Shift in Focus
Need for speed, flexibility could bring manufacturing jobs back to the U.S.
Industrial and manufacturing jobs are leaving the United States. It’s a theme we’ve been hearing for years.
According to the Information Technology and Innovation Foundation, the United States lost 33.1% of its manufacturing jobs between 2000-2010, many outsourced to countries where labor is cheaper and employment regulations are less strict.1 The Bureau of Labor Statistics reported a net loss of 800,000 U.S. jobs since January 2009.2
But as costs overseas increase and organizations reassess business models, could manufacturing jobs be rebounding in the United States?
Maybe so, according to Michael Kotelec, executive vice president of DHR International, an executive search firm in Silicon Valley, CA. Jobs at all levels are gradually returning to U.S. locations among Fortune 500 companies, he said. The Bureau of Labor Statistics data show that about 303,000 U.S. manufacturing jobs have been created since December 2009.3
While organizations are still being cautious, the best CEOs are acting now, Kotelec said, because they foresee a "talent war" emerging as more organizations begin hiring.
"Companies are focusing on ‘strategic hires’ who can make an immediate impact on top and bottom lines from day one while creating a competitive advantage in the global marketplace," he said.
According to Kotelec, manufacturers are shifting to new sales systems that look to improve speed from idea generation to the final product. This shift, Kotelec explained, requires a new, globally integrated "factory of the future" that allows for increased flexibility on the plant floor, common practices and processes across multiple sites and production closer to the customer.
Organizations are now focused on increasing responsiveness to market demand, and customers are looking at total cost of ownership, extracting the maximum value rather than lowest price.
"Customers expect customization and immediate delivery, so speed and flexibility are competitive advantages," Kotelec said.
This has caused manufacturers to consider the entire value chain of their business model, and move designers, engineers and materials specialists closer to the customer.
"When you can include designers, engineers, suppliers and customers in the up-front design activity to get it right the first time, you greatly accelerate the transfer from prototype to mass production, saving significant sums while creating a competitive advantage versus offshore competitors," Kotelec said. "It’s difficult to do that quickly and efficiently across multiple time zones."
Furthermore, the industry is beginning to experience some drawbacks of outsourcing.
According to a study by consulting firm the Hackett Group, production in China in 2005 was 31% cheaper than in advanced nations. By next year, the gap is expected to be down to 16%—a difference that’s small enough for U.S. production to make financial sense again.4
With this increased U.S. competitiveness, an estimated 2 million to 3 million U.S. jobs could result in the next eight years.5
In a 2011 study by ASQ and the Metrus Group, a research and consulting firm, one-third of participating organizations said they had reversed course on at least one outsourced function because it failed to meet business objectives in productivity and quality.6
Despite signs jobs are returning, U.S. recovery will be slow going.
According to the Hackett Group, at the current pace of recovery, it will take 25 years to regain the U.S. factory jobs lost to outsourcing since 2000.7
Still, Kotelec said he believes U.S. manufacturing will regain some ground.
"When you consider everyone pays about the same for materials, cheap labor cannot offset productivity, collocation improves cycle times and our ability to be the most innovative nation in the world," Kotelec said. "America looks like a great place to manufacture in the future."
—Amanda Hankel, contributing editor
- Sam Weigley, Lisa A. Nelson and Alexander E.M. Hess, "These Products Are Still Made in the U.S.," Life Inc. http://lifeinc.today.msnbc.msn.com/_news/2012/07/03/12462699-these-products-are-still-made-in-the-us?lite.
- Scott Blackburn, "Wasserman Schultz Manufactures Jobs Figure," Factcheck.org, www.factcheck.org/2011/11/wasserman-schultz-manufactures-jobs-figure.
- David J. Lynch, "‘Reshoring’ of Jobs Looks Meager," Bloomberg Business Week, www.businessweek.com/articles/2012-07-05/reshoring-of-jobs-looks-meager.
- Jerry H. Seibert and William A. Schiemann, "Reversing Course?" Quality Progress, July 2011, pp. 36-43.
- Lynch, "‘Reshoring’ of Jobs Looks Meager," see reference 4.
Most Applicants Hail From Healthcare
Healthcare organizations again make up the majority of organizations applying for this year’s Malcolm Baldrige National Quality Award.
