But buried in this eloquent, heartfelt speech are also what I see as relevant, important warnings about caring for our national manufacturing and innovation capabilities.

Before I share those overlooked gems, it’s important to understand the unique perspectives Eisenhower brought to the presidency, and his motivations for delivering such a poignant, sober farewell before hittin’ the bricks. It’s also important to suspend both our individual opinions on the value of military service to the office of the President and our opinions of Eisenhower’s politics.

• Eisenhower was the Supreme Commander of Allied Forces in Europe during World War II. The fact is, Ike witnessed first-hand a brand of war, mass destruction, and inhumanity on scales the world had not seen before nor has seen since. (And please consider he also served during WWI, although he saw no combat.)
• He oversaw the dismantling of the German (Nazi) war machine – an extraordinarily effective but insidious political, military, and public relations organism – including the liberation of the mechanism of the Holocaust.
• He not only witnessed an extraordinary ramp-up of technology and the infrastructure to create it, but also utilized those technologies through the course of his career.
• As President, he spear-headed the development of our national highway & interstate system, and presided over the creation of DARPA (which, in turn, begat the Internet).
• He was the only former military general elected US president in the 20th century.

The man had seen and known what ‘man’s inhumanity to man’ really meant, from the ground up to the highest levels of government. Up close. And he saw the good that we are capable of.

At the end of nearly 50 years of service, Ike felt the need to give this parting message – through a prism of experience that few others ever had.

In his address, just after the call to beware the military industrial complex, is a series of 3 paragraphs that warn of the hoarding and control of our national innovation engine (emphasis mine):

“Today, the solitary inventor, tinkering in his shop, has been overshadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers. The prospect of domination of the nation’s scholars by Federal employment, project allocations, and the power of money is ever present — and is gravely to be regarded.

“Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite.

It is the task of statesmanship to mold, to balance, and to integrate these and other forces, new and old, within the principles of our democratic system — ever aiming toward the supreme goals of our free society.”

If there is a common theme in Eisenhower’s address, it’s ‘balance’ – balance between these emerging powers and the populace, to maintain equilibrium and sustain the components of a wholesome, thriving economy. He spends a great deal of time warning of the consequences if that balance is allowed to shift too far to either side.

Today, we see an imbalance that favors those with influence to offshore our innovation engine, establish seemingly ludicrous trade & economic policies, and place inordinate burdens on small & medium sized manufacturers. We see distinct advantages to those that have the wherewithal to consume and deploy technology over those with limited access.

As I’ve said may times, I’m an unapologetic capitalist. I believe in free (and fair) markets. But take a drive through Detroit or Youngstown with the top down, and tell me free markets did that.

Watch Eisenhower’s complete address below. Listen for these 3 paragraphs in it, and consider the context of the time and his perspectives as a witness & participant to history.

While his call to be wary of the military industrial complex has seized the attention over the years, I find his warning to protect ‘the solitary inventor, tinkering in his shop’ to be just as compelling. And just as important.

(For the text to Eisenhower’s Farewell Address, go here.)

Not only are they direct and, of course, extraordinarily well-written, they’re still awfully relevant.

They come from letters that Jefferson wrote between 1815-16. I hope you enjoy them as much as I have.

“Experience has taught me that manufactures are now as necessary to our independence as to our comfort; and if… [we will purchase] nothing foreign where an equivalent of domestic fabric can be obtained without regard to a difference of price, it will not be our fault if we do not soon have a supply at home equal to our demand, and wrest that weapon of distress from the hand which has wielded it.” –Thomas Jefferson to Benjamin Austin, 1816.

“The prohibiting duties we lay on all articles of foreign manufacture which prudence requires us to establish at home, with the patriotic determination of every good citizen to use no foreign article which can be made within ourselves without regard to difference of price, secures us against a relapse into foreign dependency.” –Thomas Jefferson to Jean Baptiste Say, 1815.

“I have come to a resolution myself as I hope every good citizen will, never again to purchase any article of foreign manufacture which can be had of American make, be the difference of price what it may.” –Thomas Jefferson to B. S. Barton, 1815.

And, these days, it sure seems like the inmates are running the asylum.

