The crowd at Purdue’s Advanced Manufacturing summit is a mixture of young and old, plenty of guys in dark suits, white shirts and ties, mingling with more informally-dressed (and younger) types. There is a level of enthusiasm that belies the conventional wisdom that manufacturing is dead. Everybody is talking about deals, and the talk reflects a web of connectedness that, at least to my eyes, seems a hallmark of the Indiana business community. “He goes to my church….” “Our kids are both on the same baseball team….” “He lives right down the street….” This is not Manhattan… or Silicon Valley, for that matter. And it seems to work.
To prove this point, Dr. John Sullivan’s opening remarks bombard the several hundred attendees with statistics. We learn that Indiana spends $8,000 in incentives per job, down from $37,000 in 2004 and a measure of the Indiana Economic Development Corporation’s increasing efficiency in luring manufacturers to the state. The average wage for each new job commitment is $21.87. Twenty-nine percent of the university’s R&D is supported by industry, a much higher figure than the national average. And so on.
There is also a lot of talk about how important the manufacturing sector is to the U.S. economy, not to mention Indiana’s, which has the highest number of manufacturing jobs per capita in the country.
Sullivan, playing on the fact that student grades have just been handed in by Purdue’s professors, offers up a pop quiz with questions like, “If the U.S. manufacturing sector were a country, where would it rank in world economies? It’s multiple choice, and of course I’m not at liberty to reveal the answer, but the point is that for all the talk about China, India, et. al., the U.S. is doing pretty darned good.
How could we do better? Sullivan reveals the results of a recent study of what characteristics are shared by successful manufacturing companies. The highlights:
- Companies that are adept at responding to changes in orders or order volume are more profitable.
- The frequency of meetings between production and engineering groups is associated with higher profitability.
- Companies that produce a high proportion of customized products are less likely to be highly profitable.
- High tech approaches to connecting with suppliers are associated with higher profitability.
At times I got the impression that the speakers were preaching to the choir. There seemed to be great respect among the audience members for leading-edge best practices and for every mode of innovation. Some attendees even had titles like Director of Continuous Improvement.
Doug Hall, a brilliant, if somewhat confrontational consultant on manufacturing innovation, attempted in his keynote address to throw a little cold water on the optimism that ruled the day. He began with a question that every business owner should probably think about at least once a month: What would happen if you lost your number one customer?