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China Gets Expensive; Can U.S. Manufacturing Benefit?

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I predicted here in a musings post that manufacturing would return to U.S. shores from China. I anticipated that wages would increase there, and the cost of manufacturing would steadily increase along with it. American companies seeking economies of scale in China would begin to ponder Made In America again albeit our manufacturing base has long eroded.

While I’m no economist or global manufacturing expert, and my prediction was merely my own based on observation, it seems it may be coming true a bit quicker than expected.

Today’s Wall Street Journal story, “Buck Up, America. China Is Getting Too Expensive,” tells about a U.S. furniture manufacturer who got the raw end of a stick when he manufactured in China only to be pushed aside by businessmen in China who decided to sell direct to the U.S. instead. The story also speaks about Bruce Cochrane a Lincolnton, NC furniture maker who is ramping up manufacturing back on home soil.

Many factors contribute to this and it would be great to hear from anyone expert in global arbitrage, currency, manufacturing, and trading. What are known factors today relate to the Chinese manipulating their currency to be more favorable to them in addition to soaring wages in China as the workers there get a taste of Western capitalism.

There are many implications for business owners who thought China the Holy Grail. What goes around comes around, right? We see that in fashion every 20 years or so; perhaps we’re going to begin to see it with consumer goods and industrial products, too.

Is America ready?

Failure To Innovation With Competence

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Check out this article in the Wall Street Journal, “Better Ideas Through Failure.”  It’s about a unit of WPP Grey Group’s creation of the Heroic Failure award for employees who take an edgier, riskier approach to innovation and winning.

Then there’s the recent point of view piece I read in Ad Age from a vice president of marketing at Hoover’s. He was all set to hire a candidate when something struck him; the candidate was good, and he was competent, but that’s all. Competence is no longer good enough; candidates have to show more — get out of the corporate box and prove themselves as risk takers and, gasp, be entrepreneurial!

Putting two and two together, take a look at this picture:

** The status quo in the workplace is being shot down.

** The global platform is the new sandbox, and if you don’t come equipped with unusually innovative experiences then you can’t play.

** Thinking is what’s now required; in fact, it’s demanded in the workplace.

** Entrepreneurs rule. Have you seen all the hoopla about how those who innovate and manage their own companies are supposed to save the U.S. from a double-dip?

The initial concept about failure is nothing new to parents. We watch as our babies fall only to get up and walk. I’ve written about my failures as a blogger with the back end and analytics of this site (which can also be construed as lack of knowledge or failure to learn in a timely fashion, perhaps). Others can share failures as learning experiences all the time.

In business, though, failing is an expensive endeavor, but if that’s the new path to innovation, then by all means…make some stupid mistakes! Am certain the expectation is intense to learn from the errors, establish new and creative methods of winning and get teams to reach key performance indicators without failure, without negative effect on the bottom line, and efficiently.

Here’s what else the Wall Street Journal piece says of innovators:

** Take time off so original ideas can incubate.

** Be free to take risks, work on multiple projects at once to spark flexible thinking.

** In society and culture, civil conflict, political fragmentation and cultural diversity can trigger divergent thinking.

** What also helps individual creativity (and I don’t agree with this one IMHO) is “aggressive, egocentric or antisocial behavior makes it easier to ponder ideas in solitude or challenge convention.”

Fascinating stuff, eh? I’m sure you readers of the Harvard Business Review can muster some further food for thought on this topic? Or, perhaps an actual workplace experience might trigger a story or two?

 

Obama, Boehner and Lessons for Business

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Today, I was ready to troll for a blog post; I really had nothing brewing, not even an inkling (to reference my good friend Ken Mueller). Then, I read the second headline in this morning’s Wall Street Journal (the paper version, mind you), and the post came rolling in. (I purposely missed last night’s news as I’m trying not to get all discombobulated with the sickness plaguing U.S. leaders).

But, there it was…a slap in the face…the President of the U.S. asked to address Congress on Sept. 7, 2011; the Speaker of the House said no, you ought to do it a day later (in direct conflict with the NFL game).

That’s it. There’s my blog post concept, and the negative emotions came flooding in to wreak havoc on my morning coffee and dry bran muffin I made this weekend.

Because I’ve been letting the world’s state of affairs bug me, and I’ve been ranting a bit (see my Monday Meanderings), I’m going to turn this latest stupidity (the likes that haven’t been seen, I’m told, since Woodrow Wilson was president in the 1910s) into how not to run your business.

Imagine Company X has a president with successors interested in taking over that top-dog position. There are employees across the U.S. and they manufacture widgets. The employees are restless because the leadership of Company X is constantly bickering and doing it publicly as well as behind closed doors (if that can ever happen).