Of the 39 organizations that submitted applications, 25 are healthcare related, five are nonprofits or governmental agencies, three are educational organizations, three are service companies, two are small businesses, and one is a manufacturer.
An independent board of 478 examiners will judge the applicants in seven areas: leadership; strategic planning; operations focus; measurement, analysis and knowledge management; workforce focus; process management; and results.
For the first time this year—the 25th anniversary of the award—organizations that are candidates for the award also will be eligible for recognition of their best practices in six of the seven Baldrige criteria categories, even if they are not selected as an award recipient.
Recipients are expected to be announced in late November and honored at a ceremony next April in Baltimore. For more information about the award and profiles of previous award recipients, visit www.baldrige.nist.gov.
BY THE NUMBERS
The approximate number of certifications ASQ issued in the United States last year as part of its partnership with the Manufacturing Institute. ASQ’s 17 certifications and its complete training portfolio are included in the institute’s Manufacturing Skills Certification System. The institute and the 15 other partner organizations issued 84,738 certifications and various other credentials last year.
New Grading System for Patient Safety
To highlight the best and worst U.S. hospitals in terms of patient safety, a new grading system has been developed by a panel of healthcare experts.
More than 2,600 hospitals have been graded using publicly available data on patient injuries, medical and medication errors, and infections. They then receive hospital safety scores of A-F, which are posted at www.hospitalsafetyscore.org. Preliminary results showed that 729 hospitals earned A’s, 679 earned B’s, and 1,243 earned C’s or lower.
For more details, visit www.leapfroggroup.org/policy_leadership/leapfrog_news/4894464.
QP ONLINE ON PAPER
Eavesdrop on the Conversation
This month, listen to an audio interview with Stephen K. Hacker, author of the cover article, "Change Ability" (pp. 16-20), discussing more about the importance of the individual during an organizational transformation.
Quick Poll Results
Each month at www.qualityprogress.com, visitors can take an informal survey, and we post the results.
Here are the numbers from a recent Quick Poll:
"If you had to start a job search tomorrow, how would you feel?"
- Somewhat prepared but still nervous. 66.1%
- Panicked and unorganized. 16.9%
- Prepared and confident. 16.9%
Visit www.qualityprogress.com for the most recent poll question:
"What usually stifles change efforts at your organization?"
- Lack of planning.
- Limited financing.
- Little buy-in from team members.
- Uncommitted leaders.
Study Shows Need for Internal Consultants
To grow quality’s role and influence within organizations, the profession must develop closer ties to the specific business areas it serves and consults with, and it must leverage consistent, proven methods and formal approaches to projects and initiatives.
These were the findings of an Association of Internal Management Consultants and ASQ study that surveyed more than 800 quality professionals earlier this year.
Only 19% of survey respondents said their planning process was closely connected to their client organization’s process. This showed an opportunity for quality to strengthen those connections and grow partnerships with areas to which it provides internal support and advice.
Another 60% of respondents said they use consistent and approved methods when tackling projects and situations, and another 65% said they deploy a formal project management approach.
The authors of the survey indicated this as a key success factor in providing valued internal consulting-type services.
The survey also determined the top challenges to quality’s expansion of its role within organizations were:
- Cross-functional team building and management.
- Becoming known as a trusted advisor.
- Becoming more involved with planning activities of client organizations.
- Acquiring key change management skills.
More details from the survey can be found at ASQ’s Knowledge Center website at http://asq.org/2012/07/quality-management/internal-consulting-survey.pdf.
New CD Focuses on Environmental Standards
A new CD released by the International Organization for Standardization (ISO), "ISO Standards and the Green Economy," packages together the entire ISO 14000 family of environmental management standards, plus a collection of publications related to sustainability.
Developed by ISO Technical Committee 207 on environmental management, the collection includes 30 international standards or related documents, and a technical corrigendum. For more information, visit www.iso.org/iso/home/store/publications_and_e-products/environment_publications.htm.
APQC Announces 3 Grayson Medal Recipients
H. James Harrington, Deborah L. Hopen and Michael Perich were named the recipients of this year’s C. Jackson Grayson Distinguished Quality Pioneer Medal by the American Productivity & Quality Center (APQC), a nonprofit best practices and benchmarking research firm.
