Warner Consulting, Inc.

What to do about "outsourcing" and job migration overseas

Jay Warner, Warner Consulting, Inc.
Posted 3/28/04 15:58

There has been a lot of talk lately of "outsourcing" from overseas. If a foreign company makes a much better forging than a US company does, at the same price, why shouldn’t the customer buy the foreign one? Answer: for one case in southeast Wisconsin, they did buy the foreign product and the local jobs went away.

I would like to say that people should buy the products that we make. But if the foreign worker can make the same thing we can make, or better, what’s the angle? Legalistic trade restrictions -- tariffs, removing NAFTA, will not work. They never have worked.

Our only recourse is to learn to make our products better -- learn how to turn it around more quickly, make the product stronger, more durable -- whatever it takes to make the product more desirable to the customer.

We can make smaller lots and deliver more frequently than any overseas company. Thermal Transfer Products in Racine is thriving by learning how to produce small orders for complex oil coolers. Quick Cable Corporation in Franksville supplies a wide range of cable sets in any lot size every day -- with minimal finished goods inventory.

We can learn how to make better, more effective products. Motor Castings Company in Milwaukee has learned to make cast iron engine heads with complex water channels twisting through them. This makes the engines lighter and run longer.

These capabilities are worth paying for. If you say your firm can’t produce on a rapid response cycle, then perhaps you have the makings of an improvement project - how can we reduce our response time? If you don’t know how to make your product more desirable than it is now, then you definitely have the start of an improvement project!

Do not make the mistake of thinking that your job can’t be exported. As you read this page, orders are being taken in India for products made in Malaysia, from catalogs printed in Italy and Internet sites developed in the Netherlands. We must make every job, every activity, easier and more effective. The output of every job must be made more desirable to the customer. There isn’t a lot of choice.

Many companies in the US today are not getting the improvements they must have to stay alive. Three common reasons include:

(a) Management is not asking all the employees for help

Fact: A team of seven technicians, equipment operators and a supervisor reduced flawed parts from 40% of output to under 2% in six months, while simultaneously cutting labor hours per part by more than 75%. Capital spending was zero.

How did it happen? The whole team devoted fifteen minutes each day to reviewing the day’s progress and possible improvements. Suggestions that worked were kept. Management asked for and appreciated input from everyone.

(b) The workers are afraid to contribute for fear of losing their jobs.

I wouldn’t want to eliminate my job, either! On the other hand, if someone learned how to make the same item for half the cost, any rational manager would want to keep that person around to discover more improvements. Management must address and minimize this primary employee fear. If this fear is not eliminated, the company will not get the bulk of creativity potential. Then when the jobs go overseas, there will be no need for the managers either.

(c) The workers don’t know how to contribute.

Everyone in the company is needed. If anyone doesn’t know how to contribute then we need some just-in-time education. We need a framework to work in. It’s called "problem solving," "team building," "organizational development," and a host of other terms to describe portions of the process. (If you work in "Quality" you will recognize Taguchi Method™, 6-Sigma®, and Deming’s Plan-Do-Check-Act). It works best when a specific problem is addressed and only those specialty aspects are brought in that are necessary for the situation. Let’s take the team, present the problem, learn how to measure things that count, and learn how to show the results with meaning. They can take it from there, or use a step-by-step framework such as the A2Q Method. There are many options for frameworks for those who want to make their jobs and their output better.

Let’s ask everyone for each person's contributions, put the fear factor to rest, and make our output more desirable and lower cost. If your company does not pull itself up by its own bootstraps, what will you lose? What will the employees lose? What will management lose? It’s past time to work on improvement.

Comments, debates, and questions are welcome at quality@a2q.com.