Six months ago, everybody in the United States had a choice: We could go with the old guy who didn’t seem to have much to say about the U.S. industrial sector, or we could go with the young guy, who also didn’t say much about industry. Given that situation, it’s hardly a surprise that, more than 100 days into his Administration, President Obama still has yet to articulate exactly what, if anything, his plan is to help the industrial sector recover. And maybe, given the current situation with the Not-So-Big Three Detroit automakers, having no plan is better than implementing a bad one.
Kevin Kearns, president of the U.S. Business & Industry Council, recently wrote an open letter to Pres. Obama, taking him and his economic team to task for their “almost complete neglect of the cascading crisis in domestic manufacturing,” while they instead focus obsessively on the financial industry. “To date,” Kearns writes, “your economic team’s approach seems to be trillions for banks, but hardly a dime for manufacturing. You save wrongdoing financial houses from failure, but send good-faith, if sometimes poorly run, manufacturing companies into bankruptcy—a formula for disaster.”
Kearns is hardly alone when it comes to wondering what exactly is going on in Washington. Craig Giffi, vice chairman and leader for the U.S. Consumer & Industrial Products Industry practice with consulting firm Deloitte LLP, puts it rather succinctly: “The United States does not have a clearly defined national competitiveness strategy to support and grow manufacturing.” Having a strong manufacturing base in this country is critical, Giffi emphasizes, “because it drives innovation, creates well paying, skilled jobs and raises the standard of living for all of us.” Problem is, lacking a unified manufacturing competitiveness strategy, individual companies, along with state and local governments, are left to fend for themselves on what he describes as an “increasingly unlevel playing field.”
Giffi also observes, “We continually hear people hope that things will improve. But hope is not a strategy.” Indeed not, but these days, hoping and the even more common strategy, waiting—as in “waiting for things to get better”—seem to be the extent of many companies’ plans for 2009. Given what we know about the way things work in Washington, I have to wonder what exactly these companies are waiting for.
If your business is like most in the industrial sector, you’re facing a lot of challenges from many directions: offshore competition, controlling costs (fuel, materials, labor), finding and retaining talent, environmental regulations, reducing time to market…the list goes on and on. Expecting things to get better just by waiting the economy out, though, seems like a fool’s errand at best. While the government could—and should—address the unfair foreign trade practices of certain countries (in particular, China), that day of reckoning could be a long time coming. Paradoxically, one of the best chances for companies to rebound lies not in the U.S. economic stimulus program (aimed mostly at the financial sector) but in China’s own $585 billion program, which is centered largely on infrastructure projects. As a recent Wall Street Journal article points out, “China is emerging as the best opportunity for many U.S. producers.” (WSJ, Apr. 30, 2009)
There’s something perversely out of kilter when U.S. industrial companies have a better chance of recovery by doing business with the Chinese—unfair trade practices and all—than they do by following the lead of their own government. But the real answer lies not in China nor within the D.C. Beltway, but rather, in the drive and initiative of U.S. managers. Those who choose to sit and wait for things to get better while investing nothing in their companies will still be on the sidelines when the recovery happens. Those who resist the impulse to cut back to the bone and instead seize the opportunity to build market share, invest in training programs and solidify their customer base with improved service levels will ultimately emerge as the clear winners.
Dave Blanchard
Editorial Director/Associate Publisher
[email protected]