Harrington is CEO and chairman of the Harrington Institute consultancy and a past ASQ president. Hopen is president of Deborah Hopen Associates, another consultancy. She also is a past ASQ president. Perich is a consultant to Montgomery County Public Schools in Rockville, MD.
The medal recognizes people who have made a difference by passionately promoting quality and process improvement tools and concepts in education and not-for-profit sectors. For more details about the recipients, visit www.apqc.org/grayson-medal.
TAG ADDITION Ted Michaelis has been named a member of the U.S. Technical Advisory Group to ISO/Technical Committee 176 on quality management and the ASC Z1 subcommittee. Michaelis is a senior project manager of quality management systems at Long Island Forum for Technology in Bethpage, NY.
IN THE SR SPOTLIGHT This year’s Pathways to Social Responsibility: Successful Practices for Sustaining the Future has been released by ASQ. The publication showcases effective practices and case studies from organizations in different sectors that are integrating social responsibility into their missions. The latest edition features 12 companies, including two Malcolm Baldrige National Quality Award recipients, one ASQ Enterprise Member and an International Team Excellence Award Competition participant. For more information, visit http://thesro.org/sro-stories.
QUALITY IN ISRAEL The 19th International Conference of the Israel Society for Quality will be held Oct. 22-24 in Jerusalem. The conference will be conducted in English and Hebrew, with simultaneous translation in many sessions. For more details and to register, visit www.isas.co.il/quality2012.
REASON TO CELEBRATE National Healthcare Quality Week is scheduled for Oct. 14-20 to help celebrate the dedication of healthcare quality and patient safety professionals. For more information, visit www.nahq.org/membership/content/celebratehealthweek.html, a website that includes ideas about planning events to mark the week.
BUSINESS-TO-BUSINESS MATTERS A new International Organization for Standardization (ISO) standard and technical specification (TS) was written to help build confidence between partners in business-to-business dealings, and provide support for trade regulations. The new standard, ISO/IEC 17020:2012, and the new TS, ISO/IEC TS 17022:2012, relate to specific aspects of conformity assessment, which refers to the processes used to demonstrate that a product, service, management system or organization meets specified requirements, such as those of a standard. For more information, visit www.iso.org/iso/pressrelease.htm?refid=ref1569.
Who’s Who in Q
NAME: Julie A. Furst-Bowe.
RESIDENCE: Edwardsville, IL, with a summer home in northern Wisconsin.
EDUCATION: Doctorate in work, family and community education from the University of Minnesota.
CURRENT JOB: Chancellor, Southern Illinois University-Edwardsville.
INTRODUCTION TO QUALITY: Becoming a Baldrige examiner and having a leadership role in the University of Wisconsin-Stout’s quality journey toward becoming the first university to receive the Malcolm Baldrige National Quality Award.
PREVIOUS EXPERIENCE: Provost and vice chancellor for academic and student affairs, director of assessment and continuous improvement, and faculty member at UW-Stout.
ASQ ACTIVITIES: Member of the Education Division leadership team; author and reviewer for Approaches in Higher Education journal; author for Higher Education Brief newsletter; co-chair of ASQ STEM Conference; and instructor for the ASQ course, Baldrige Self-Assessment for Higher Education.
OTHER ACTIVITIES: Member, Civic Progress in St. Louis; member, leadership council of Southwestern Illinois; board member, Southern Illinois University Edwardsville Research Park; judge, Wisconsin State Quality Award; and member, SHSH Health Systems quality committee.
PUBLICATIONS: Has edited, written and contributed to several books, including co-editing Advancing the STEM Agenda: Quality Improvement Supports STEM (ASQ Quality Press, 2012). Also a regular contributor to ASQ newsletters and publications, including Higher Education Brief.
RECENT HONORS: Outstanding achievement award last year from the Wisconsin Women in Higher Education Leadership organization.
PERSONAL: Married for 25 years to Daniel Bowe.
OTHER ACTIVITIES: Reading and walking.
QUALITY QUOTE: Successful organizations and successful individuals are guided by a long-term vision yet have the discipline to systematically evaluate and improve their operations and actions on a daily basis. They also create an environment that encourages and supports lifelong learning for individuals and the organization.