Employees are Facebooking their malcontent, and water-cooler gossip among the white-collar shirts is heated. The president of Company X requests an all-staff meeting, and the management team suggests all staff should not attend; they can watch streaming video of the presentation instead.

Should this difference of timing, medium and attendance be publicized for all the world to see, or should this be discussed and negotiated behind closed doors until everyone can comfortably agree?

You know the answer; I don’t need to tell you how we play in business. But, I do, apparently, need to tell the leaders of the United States, and here’s what I’d like to say:

** We The People in order to form a more perfect union, would like the president of the U.S and his Congress to get the flip along.

** When there are differences so ridiculously inane, like timing of a speech, keep it to yourselves and work it out so We The People don’t need to participate in your bickering.

** Hire a team of therapists to sit with each of  you to curb your hostility for one another so We The People can begin to raise our heads proudly that we’re all working toward one goal — to shore up the foundation this country has worked so hard to attain.

** Put on your mud clothes and hit the streets of Brattleboro, Vermont, where my friends live, and get your hands dirty — TOGETHER — so We The People can begin to see some unity of action on our behalf.

** Read all the blog posts and comments from We The People about how embarrassed and absolutely, positively fed up your constituents are about your behavior. Begin to mend relationships that benefit the jobless, the homeless, those with medical needs, those under water with mortgages, those paying all their taxes, the children without milk, and others who are heading into a downward spiral due to price increases everywhere in this country.

Perhaps, Mr. President and Mr. Boehner, if you heed one item on this list, that would be a start. Maybe if you just read it and noodle on the sentiment at the grassroots level, you’ll know that both of you are heading out the door because We The People are just plain old fed up.

Aren’t we?

Monday Meanderings

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I need to get this gobbledy gook out of my gray matter and on to yours for insightful comments. So much to take in in this changing world in which we live (how’s that for four “ins” in one sentence?).

1. Florida recently passed a law that requires mandatory drug testing for welfare recipients. Would that be a liberal or conservative approach to ensuring taxpayer dollars are being put to appropriate use and that people getting aid from states are drug free? Who cares? In this country today (U.S.) everyone is labeled for their stance on one side of the aisle or another offshoot. Can we please begin being logical instead of political?

    2. Prices are skyrocketing for durable goods and consumables. I’ve begun my own cost consciousness in the area of foodstuffs. I’m speaking with moms in the dairy section as I see them buying the store brand of yogurt, for example. When she tells me her kids snarf it up, I put back the more pricey Dannon and Yoplait brands and opt for the Kroger brand. I’ve already made the switch to Kroger bagels — six for $1.89 versus the Thomas or Sara Lee brands — 6 for $3.98. Really? My kid can eat Kroger bagels.

    3. Warren Buffett recently bailed out (if that’s possible) Bank of America with a major cash infusion to the tune of $5 billion. Is he aware of something we’re not? Should investors flock to the big banks that are drowning in mortgage crises, etc., and buy their stock? What does Buffett, head of Berkshire Hathaway, know as hit sits on top of the world with boatloads of cash?

    4. My kidlet just put $100 cash into her savings account, and then I got the bank statement. She’s collecting .01 percent on that money. It’s not even worth it, but where else should her money be saved? Where should all of our savings be saved? It’s a terrible conundrum; I’ve decided to reduce debt rather than sock money into my portfolio this year. Let the market play with what it already has of mine, and I’ll be saving money by reducing the inexcusable finance charges on credit.

    5. As China’s economy becomes more prosperous and its citizens become more oriented to material goods (and it’s happening), my opinion is that U.S. business will begin to pay more money to produce outsourced goods manufactured in China. When that happens, the economies of scale will not be as profitable. U.S. companies will want to manufacture again at home, but guess what? They can’t! Our manufacturing infrastructure is gone — outsourced and off shored. Can the U.S. ramp up again to be “made in America?”

    6. Remember that blog post I wrote last week about buying a vacuum cleaner? I did a social media search for manufacturers of sweepers and could only find Miele USA, a German manufacturer, on Twitter. In the comments section, I “took heat” from two independent resellers in local markets, and one suggested I buy local and support family-owned businesses. Someone on Facebook also suggested that. So, I went to the local indie reseller in the hopes of buying that Miele brand I’d never heard of. Instead, I was sold a Riccar — a U.S.-manufactured top-of-the-line vacuum no one has ever heard of. There is no advertising, social media, or marketing campaign to push the Riccar brand. It’s strictly sold by independent retailers, and “the money is spent on the product.” The salesman told me he services Dyson the most (every day), and Miele is not as strong in quality as they used to be because they off-shored manufacturing.

