> Constant pressure to hit quarterly performance targets meant that machine quality often suffered.
It’s not necessarily the case that greedy, ignorant MBAs came in and ruined everything. Like, if their practices were so inferior, then any domestic firm that didn’t get taken over by them should’ve had a leg up and could’ve dominated the domestic market.
Don’t you think the more likely source of “pressure” was the international suppliers who had lower costs?
> Aided by Reagan policy to aggressively outsource manufacturing from the nineteen eighties US manufacturing just imploded.
Was the policy to outsource everything, or liberalize markets and let firms and consumers more freely choose where to buy things from? Globalization has done quite a lot to lift people out of poverty and keep prices low.
Brand names carry weight for several years before the damage becomes apparent.
Often their cost cutting measures seem positive at first as it creates a profit uptick, but it's usually at the cost of the brand, so 3-5 years later things take a turn (once the consumer has figured out the brand can't be trusted anymore). By that point it's hard to put the blame on the appropriate person or identify the appropriate reason for a less profitable year.
I said it thousand times in different but related at root topics, quality and reliability are possible but why would somebody build something that would last forever? It’s more profitable to churn cheap garbage over and over specially when customers wouldn’t pay for quality products or when a new, more flashy and feature-rich one is launched everyday. It’s the same for electronics, fashion, cars, machines and anything. Manufacturers just push consumers to “desire” the brand new product but the grinder is spinning faster and faster and the landfills getting higher and higher.
In cases where it matters, it's still a competitive advantage. Consumers don't care, maybe, but companies absolutely do, for their business-critical tools.
> Like, if their practices were so inferior, then any domestic firm that didn’t get taken over by them should’ve had a leg up and could’ve dominated the domestic market.
There aren't infinite firms. Plus in the article, the previous paragraph goes into how the tooling industry was being bought up by conglomerates so the finite firms became even easier to count.
A company fitting your argument is Telsa. The existing firms weren't willing to canabalize their existing product lines so they didn't invest into EVs and now a domestic firm is eating at their market share. However, "Who killed the electric car?" is from 2006, there has been a lot of pent up demand for EVs that no domestic firm was selling to.
However, something also fitting your argument is Moneyball [1][2]. It's not until the 2002 season that teams start to use statistics to determine who to staff their roasters? The League is from 1876; it took 126 years of baseball before a team figured out how to use math!
> Don’t you think the more likely source of “pressure” was the international suppliers who had lower costs?
Well, the article agrees in that it says "By now, tools from Japan and other countries were as good as or better than US tools, not to mention cheaper and more reliable.".
However, R&D was also being cut prior to this so if you don't do any R&D and your products become uncompetitive it's probably because R&D was cut.
> Was the policy to outsource everything, or liberalize markets and let firms and consumers more freely choose where to buy things from?
Well, don't forget there are winners and losers when trading.
In this case the losers are the American Tooling Industry; the winners were everybody that bought from them lol.
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I do think this growth every quarter is a big problem though. The early observers of business cycle all noticed that it has its ups and downs. Pretending that there won't be a down and fudging the numbers so that you don't have any downs is going to cause future problems. Delivering not-finished lathes counts to me as fudging the numbers.
The main way for countries with higher wages to compete is through automation. You can't supply 1000 laborers at $2/hour, but you can supply five skilled mechanics at $50/hour.
The problem with this is that the 1000 people who had been doing the labor in the US for $25/hour don't want that to happen any more than they want it to move offshore, and they're the people with the skills to ensure the automation goes smoothly. So they resist and then lose to offshore manufacturing rather than domestic automation.
Which in turn causes the US to lose even more manufacturing jobs, because now that factory is in Asia and it's more economical for its inputs and outputs to be other factories in Asia.
The way out of this is to make sure domestic barriers to entry are low, so that you get more new domestic companies like Tesla that aren't stuck in this trap. Right now that isn't the case and Tesla is an exception that got there on hype and eccentric leadership, whereas what you really want is for domestic small businesses to be able to eat the lazy incumbent's lunch long before China does, and indeed to be able to eat the Chinese company's lunch by replacing a thousand low-wage workers with a handful of high-paid specialists.
> It’s not necessarily the case that greedy, ignorant MBAs came in and ruined everything. Like, if their practices were so inferior, then any domestic firm that didn’t get taken over by them should’ve had a leg up and could’ve dominated the domestic market.
In this instance, it was people like Icahn.
Machine tools were a very cyclical market. Consequently, they did well as part of a vertically integrated conglomerate where the profits could be booked over time and the R&D could be shared with the manufacturing parent. When forced to spin out and stand alone by corporate raiders, those companies were effectively doomed as you just ripped out their ability to do R&D.