On the one side, there are the consumer economy & free market economists – who believe a services-based US economic utopia is not only sustainable but is a also a wealth generator. Let’s call them Pure Economists (PEs). They see the loss of manufacturing the same as our shift from an agrarian society, inevitable and preferred (although the US is still the world’s top exporter in this regard). To them, the global distribution of industrial capacity will create new markets, lower costs, and create a universal tranquility – countries will play specific roles and will feed global supply and demand chains as one, organic unit. (PEs also include many government entities that respond to this influence and support these initiatives.)

On the other, there are the makers. The creators. Let’s call these folks Pure Manufacturers (PMs). The people that buy the equipment, run the plants, compete for work or market share, and employ other makers to serve and advance the enterprise. Oh yeah … and to make the stuff that brings in the dough that the bean-counters count. This is the side that understands intimately the effort, challenges, and complexities of translating raw materials via technology into valuable stuff.

The struggle in the US between these two groups is as old as the US itself. As a matter of fact, it’s as old as civilization. But these two perspectives are equally necessary to create a balanced, healthy society and the economy that it serves. It’s that balance between the sides where most value is attained.

But something has changed, and it is this fact that causes me to wanna slap a puppy: one side has almost completely dominated the influence, governance, and control at the expense of the other.

This domination can be seen and heard in many subgroups and sectors of the US manufacturing strata:

• Large vs. small manufacturers – The fact is that large & small manufacturers are completely different from each other, in terms of economics, resources, cash, capabilities, and the wherewithal to pivot and innovate. And yet, they all live under many of the same tax and regulatory systems that are more burdensome to the small guys due to their lack of resources. Large manufacturers are run, primarily, by PEs – just ask Bob Lutz. Game: PEs.
• Manufacturing employment – The US manufacturing base in the US was gutted due to many factors, but primarily because of trade & economic policies that favored the offshoring of production in favor of cheap labor (i.e., greater corporate margins & profits). These policies (or the influence to create the opportunities) favored those best able to afford establishing and managing the complex supply & demand chains of overseas. And leaving those that could not compete left to cope. Also, it’s a buyer’s market for employers that is resulting in lower pay for their shopfloor talent.  Set: PEs.
• US economic & competitive posture – When pure profits are measured, we’re kickin’ booty. Well, at least according to the PEs. But in terms of holistic or macro measurements, we remain in a compromised position in terms of our economic and social stability. We are seeing little meaningful improvement in our manufacturing employment – our trade deficit continues to grow, which directly indicates that noble efforts toward reshoring production to the US is having only marginal impact in the face of US trade policies – or the lack thereof. Match: PEs.

Here’s an example of the chasm between PEs vs. PMs: A recent, popular PE explanation for the loss of manufacturing jobs over the last 20 years is that automation has simply resulted in the need for fewer shopfloor workers. The danged argument just won’t go away. Well, let’s try this again (I’ve already challenged this assumption once in a previous post). Check out this graphic, with manufacturing jobs data from the BLS:

Let’s look at manufacturing employment from 1939 to now. In the chart above, the blue lines indicate recessions in the US economy. From the outset of World War II, manufacturing maintained robust employment – with few exceptions – for the next 50+ years. As an example of formidable technological impact, I’ve included the introduction of mass computer numerical controlled machining technology in the manufacturing markets (green line).

So here’s the rub – in all that time, automation remained stagnant enough to have no impact on employment? The introduction of CNC machine tool and production line & material handling automation had no impact on manufacturing labor until the last 10 years? Who – that has any sense of how things are designed and built – really buys this? We’re expected to accept the PE premise that some heretofore unknown breakthrough suddenly transformed us or was finally mastered to allow us to create that which we consume and use, with this drop in employment?

Well then, beam me up. Please.

The fact is, moving production offshore resulted in our job losses to levels not seen since before WWII. And if people aren’t still critically important to making things, why did we move those manufacturing jobs to be performed by other people?

Look, balance is key. But we’re not getting much of that these days. Not in government, not in business, not in politics, and we sure aren’t getting it in finding solutions to our manufacturing malaise. Instead, economics metrics and perceptions are dominating our conscience. We must make room again for manufacturing’s influence on policy.

