision was made to save the company by building a new plant in a right-to-work state. Since the new machinery would require either a temporary closing of the existing factory or at least limited production, the new plant was built to accommodate the CNC machinery. Over time, as the new factory came online, production was slowly moved to the new facility, thus giving the work force at the old plant as much lead time as possible to adjust to the new scenario. In this example, there were blacksmith-like positions eliminated, but the company survived, and it survived without moving overseas.
Looking Ahead
The displaced workers couldn’t have been expected to foresee what was coming; such things are largely beyond the scope of the average laborer. Should there have been someone looking out for such developments in regards to the workers’ welfare? That’s not a question that can be definitively answered in this article. What can be done in such scenarios for the good of the company and the individual laborer is for someone to be responsible for an ongoing assessment of current trends in business and technology. It could be something as simple as knowing which machine manufacturer offers the more reliable product support, or knowing the best area to locate a new plant. This kind of thinking benefits the employees in that the business will be more profitable and the company will be less likely to over-hire for positions that won’t survive the foreseeable technological advances.
In the case of the above example, the CFO was very new in his position. “Here I was in my mid- 30s, new on the job. The head engineer had retired just after we got this thing into the idea phase, and I and another young man, an engineer, were just going ahead not sure what the results would be. It was a little, well, nerve-wracking.” He was confronted with a decision that would cost millions of dollars, put people out of work, require the physical relocation of an entire manufacturing process, and all of it hinged on an experimental machine. It would have been easy for him to evade such responsibility by simply deeming the project “too risky.” Perhaps being new worked to his advantage. Not being deeply entrenched in any old ways of doing things, he was – to abuse a cliché – already working outside of the box.
Know Your Market
All of this sounds obvious when presented as hindsight, but it illustrates the need for a kind of situational awareness in the marketplace. If business really were this obvious, then most blacksmiths would have merged into that many more factories. John Deere was a blacksmith who came near to failure more than once, and yet this plow maker is today a household name. Had Deere been able, perhaps he would have hired a competent consultant who would have produced for him multiple spreadsheets showing that Vermont and the surrounding areas were in a blacksmithing glut; too much supply and too little demand to warrant yet another shop. The consultant could have informed him of the rapidly expanding Western frontier, that there was an area west of Chicago that was wide open, full of farmers and very few blacksmiths. Maybe the same consultant would have informed him sometime later that blacksmiths were on the short road to obsolescence, and that he should begin looking for a way to specialize. Maybe or perhaps. What did happen, of course, is that Deere was able to clearly see the obstacles before him such as others did not.
So America is no longer the king of the cheapest manufactured goods. And the blacksmith, in a professional sense, is no longer with us. If the media of a century ago had the capabilities of today’s media, the demise of the blacksmith would no doubt have been broadcast as the demise of America. The Luddites had placed the same obituary a century before that, as more and more people gave up the threadbare life of small farming for the regular paycheck of the urban factory. As of this writing, and according to the U.S. Bureau of Labor Statistics, unemployment is at 4.6%, the lowest in five years. Wages have risen 4% in the past year, which is higher than the 3.3% average annual wage growth of the last 25 years. And the Labor Department has just revised upwards the employment numbers for the 12 months through March 2006 by 810,000 jobs.
Fortunately for springmakers, it looks as if the world will always need their goods. The downside is that springmakers have a very broad spectrum of spring-using industries on which to fix their focus. Furthermore, springs typically being one of the cheaper components of the end-product, location of the spring manufacturers’ facilities can play as much if not more of a role than price alone. Not to mention that cheap labor resides overseas, and they have ample supply of cheap springs, as well.
What should a springmaker do? Focus on domestic end-product facilities? Attempt to play both markets? This will depend on the individual company, of course, and what specialties are involved. Perhaps nurturing a base of domestic clients with needs of specialized springs, while seeking out opportunities for distributive partnerships overseas would be an option.
Global positioning also requires an in-depth look at local requirements for many different countries, especially where environmental regulations are concerned. The consuming public is not as hot for green products as the producers of green services would have those consumers believe. Nevertheless, the wave of environmental regulations cannot be avoided, and this is one more aspect of global commerce on which to focus. Perhaps opportunities can be found where larger, better established springmakers are having trouble adjusting to local environmental regulations. A smaller, more flexible manufacturer might be able to ramp up production of the newly required product.
Then there is the highly coveted but rarely found niche market. Many of the well-known American manufacturers have found a way to do more than survive with domestic labor; they’ve managed to become icons. Viking Range Corp. has opened three plants in Greenwood, MS, since 1989, with a fourth in the works. When one thinks of motorcycles, the name “Harley Davidson” comes quickly to mind. Small aircraft? Cessna Aircraft, of course. These names are seemingly synonymous with their actual product category and are American-made. As The Wall Street Journal proclaimed, “Rumors of the death of U.S. manufacturing have been greatly exaggerated.” [11]
Positioning a manufacturing company for future success will require research which, of course, requires capable people to sift through the limitless amount of information available. Smaller companies might consider making such research part of the job description for an estimator or sales professional. Some might be better served with a competent consultant who could develop quarterly economic reports specifically for the manufacturer’s target clientele. Regardless of how it is accomplished, though, the research must be done. John Deere the blacksmith became John Deere the icon through a series of tough decisions made possible by Deere’s foresight while so many other blacksmiths could not see beyond their own anvils.
References
1. http://www.bls.gov/oco/cg/cgs012.htm
2. The New Yorker magazine; August 28, 2006
3. http://www.bls.gov/iag/manufacturing.htm
4. http://www.bls.gov/oco/cg/cgs012.htm
5. http://www.bls.gov/oco/cg/cgs006.htm
6. http://www.bls.gov/oco/cg/cgs052.htm
7. http://www.bls.gov/oco/ocos027.htm
8. http://www.bls.gov/oco/cg/cgs006.htm
9. http://www.bls.gov/oco/cg/cgs008.htm
10. http://www.bls.gov/oco/cg/cgs009.htm
11. The Wall Street Journal; Tuesday, October 24, 2006. Marketplace
Ray Gardner, after eight years in the aerospace industry, obtained his licenses as a financial professional and eventually moved on to teach high school mathematics. His writing has appeared in the Arizona Republic as well as Springs magazine. Readers may contact him by phone at (602) 399-0534 or by email at raygardner@cox.net.
