41 years ago, American sociologist Daniel Bell coined the term “post-industrial” in his book The Coming of Post-Industrial Society: A Venture in Social Forecasting. Bell predicted that America would transition from the production of goods to the production of services, with few companies remaining to directly manufacture hard goods. Was he right?
History has shown that Bell was only partially correct. Indeed, service sector growth, especially in the areas of finance and investment, has been significant in the decades following Bell’s writing. (Sadly, however, the financial sector is also accountable for taking us on one heck of a roller-coaster ride following the mortgage crisis of 2008.)
What Bell failed to account for was American manufacturers’ commitment and investment in people; our “knowledge capital”. Successful manufacturers have learned to correctly isolate, quantify, and develop the key skills and tool sets that their workforces need in order to become more productive. We’ve certainly made that effort at EJ Ajax.
And while Bell’s service sector may seem to be today’s economic driver, it’s actually a precursor to manufacturing growth. Consumers who work at service companies want new homes, cars, appliances, furniture, and thousands of other manufactured goods just like everyone else. All that demand eventually flows to manufacturers.
Where did Bell imagine these manufactured goods would come from? China, Japan, and Mexico perhaps? Again, only partially true. Foreign manufacturing has grown considerably, sure. But American manufacturers enjoy several key advantages that other countries lack. Among them:
- Fast Turnaround and Just-In-Time delivery — it can take three weeks or more to ship products from China to ports in the U.S. That’s OK for toys and dolls, but not for many other manufactured goods. Our company can literally deliver metalformed products the next day if needed. Many of our customers would accept nothing less.
- Training and Education — U.S. technical colleges, the military, universities, and other training facilities provide us with a highly skilled workforce that can operate today’s complex manufacturing machinery. My plant is loaded with just that type of machinery. Unskilled labor is not qualified to turn on the power switch, much less use these machines to produce pristine, error-free manufactured goods. Our commitment to training and education makes us better.
- Clean & Safe Workplaces — today’s American plants are cleaner, safer, quieter and more productive than ever. Worker injuries are down. America leads in this regard.
Based on the grinding experience following 2008, I’ve learned to value our company’s people (we call them colleagues) as a tangible business asset rather than a payroll expense. We could no sooner operate without the knowledge and experience of our colleagues than we could without our buildings or machines. Our colleagues are the primary repository of our knowledge capital. Seriously, our colleagues are not line items on the asset side of our balance sheet, but they could be.
And while I am very excited about the future of manufacturing in general, and our company in particular, I do have a persistent concern: finding, training, and retaining the top colleagues we need to continue growing and investing in new methods and technologies.
Getting Ready For The Go Go Teens
The years 2015 through 2020 look extremely promising for manufacturers. Thanks mostly to America’s increased domestic output of oil and natural gas, energy costs remain at manageable levels. This has enhanced the competitiveness of energy-intensive manufacturing companies like ours. Meanwhile, labor costs in China are increasing quickly, causing a “re-shoring” trend that is bound to gain steam as the benefits of off-shore manufacturing diminish.
Retail giant Wal-Mart now holds supplier conferences to promote “Made in U.S.A.,” where manufacturers are encouraged to commit to producing in the United States. In exchange, Wal-Mart will purchase $50 billion more in U.S. manufactured goods over the next 10 years.
Moreover, I continue to be amazed by America’s business creativity. Creative business thinking is engrained in American culture. Where else but the U.S. would businesses such as Apple, Google, Amazon, and Facebook flourish? Great business ideas flow from basements, garages, and dorm rooms across America. Financing is generally affordable and available. Who knows what the next great American business innovation will be?
Here at EJ Ajax, we place a very high valuation on knowledge — it truly is a form of business capital. Adding the right amount of knowledge capital to material capital is a key business formula for us.
Currently in the U.S., we have the material side. But we’re short on the people side. That’s why EJ Ajax is spending more time, attention, and financial resources on human resources than ever. I don’t see that changing anytime soon.
Being a third-generation business owner has gifted me with a unique perspective on business. I am better prepared to foresee the road ahead than I was in the past. And what I see is this; American manufacturers are poised to have a very productive decade. If we can get the right people in places, get them trained and on a solid career path, there’s no stopping us.