Dispelling the Manufacturing Myth American Factories Can Compete in the Global Marketplace (1992) / Chapter Skim
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EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
Pages 1-8
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The Committee on Comparative Cost Factors and Structures in Global Manufacturing was formed to examine the relationship between manufacturing costs and global factory site selection decisions. The study was motivated by the argument that the United States has become or is destined to become a high-cost environment for manufacturing and therefore must specialize in high-value products.
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Access to lowercost direct labor continues, but its importance is waning first, because direct labor is Reclining as a proportion of total manufacturing costs and, second, because manufacturers are finding that other factors besicles cost affect their competitiveness. Manufacturers have begun siting factories offshore to gain access to markets, as well as access to manufacturing processes, skills, technologies, or components unavailable in the United States.
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Further, the Toshiba study demonstrates that the United States is actually a "low-cost" manufacturing location compared to Japan at recent prevailing exchange rates. Perhaps more importantly, the Toshiba study confirms that market access, almost regardless of manufacturing costs, is typically what draws foreign manufacturers to the United States.
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Lean production, the new approach to high-volume manufacturing pioneered by Japanese firms, is a systemic approach to manufacturing that recluces total costs and cycle time while increasing quality and flexibility.2 Lean production emphasizes continuous improvement in the total manufacturing system. Instead of focusing on traditional accounting categories such as labor cost and number, materials cost, or overhead, lean producers concentrate on other cost drivers, such as minimizing work in process, inventories, and materials waste.
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From page 5... ...
work force skills must be enriched continuously if the United States is to remain attractive. Protectionist policies must not be allowed to undermine the vibrancy of the United States as a "state-of-the-art market" one in which a variety of worId-cIass foreign and domestic manufacturers compete for the business of highly demancting consumers.
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Foster a favorable environment in the United States for competitive global manufacturers, foreign and domestic, by maintaining the macroeconomic conditions necessary to suslain a state-of-the-art market. The strong competition and healthy demand needed for such a market require stability and pre
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A skilled, educated work force is a critical component of a state-of-the-art market. The United States must maintain the necessary investment in its educational infrastructure to ensure that the supply of courses, materials, and instructors is sufficient to meet demand, not just for new graduates but for much of the existing work force.
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