The global supply chain has taken a lot of political hits for shuttering U.S. factories and job loss. The assumption is that the global supply chain is advantaged by unfair trade deals.
What has been lost in the political rhetoric is how the global supply chain has kept product prices low for all Americans. From Apple to Walmart, Americans are paying much less for higher quality products generated by the intense price competition inside the global supply chain.
The real (non-political) question is how can America keep its lower consumer prices and win back global manufacturing leadership?
How The Global Supply Chain Is Saving You A Lot of Money
Apple, and its CEO Tim Cook, provides a world class example of how the global supply chain works. Cook joined Apple as COO with responsibility for developing reseller/supplier relationship strategies. In this role he implemented a strategy to create intense price competition and increased efficiency. He did so by cutting Apple’s then current number of manufacturing suppliers from 100 to 24. The winning 24 manufacturing suppliers won based on price, quality and the ability to deliver product into Apple’s just-in-time inventory system. Today that inventory system moves a product from the manufacturer’s location into a customer’s hand in five days. The result is a smartphone that is both affordable and a key tool that advance American efficiency and productivity.
This same type of global supply chain has been adopted by every company you shop with including The Home Depot, Walmart and Ford. At one time America was plagued by annual inflation that continuously pushed prices higher. Today’s global supply chain with its intense focus on cost, efficiency and inventory management is a major reason why what you pay at the cash register is not rising.
Smart Factories Will Dominate The Global Supply Chain
An obvious question, especially if you lost your manufacturing job or your town has a shuttered manufacturing plant, is whether the global supply chain is fair to America? There is no question government policies in the 1980’s enabled foreign manufacturers to undercut American manufacturers’ prices. Correcting that historical wrong is the political focus for returning manufacturing jobs to America.
Unfortunately, that focus will fail to achieve the scale of intended job growth unless Americans are willing to pay much more at the cash register.
The proposed border tax is actually a consumer tax. It charges consumers more at the cash register for imported goods. This will make higher cost American manufactured goods more price competitive. The end result is that we will pay more so that America manufacturing can be more price competitive.
The smart factory is the nail in the coffin in this consumer tax plan. The global supply chain is massively moving into smart manufacturing. Smart manufacturing achieves lower costs and higher product quality by using artificial intelligence, smart optics, predictive software and the Internet of Things to displace manual labor with machines that learn. For example, Foxconn is Apple’s largest manufacturing supplier. They have just released 60,000 workers at their China plants by replacing them with machines that learn.
The great news for America manufacturing is that America can be, and will be, highly competitive in developing smart factories. A global supply chain mega trend is to achieve lower costs by moving smart manufacturing to the country where products are purchased. This path to lower manufacturing costs can make America a world leader in smart factories if we have the skilled workers to run smart factories.
Here is the manufacturing reality that America must face. Lost manual labor manufacturing jobs will not return in significant numbers because smart factories need fewer manual laborers. Smart factories are operated by people with skills in quantitive analysis, predictive software and smart machine maintenance.
U.S. Needs Smart Workers, Not Import Taxes, To Restore Jobs
Training workers to operate a smart factory is the key to returning manufacturing to the U.S. It is also the key to growing good paying manufacturing jobs.
Today, America faces an employment gap. Our existing smart factories are searching for workers with tech skills. Too many of our unemployed or underemployed workers do not have the needed tech skills. The result is a lot of good people working in lower paying jobs while higher paying tech jobs go unfilled.
What America needs is a tech based Marshall Plan that retools American workers to fill the higher paying jobs that are going unfulfilled. The Marshall Plan was the investment America made in Europe to restore technologies, infrastructure and businesses after the devastation of WWII. America needs a similar plan to massively invest in training its workers to work in smart factories. This will make America manufacturing great again. This will create the good paying jobs that our American workers should be winning within the global supply chain.
About the author
Bill Roth is a clean tech pioneer who led the team that launched the first hydrogen fueled Prius. He is a featured contributor on Triple Pundit and Latin Business Today. His book, The Secret Green Sauce, has been used by thousands of business people to implement proven green best practices that make money and a difference. Bill’s latest book, The Boomer Generation Diet, is his personal story on how to achieve sustained weight loss while still having fun and living more. The book’s ten customizable best practices are the sustainable solutions to our national weight crisis that threatens our health and medical cost bankruptcy.