Life, business, and the open debate our culture embrace make for messiness. That’s the way things are supposed to work. We slug it out, and we find solutions. Or at least we should be.

Both PEs and PMs are necessary to find sustainable solutions, not to duke it out and win for one side. I don’t want a PM developing intricate economic policy, anymore than I want a PE setting up a 5-axis Mori that’s gonna cut parts for the airframe of a plane that’s gonna carry my son through the sky at 600+ mph.

These two sides need to start facing off and working together. If not, we’re doomed to barely distinguishable recoveries, lethargic job growth, and no beans to count.

The passions run deep. Home-commuting advocates cite growing numbers of ‘homies’ and reports of improved productivity. While opponents of telecommuting point to the loss of corporate control, a lack of accountability, and reduced one-on-one collaboration &, in turn,  innovation.

I am struck by the similarities between this debate and the reshoring of manufacturing to the US from overseas in response to offshoring it in the first place.

Man, life is rich, ain’t it?

Let’s dissect this issue and transpose those elements to reshoring, and you’ll see what I mean.

First, Yahoo! & Best Buy both state that they want to improve their business posture. To do that, both claim that face-to-face is the best way to go. Isn’t this the same argument used to support the reshoring movement – that separating production from design & engineering has severely hampered innovation & development of new products or services?

And what about quality? In manufacturing, the reworking or scrapping of poor quality add significant costs that often aren’t easily attributed to outsourced production. That’s partly what Total Cost of Ownership is all about, and it sounds to me like these two companies have decided to mitigate the risk that quality is being stunted by extended & separated work groups.

Supporters of telecommuting say that never before has technology allowed for the ‘virtual workplace’ like it has today. Intranets, extranets, email, IM, and other internal communications systems and platforms, they argue, make engaging & collaborating with groups, divisions, peers, and employers as or more productive than in the traditional workplace. But didn’t we hear this before – that offshoring would lower prices for goods & services and make this a consumer Utopia? Just because we CAN do something, doesn’t mean we should. After all, what might we lose in the process?

The short answer is: in most cases, a lot.

Like reshoring – with its extended supply chains and inherent, unintended consequences – telecommuting can often lead to lapses in efficiency that are difficult or impossible to measure effectively. If these two issues are alike, and I believe they are, then what Yahoo! and Best Buy are doing amounts to bringing their ‘producers’ together. To overhear unexpected conversations. To learn from & adjust to mistakes. To influence. To be influenced. And to reap the rewards that come from kismet.

I understand that telecommuting is ideal for some positions, companies, divisions, groups, or industries, just as I believe that some offshore production is vital to our economy – for manufacturing in or closest to markets of consumption, for example. And I’m sure that there are examples of telecommuting that have been wildly successful.

But it’s entirely unsurprising to me that these folks have recognized some of the total costs that have resulted from across-the-board telecommuting policies, and that they now feel the need to pivot away from them. And expect to hear from more companies following THIS lead in the near future.

In the end, both arguments are about balance and value to stakeholders. Is it in the overall good of the corporation, the employees, investors, the customer, and the entire country to extend oneself as a matter of convenience, seemingly reduced costs, or altruism? Maybe.

But we’re human beings, for better or worse, and we’re are social. We respond to each other and to the company of others. We aren’t meant – in most cases – to work in isolation. That can work if you’re Picasso or Hemingway or Leonard Cohen. But we ain’t them. Put another way, can you imagine the outfield of the Cincinnati Reds telecommuting to spring training?

And I suspect that ultimately many companies instituted virtual workplaces primarily because they saw others do it – just like how much of the offshoring of our manufacturing base happened 30 years ago. “Hey, that guy must KNOW something. We better do what he’s doing.” And off they went, without the due diligence, the support systems, or the teams to support them.

As for reshoring, the ability to manufacture and innovate are critical to any sovereign country of consequence. Similarly, these abilities are equally critical to most any company that wants to succeed, grow, compete, and survive.

Here’s to hoping that those involved in both of these issues come to the same, sensible conclusion.

But, to me, this one’s a no-brainer.

On January 30th, 2013, a powerful storm front moved through the southern US and wreaked havoc on communities from Arkansas to the East Coast. Within the front, a massive tornado formed in northern Georgia. In it’s path was Daiki, a metal fabricating shop located in Adairsville, about 60 miles north of Atlanta.