    7. In this week’s BusinessWeek (I know, it’s Bloomberg BusinessWeek), there is a graph “Graphing the Recession’s Impact” suggesting the “latest recession resulted in more lost jobs and output than any recession in the last 50 years…no other post-war recession has been as severe.” I’m not an economist, but can we please stop comparing the 2010 decade to 50 years ago, or even 10 years ago? We’re now in a global economy; no one has seen this type of teeter-tauter on the world stage ever — so, can we please start graphing this bunk based on today instead of yesterday?

    8. Also in BusinessWeek this week, a frightening headline, “The Slow Disappearance of the American Working Man.” Apparently, only 81 percent of men ages 25-54-years-old held jobs in July 2011. Ouch. Could part of this slide be affected by #5 here?

    9. And, lastly, we’ve seen the end of an era. I commend, applaud, admire, and wish peace upon Steve Jobs — the man who brought Apple into the limelight among the world’s consumers. Congratulations, Mr. Jobs; you are a revered and respected innovator. Thank you.

      Whew…what musings are clogging up your brain cells? Please share and comment to any of the above!

      (Image: MistyWisp.com)

      Small Business Ruminations About U.S. Economy

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      The news has been deafening these few weeks for investors, individuals, the world, and we small businesses. Deafening and frightening. The unknown is enough to dampen the best of spirits, and the waiting game will kill us. The volatility for no reason except for panic about Europe (and perhaps the fiasco that is the U.S. Congress?), has done nothing to ally our fears.

      Kraft Foods spent $19 billion to buy Cadbury PLC last year, and now it’s splitting in two. It is scaling back the merger of a high-end luxury item with every-day lunch meat to better compete in the global economy. Meanwhile, ground turkey is infected with salmonella and killing people. And, that behemoth Google is purchasing Motorola Mobility (yes, that kind of money is alive and well in this stinkin’ economy).

      Banks are now going to charge huge-scale investors a fee to stock pile large sums of cash apparently pulled from the too-risky financial markets. Shall we small businesses be following suit? Do rich investors know something we don’t? But, too much cash is not what banks want; in fact, they have to pay interest on that and with the truckloads of greenbacks pouring in…that means money is going back out.

      Individual investors have money stuck in the markets, and we’re subject to the high risks of the fluctuating volatility. Where else shall we put our money? The FDIC only insures up to a certain limit, and not all vehicles, money are insured! If a bank goes belly up, and you have more than the insured amount sitting in the bank, you lose (the traditional amount is $250,000). In our lifetimes, we need to have eight times that amount to comfortably retire. Can any of you say you’ll make it?

      Shall we buy gold? It’s a bit too late with the price sky high (now trading at $1600+), and you can bet people ran to melt their gold jewelry for an instant fix. Stories are all over the news with families forced to trade in family heirlooms and wedding rings.

      Shall we invest in real estate and hope the market turns? Real estate agents have been saying “there’s no better time to buy a house than right now” since 2006 believing the market to be at bottom, but they don’t really know. How about investments in rental units? Apparently, rental vacancies are low in some regions, like near military bases where there is higher need.

      Our financial advisors have never seen markets like this, so they tow the company line and say “ride the wave, you’re in for the long term!” Except, the graying of America has 50 percent of the nation’s population suffering from the demise of their portfolios. And, the wild ride is expected to remain volatile through 2013, say economists.

      I knew with absolute certainty the market would crash again; I rode the wave and the uptick felt good for awhile. For young peeps with the income to consistently invest, the markets are still something to consider. With the global economy now dictating market fluctuation (something the U.S. markets were not affected by eight years ago), no one can assess the health of their portfolios by looking at the U.S. economy only.

      What does this mean for us small business owners?

      We hire contractors; we hire service vendors; we purchase technology and services to run devices; we service clients; and we manufacture and sell products. Jobs? Yes, we create jobs, but these may not be full-time positions. What if our clients look to saving money and decide not to need contract work or decide to forego partnerships that have been in place for decades? These are the questions small-business owners are faced with in light of the current debacle that is the U.S. economy and economic future.

      While the news of late has been oriented to banks not lending to small businesses, the news today is that small businesses don’t want to add to their debt burden without comparable or higher sales to offset the debt.

      This roundup all came from one day of news stories in the Wall Street Journal. I’m a bit un-nerved for the first time about all this and wonder today about filling the queue for the coming year. We’ve been through a recent recession that we never really came out of healthily, but this time? We’re royally screwed, and I encourage small businesses to shore up and brace for the worst. It’s going to be a long haul, Friends.