No. of Recommendations: 14
This is in my wheelhouse given that I have been in manufacturing life long.
My humble takes on declining productivity and simply dwindling manufacturing
1. US and European manufacturing have adapted very poorly to the salient shift from high volume to high variety production. A number of reasons for this and IMO, the single biggest culprit is that the accounting paradigm hasn’t budged much from (don’t shoot me) the Ford Assembly Line inspired system. Accounting for reporting up and out remains firmly in control, while it wouldn’t be a stretch at all to say that actual, real product and process costs are unknown.
2. The result of distortions in accounting and ensuing behavior at the shop floor shows up in many ways; capital allocation which has been discussed is a notable one. Wasted, inappropriate, underutilized, over complicated capital is significant. Especially in the reality of high-mix low-volume production. Robots are generally terrible at being changed over but impressionable managers are patsies in the hands of equipment sellers, FOMO etc.
I have other observations but is unlikely to keep folks engaged. For those in the know, there’s one company's that has entirely bucked this perverse trend and that is Toyota. For those interested, I cannot recommend reading up on the evolution of Toyota since WWII. Something to chew on, Toyota started moving production to the USA and across the globe starting in the 1980’s while the competition was going the opposite direction- away. This was done primarily because Toyota recognized the hi-mix world was here to stay and was going to be higher-mix(variety) and tattooed that into their DNA. While much of the traditional manufacturing industry remains mired in the ethos of volume production, in perpetual denial.
Sorry for the rant.
Great topic for discussion.
