An old friend takes our columnist on a trip through time.

Better Manufacturing
“What a long, strange trip it’s been.” – Jerry Garcia

A few years ago, I reconnected with one of my best friends from high school, Ross Miller. When we finally got together, after 30 years, we picked up right where we left off. Topics included memories of growing up in Elizabeth, NJ (in the shadow of the Exxon refinery), the underground school newspaper we started our senior year (my first foray into journalism), Jean Shepherd, politics, and what we’ve been doing in our respective lives and careers the last three decades.

Ross ultimately wound up with a doctorate in economics from Harvard. He did some time at General Electric and wrote two interesting books: What Went Wrong at Enron and his pride and joy, Paving Wall Street. In addition to consulting in economics, Ross is now a finance professor at SUNY-Albany. A few months ago, Ross invited me to participate on a panel. It meant some more quality time and sounded like fun.

The topic was the implications of globalization and outsourcing. Most of the audience was MBA-level graduate students. There were also a number of undergrad business students and professors. All the MBA students had read The Earth Is Flat, the (for the most part) excellent book by Thomas Friedman that is currently required reading at quite a few business schools.

Questions came from the moderator and audience, and most of my answers tended toward the anecdotal (Ross told me that grad students love stories). In my 30 years in the industry, much has changed. Obviously the technology evolves, but so have the ebbs and currents of the business side.

For example, when I started, in the mid 70s, we were in the midst of the Cold War, and the U.S.’s most formidable business competitor was Japan, though quite a few people were wary of Germany. While Gerald Ford urged us to Whip Inflation Now (WIN), there were mutterings of “the Volkswagen succeeded where the U-boats failed” and mock headlines like “Japan Buys Pearl Harbor.” Indeed, insofar as consumer electronics, the Japanese were setting the pace. One popular saying in California was, In the U.S., there are 10 lawyers for every engineer, and in Japan there are 10 engineers for every lawyer. (One could state that on our shores, that remains a problem.) Coinciding with products both in and from Japan getting more expensive, we experienced growth in offshore outsourcing, primarily to Southeast Asia, Hong Kong and Taiwan. And Mexico competed for the lowest cost labor.

Throughout the late 80s and early 90s, the Asian “Tigers” grew. But back then, who’d have ever thought where China would go? “Red China,” with its Maoist communist government and decidedly different business culture. While at Vitronics in the late 80s, I specifically remember dealings with a Chinese “company.” They were escorted to equipment manufacturers in the U.S. by a special agency that worked out of Washington and served as translators. The five-person delegation, from what their business cards proclaimed Peoples Radio Factory Number 23, wore Western-style suits and had Western business titles such as director of engineering. Of course, one was a ringer – not part of the “company” but rather a representative of the Party, making sure that no one defected. (He was easy to spot: He didn’t ask any questions.) The Chinese electronics industry has come a long way.

There were quite a few questions asked, ideas expressed and stories told that were interesting and pertinent, but much more than I can explain here. It was important to discuss how outsourcing continues to evolve; that China is certainly not the “end all” (for a lot of reasons); that India is promising, despite the slow transition from Indira Ghandi’s Soviet-style socialism imposed in the 70s (plus that nation is not nearly as “wired” as Friedman implies); that Vietnam, with an infrastructure that has origins with the French occupation, is receiving quite a bit of attention. The rest of Southeast Asia, particularly Malaysia and Thailand, are still kicking, as is Mexico. One horse I’m betting on, assuming its government gets its act together, is Brazil. Twenty years from now, who knows – it could be Jordan, Iran, Kazakhstan, even the U.S.!

The final question was perhaps the most poignant:  What advice would you give to MBA students about to embark in a globalized world? My spontaneous response: "Learn Mandarin! Or Spanish." As my mind shifted into gear, I elaborated: “Be open-minded and be a participant in the world. There is no place for myopic thinking and the ‘Ugly American’. Think for yourself, but take into account and try to understand the other person’s perspective. For example, if you’ve read Barak Obama’s book, hear what Bill O’Reilly has to say. If you think Rudy Guiliani is ’the man’, read Freakonomics. Form your own set of ideas and values and don’t get caught up in labeling. Above all, make an effort to effectively communicate. This means listening and thinking as well as speaking. Always remember, we’re all in this together.”

Phil Zarrow is president and SMT process consultant with ITM Consulting (itmconsulting.org); itm@itmconsulting.org. He still bears the scars, physical and mental, of reflowing convection/IR ovens. His column appears bimonthly.

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