Today, Daiki is barely here.

For some perspective, take a look at this picture from an article & slideshow on the Huffington Post. And while you’re at it, imagine that this is your shop. Or your co-workers. Or your family. Or your friends. Or you.

Over the last 30 years, the US manufacturing base has been decimated through offshoring and chasing cheap labor. We lost a lot of manufacturing plants since. There are those trying to help with that, fighting the good fight, like Harry Moser at the Reshoring Initiative and other US manufacturing advocates.

But what about when tragedy strikes, something that has nothing to do with greed, miscalculations, poor business chops or resisting progress? Who lends a hand, gives ‘em support, provides comfort?

I’ll tell ya who. It’s us. It’s you, me, and everyone else that’s fortunate enough to live and function in the US manufacturing tidal pool.

There are tragedies every year, sure. I’m certain that Daiki isn’t the only manufacturer to catch a tough break on January 30th. Small and medium sized manufacturers have been smoked by disasters a lot lately. Sandy, other weather events, massive wildfires …

But I’m focused on Daiki right now. They need our support. They need to know that they aren’t forgotten or ignored. They at least need to know that the fellowship of US manufacturing gives a damn about them, that we realize they are people with families, and they’re in for a rough patch.

Will you reach out to them? Will you let them know that you’re pulling for them? Maybe just shoot them a message through their Web site? Or call them at 770-773-9000? Or how about a small donation to support Daiki and the Adairsville community?

(To add to the desperation, I just tried to send emails to Daiki through their Contact Us page. It was returned as undeliverable. But I’m gonna keep trying.)

Or maybe there’s a manufacturer in your community that’s facing an uphill battle to rebuild and come back from the unexpected or unthinkable.

Right now, there are people that are the backbone of US manufacturing that aren’t sure what their future holds. The least we can do is let them know that we’re with them now.

Go ahead. Reach out.

Actually, it’s not the motivations behind their actions I find so interesting; it’s the contradictory responses of government & politicians toward both tactics that I find ironic.

Now, I know that unpredictable behavior by governments & politicians aren’t news. But what I’m seeing, I believe, speaks volumes about control, intentions, and who was responsible for moving our production & innovation bases to low cost countries in the first place.

In case you’re unaware, 2012 saw some dramatic increases in citizens expatriating from their home countries to those with lower personal tax rates. For example, this past Spring facebook co-founder Eduardo Saverin renounced his US citizenship & moved to Singapore. At the time, two US senators accused him – quite vocally – of dodging taxes on profits made from the facebook IPO.

As 2012 progressed, the number of Americans renouncing their citizenship has exploded over previous years according to various sources.

But rest easy, fellow patriots. Our government and representatives are on it. As a matter of fact, they’re on it like Alex Karras on a buffet at Ponderosa.

In economics, the Laffer curve is a representation of the relationship between possible rates of taxation and the resulting levels of government revenue.

Several proposed and enacted pieces of legislation are creating a perfect storm to put a stop to this understandable diabolical manifestation of the Laffer Curve.

• Back in 2010, the US enacted the Foreign Account Tax Compliance Act (FATCA) which was established to require foreign governments & their financial institutions to report all US-owned accounts in excess of $10,000. As expansion progresses into 2013, enforcement is assigned to the US IRS & Department of the Treasury.
• This past May, Sen. Chuck Schumer (D-NY) & Sen. Bob Casey (D-PA) introduced the Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy (Ex-PATRIOT) Act.
• According to comment posted on this article from a US ex-pat, the US is currently reviving elements of the Bank Secrecy Act – which was enacted in 1970 to prevent money laundering through foreign banks – as a means of retrieving lost tax revenues from foreign-based US citizens.

And recently, the tax exodus debate has reemerged in California.

So, the fiscal peril of losing the wealthy to expatriation over tax rates is important? I get that. But where was at least the same level of response when these same politicians in Commerce & State, representatives in associations ‘representing US manufacturers,’ and our elected officials all greased the skids for manufacturing to be shipped offshore? Why didn’t they play the tape all the way through to the end, and see our tax roles reduced? Or our innovation engine decimated? Or the downstream impact on the overall economy? Where was the outrage? Where was action to prevent the pall mall off-shoring of whole industries & our middle class, at any level or immediacy approaching those we’re seeing now to prevent tax dodging?

