August 15, 2006 | Mark Paradies

Why is Manufacturing Leaving the US? … And What Can Be Done To Stop the Trend

Why is Manufacturing

Leaving the US?

And What Can Be Done To Stop the Trend

Many say the end of manufacturing in the US is the natural and inevitable result of a global economy. They say manufacturing, which is heavily labor dependent, will seek the cheapest labor.

But this is NOT the whole story. Most manufacturing is as capital dependent as it is labor dependent. And with more automation every day, labor costs are less of a factor than they once were. Instead, I propose that 3 other factors are just as important:

• The Cost of Expensive Regulations

• Too Little Investment in Improvement

• Equipment Unreliability

First, the US regulatory burden, especially unnecessarily expensive environmental regulations, are almost non-existent in third world countries.

Second, US manufacturers, in an attempt to cut costs, have failed to invest in problem solving technology like advanced root cause analysis. Thus problems that could have been solved to cut costs happen over & over again while manufacturers implement ineffective, wasteful fixes.

Third, the cost of unreliable equipment at facilities is an unrecognized source of expense that magnifies labor costs. If manufacturers had more reliable equipment, productivity would improve (people wouldn’t waste time waiting around for frequent repairs).

The solution for two of these problems isn’t difficult or expensive. The second and third problems can be solved by using TapRooT® and Equifactor®. Call Ken Reed at SI (865-539-2139) or e-mail him by using this web site.

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