In addition, people forget that the Japanese companies were very much not playing fair. MITI (Ministry of International Trade and Industry) and the keiretsu/zaibatsu companies were actively attacking the US companies--this was effectively governmental and monopoly collusion. This attack was to the point that they almost wiped out the semiconductor industry (which prompted the DARPA VHSIC project and later Sematech in response) for example. They did similar actions in the manufacturing industries but the government never responded with the same vigor.
> Was the policy to outsource everything, or liberalize markets and let firms and consumers more freely choose where to buy things from?
The policy was to fund the hell out of West Coast (high tech and mostly no unions) and to leave the Rust Belt (manufacturing and lots of unions) to rot.
I will be one of the first to line up to piss on Reagan's grave for the complete shit that he was. However, to be fair, NOBODY had any answer to the fact that manufacturing automated and could get by on two orders of magnitude fewer employees. Every country dependent upon manufacturing went through a horrible time (see: England and Thatcher for similar vitriol). In fact, nobody still has any answer 4 decades+ later. It's one of the reasons there are so many old, very angry MAGAs.
> Globalization has done quite a lot to lift people out of poverty and keep prices low.
At what local cost? Nobody in Cleveland gives a shit about whether someone in Africa is doing better when they can't make their house payment.
> When forced to spin out and stand alone by corporate raiders, those companies were effectively doomed as you just ripped out their ability to do R&D.
It would be just as fair to blame the original culture of having vertically integrated conglomerates to begin with.
If there is anyone who should be able to figure out how to automate manufacturing with a small number of workers, it should be a bunch of machinists. But you put them in a lumbering conglomerate and teach them that automation is the enemy because it will take their jobs. Then they take that same attitude into a smaller company that has to be leaner in order to survive and you've set them up for failure.
Whereas if you embrace it, instead of domestic buyers getting their goods from cheap labor in China, domestic and international buyers get their goods from automated domestic factories that employ fewer people per unit but make more units than ever before because they have globally competitive prices and the global demand when you can supply at a low price is enormous.
> Nobody in Cleveland gives a shit about whether someone in Africa is doing better when they can't make their house payment.
But the reason they can't make their house payment is the same kind of regulatory capture that they supported and caused them to lose their job, which in turn makes housing unaffordable because you can't outsource plumbers and electricians.
AR enables offshoring the smarts at least, you treat the person at the ___location of the work as if they were a robot ... until the robots get good enough, I guess ...
Not yet. Wonder where west would be if politics threw trades to the wolves and kept machinists. Maintain manufacturing prowess and build cheap factories.
Riffing on your last remark, the federal labor statistics list of Ohio occupations with the highest ___location quotients (prevalence in that area divided by prevalence of the same occupation nationwide) still shows machine tools related professions near the top. Surely that cluster of expertise would be in even greater demand if the national economy were to grow in that direction.
May 2022
Engine and Other Machine Assemblers
4.21
Multiple Machine Tool Setters, Operators, and Tenders, Metal and Plastic
3.79
Patternmakers, Metal and Plastic
3.23
Forging Machine Setters, Operators, and Tenders, Metal and Plastic
2.99
Heat Treating Equipment Setters, Operators, and Tenders, Metal and Plastic
2.91
Tool and Die Makers
2.81
Grinding, Lapping, Polishing, and Buffing Machine Tool Setters, Operators, and Tenders, Metal and Plastic
2.75
Sewers, Hand
2.71
Cutting, Punching, and Press Machine Setters, Operators, and Tenders, Metal and Plastic
2.70
> However, to be fair, NOBODY had any answer to the fact that manufacturing automated and could get by on two orders of magnitude fewer employees.
Hasn't the answer been tons more products being made? More product designers, more tool manufacturers, more people in charge of designing factories, more automation engineers, more robotics engineers?
More people supporting those products, more people in sales, more people doing packaging design, logo design, and so on and so forth.
(None of this is environmentally sustainable, separate discussion!)
It’s not necessarily the case that greedy, ignorant MBAs came in and ruined everything. Like, if their practices were so inferior, then any domestic firm that didn’t get taken over by them should’ve had a leg up and could’ve dominated the domestic market.
Don’t you think the more likely source of “pressure” was the international suppliers who had lower costs?
> Aided by Reagan policy to aggressively outsource manufacturing from the nineteen eighties US manufacturing just imploded.
Was the policy to outsource everything, or liberalize markets and let firms and consumers more freely choose where to buy things from? Globalization has done quite a lot to lift people out of poverty and keep prices low.