I’ll tell you why we didn’t see it – it’s because ‘we’ saw the opportunity to build new markets and middle classes on a global level at the expense of our own. If the argument to protect our economy is good for one threat now, why wasn’t it appropriate for off-shoring in the first place? The answer is simple – because ‘we’ wanted it to happen.

What we’re losing to expatriation to dodge taxes is a drop in the bucket compared to what we’ve lost due to the expatriation of our manufacturing base. To see such contradictory responses to similar threats is perplexing, and it should have us all asking tough questions. It’s like letting a guy break into our house with a bazooka & letting him get away with it, then killing another that breaks in with a crowbar.

I’ve been told directly that it’s water under bridge, that leveling blame is a fool’s errand. That it doesn’t enable the reshoring trend to develop as quickly as it should. But to those I say it’s critical to understand history in order to manage our present and future.

I’ve also been told that this sounds a lot like a conspiracy theory. To them, I say that anyone who doesn’t believe in conspiracy theories has never read a history book.

Sure, it’s ironic that we’ve not seen consistency among these two matters. But it’s also pathetic. And it should insult your intelligence whenever someone suggests that the off-shoring of our manufacturing base was due ‘solely’ to markets or the invisible hand.

Well, it’s not exactly a happy one … but it HAS been one year since the President established the White House’s Office of Manufacturing Policy (OMP). This office was established in conjunction with replacing then-outgoing ‘manufacturing czar’ Ron Bloom with two co-chairs of this new office. Not one czar – two. Heading up an Office of Manufacturing Policy. Think on that one for a minute .

And still, we have no meaningful signs of a comprehensive manufacturing policy in this country. Instead, we drift along rivers of uncertainty, speculation, (in)visible hands, and disconnected initiatives.

At this stage, we should all be asking the obvious questions – including the most glaring: How much longer are we gonna have to wait?

Even when the OMP was announced last December, there were some questions raised about its co-chairs and likelihood of success. In ‘Obama Picks Two To Lead Manufacturing Push – But The Right Two?’ Dan Froomkin opines in the Huffington Post from 12/12/11 that both have questionable ‘bona fides’ with regards to their manufacturing experiences & motives. Specifically, Secretary of Commerce John Bryson’s and National Economic Council Director Gene Sperling’s previous roles have been almost exclusively C-suite or government roles. Both are attorneys. Not that there’s anything wrong with that.

So since handing over the reigns of the ‘new’ OMP to both Mr. Bryson & Mr. Sperling, we’ve heard precious little from the office or of anything that can reasonably indicate movement toward a comprehensive US industrial policy.

I read two articles this past week which was the one-year anniversary of the OMP. I’m assuming that the timing of ‘em were coincidences, since neither directly reference the OMP – but i think that makes both even more compelling.

In ‘Apple’s Made-In-The-USA Plan Fuels Wishful Thinking,’ Alan Tonelson uses economic data & pragmatism to question Apple’s motives in investing $100-million to repatriate production to the US. But he also takes a look at the overall progress made in reshoring production from China to the US. And the data he presents to support the notion that reshoring isn’t happening at meaningful rates are sobering.

“… if China’s manufacturing clock is rapidly being cleaned by America, why have the Chinese taken the global industrial output lead during the past two years, according to the consulting firm IHS? Why does the manufacturing-dominated U.S. trade deficit with China keep growing robustly despite stagnating overall U.S. economic growth? Why did the U.S. manufacturing trade deficit with China set a new monthly record, as shown in Census Bureau data released yesterday (12/10/11)?”

“Moreover, if American manufacturing is becoming such a world-beater, why do IHS‘ calculations show it losing ground in global output rankings to the crisis-ridden European Union? Why did the overall U.S. manufacturing trade deficit hit its own all-time high in October, according to new U.S. government figures? And why were foreign-based manufacturers last year supplying fully 37.57 percent of U.S. consumption of a broad cross-section of advanced industrial goods, up from 24.49 percent in 1997?”

