Estimated reading time: 4 minutes

It's Only Common Sense: All You Need is Confidence

Editor's Note: To listen to Dan's weekly column, as you've always done in the past, click here. For the written transcript, keep reading...Here’s something that may surprise you. I’m currently reading The Tinkerers: The Amateurs, DIYers, and Inventors Who Make America Great by Alec Foege. At the beginning of the book, he writes: The canard that we don’t make anything anymore has a ring of truth since there is no denying that much manufacturing appears to have migrated to countries where the living wage is much lower than in the United States. But, in fact, more manufacturing still happens on American soil than in any other country on earth. United States manufacturers created $1.7 trillion in goods in 2009 according to United Nations statistics--outproducing China by more than 40%. So why is there a perception that Americans are losing the manufacturing battle?

The answer is simple; the solution is complex. The simple reason for America’s continued dominance in manufacturing is that U.S. companies have figured out how to manufacture goods with fewer workers. Productivity due to innovation has swelled dramatically over the last 30 years. Since the middle of 1979, when manufacturing employment hit its zenith with 19.6 million workers, the U.S. economy has shed over 8 million factory jobs. Meanwhile American manufacturers have abandoned industries with low profit margins, such as shoes, consumer electronics, and toys leaving emerging economies such as China and Indonesia to make these good at a fraction of what they would cost here.

American companies now churn out mostly expensive, specialized products that require skilled labor, such as computer chips, fighter jets, medical devices, and industrial equipment. Stateside companies also make anything that requires quick turnaround time, such as specialized parts for high-tech industrial lathes which are also made in the United States. Thanks to superior roads, reliable electrical grids and a steady supply of clean water American businesses excel at producing goods that must be world class.

The author goes on to say, “The motivations that Americans have had for creating solutions to the world’s problems are as varied as they are vivid. I suspect, as I detail in this book that what we’re really talking about is a crises of national confidence rather than a systemic failure.”

Amazing. I was stunned when I read that we still produce more manufactured goods here than in any other country on earth, not to mention that we produce 40% more than China. Why doesn’t it feel that way? Why is it that we seem to be in a decline? Why is that since the Japanese showed up in the 1970s, and then the Chinese and the rest of the region in the 1990s, we've felt that we didn’t have a chance? Why does it feel like we've been surrendering for almost 40 years?

I think I know the answer and I think Foege says it best: “We are in a crisis of national confidence rather than a systemic failure.” I could not agree more--it’s all about our confidence or lack thereof.

I’m not surprised that we lack confidence. The obvious reason is due to the hard times we've had in recent years, but I also think it goes back further. I know from personal experience that from the time the Japanese manufacturers showed up in the 1970s our customers began telling us how much better they were than American PCB manufacturers, not to mention all of the college professors who claimed they were so much better than us--a claim that wasn't quite true as, over time, it was realized that it was more a case of a 1950s economy versus a 1970s economy: Wages were lower, but that's it.By the 1990s, when the Chinese really came on the scene, these same people were literally rubbing it in our faces. Companies like IBM, Motorola, and Intel literally took the technology for building boards that we gave them and brought it to Asia to teach them how to build their PCBs at lower hourly wages. These are the same companies who were telling us we had to be better, and profitable, while meeting all the specifications and regulations that our Asian counterparts did not. Not to mention the illegal purchasing practices that they would actually brag about over drinks.

We have just gone through the greatest recession since The Great Depression and, although it has been over for at least 18 months, many still find it politically expedient to claim that things are worse than ever. How has that affected our confidence? We have seen some of our great car companies come back from the brink of disaster to reestablish their rightful place at the top of that market. That should make us more confident, right?

Now, as we come out of this recession, as we start to build up our economy again, we need to get that confidence back. We need to understand that we are still the world leader in manufacturing and can still make the best products in the world.

Let’s apply all this to our industry. Let’s make sure that we get better, that we do everything we can to be the best in the world. From basic, everyday customer interfaces to technology and quality, let’s make sure we dominate in what we do. Slowly and surely the playing field is evening out and, as always, we need to make we're ready to lead our industry--in America and around the world.

It’s only common sense.