The relative economics of manufacturing the U.S. have turned. However, ingenuity is required to change the way that American labor works. Charles Fishman writes about a GE Appliance plant in Louisville, Kentucky.
Even then, changes in the global economy were coming into focus that made this more than just an exercise—changes that have continued to this day.
- Oil prices are three times what they were in 2000, making cargo-ship fuel much more expensive now than it was then.
- The natural-gas boom in the U.S. has dramatically lowered the cost for running something as energy-intensive as a factory here at home. (Natural gas now costs four times as much in Asia as it does in the U.S.)
- In dollars, wages in China are some five times what they were in 2000—and they are expected to keep rising 18 percent a year.
- American unions are changing their priorities. Appliance Park’s union was so fractious in the ’70s and ’80s that the place was known as “Strike City.” That same union agreed to a two-tier wage scale in 2005—and today, 70 percent of the jobs there are on the lower tier, which starts at just over $13.50 an hour, almost $8 less than what the starting wage used to be.
- U.S. labor productivity has continued its long march upward, meaning that labor costs have become a smaller and smaller proportion of the total cost of finished goods. You simply can’t save much money chasing wages anymore.
Both Bowman and Calvaruso knew something about “lean” manufacturing techniques—the style of factory management invented by Toyota whereby everyone has a say in critiquing and improving the way work gets done, with a focus on eliminating waste. Lean management is not a new concept, but outside of car making, it hasn’t caught on widely in the United States. It requires an open, collegial, and relentlessly self-critical mind-set among workers and bosses alike—a mind-set that is hard to create and sustain.
In the simplest terms, an assembly line is a way of putting parts together to make a product; lean production is a way of putting the assembly line itself together so the work is as easy and efficient as possible.
“We thought, ‘We gotta try something new,’ ” says Bowman. “ ‘We have to be competitive.’ ” Calvaruso put together a group that included hourly employees and told it to completely reimagine dishwasher assembly. The group was given this crucial guarantee: regardless of the efficiencies it created, “no one will lose their job because of lean.”
So the dishwasher team remade its own assembly line. It eliminated 35 percent of the labor.
What happened to the workers who were no longer needed for dishwasher assembly? Bowman and Calvaruso created another team and asked them to pick a dishwasher part they thought Appliance Park should, once again, be making itself. The team picked the top panel of the door—appliance people call it the “dishwasher escutcheon.” It’s the part you grab to open and close the dishwasher, where all the controls and buttons are. If you use a dishwasher, you touch the escutcheon.
The Insourcing Boom | Charles Fishman | Dec. 2012 | The Atlantic at http://www.theatlantic.com/magazine/archive/2012/12/the-insourcing-boom/309166/?single_page=true.