Simply put, we continue to pile up debt with and lose ground to China, which shows that while the headway we’re making in manufacturing is encouraging it isn’t nearly enough.

In ‘Needed: A US Manufacturing Policy‘ by Clyde Prestowitz, the Apple announcement is also examined. But Clyde takes a different angle by pointing out that a lack of skilled labor presents an obstacle to Apple’s (or anyone’s) intentions to reshore production to the US.

“But in their announcement and subsequent discussions, Apple executives emphasized that in moving production back to the United States they faced the obstacle that American workers with critical skills are in short supply. They attributed this to flaws in the U.S. educational system, saying that American schools no longer teach many of the subjects that Apple workers would need to know.”

Clyde explains that while there’s some truth in this, the larger issue is that we’ve basically killed our schools – that is, the factories and plants and shops that also acted as training facilities to grow manufacturing talent were outsourced, accelerating our loss of intellectual and technical chops.

Further, Clyde addresses the recent purchase of US battery maker A123 Systems by a China’s Wanxiang America. And the events leading up to the purchase are disappointing from the US’ perspective. Clyde writes:

“A second item in the recent press is the news of the buyout of advanced U.S. battery maker A123 Systems by China’s Wanxiang America. This is another example of what happens when we operate with half baked policies. Sad to say I predicted exactly this scenario nearly four years ago. At that time, a meeting was held in Vice President Biden’s office to discuss how to promote development of an advanced battery innovation and production capability in the United States. This was in response to the question posed by President Obama as to why we couldn’t produce advanced batteries in America. Some at the meeting proposed providing various levels of financial grants and tax breaks as a way of stimulating U.S. based R&D and manufacturing. I urged caution, pointing out that other countries like Japan, South Korea, China, and Germany were already spending heavily in the same area. I argued that unless the United States was prepared to match the spending and subsidies of the other countries, any money it spent would go down the rat hole because it wouldn’t be sufficient to allow a U.S.-based company to compete with the big boys from abroad. Unfortunately, it has turned out that I was right. A123 couldn’t compete with the Chinese and others and so now will become Chinese itself. Or maybe I should say Chinese-American. I do hope that Wanxiang will be able to exploit the A123 Systems technology from an American base. But the real lesson here is, again, that a Commerce Department that was on the job would know the global situation and have a comprehensive strategy either for really competing or for not spending money that is sure to be lost.”

Read that again – ‘…a Commerce Department that was on the job would know the global situation and have a comprehensive strategy …”

Both articles spell out the results we can expect from having no policy to support and encourage manufacturing in the US. And both rightly examine the data and unfortunate consequences that show our invisible hand policy is actually perpetuating our manufacturing malaise.

Our growing trade deficit. Neutral production growth. Continually rising imports. Skilled labor shortages. Bungled economic & trad policies. And, of course, tepid manufacturing job growth.

These are symptoms of a nation without a plan, being run by special and myopic interests. And to this point, all we’ve seen are sporadic, disjointed initiatives built for short-term relief but without long-term vision. Or the gumption to see them through. Worse, there’s no overall policy of what we stand for, what matters, and where we’re going.

Both Tonelson and Prestowitz ask in their articles for a comprehensive manufacturing policy to get us back on track. And both represent a continuation of the same good works we’ve seen go unnoticed and ignored over the last year – and longer.

Where should we go for our second anniversary? At this rate, maybe we should just stay in, and order Chinese.

You’ve heard and read the stories. They say that US manufacturing productivity has continued to rise over the past 15 years, accounting for the loss of manufacturing  jobs. They tout these immense productivity gains – most often attributed to automation – as the direct result of our industrial & intellectual superiority.

These are great stories. And they’d be so much better if they were true.

I recently spoke at IMTS on the overall conditions of US manufacturing and to share my belief that a comprehensive industrial policy is our best way to begin building our way back to prosperity. As part of this presentation, I laid out the general reasons for, and impact of, the distortion of US productivity numbers. Here’s what I had to say:

The fact is that the productivity numbers reported by the US Bureau of Labor Statistics (BLS) count production performed overseas that is ‘owned’ by US-based companies as US production. And at the lower wages AND with the increased profits that those lower wages have created. This mis-measurement is known as ‘import price bias.’

If the BLS productivity numbers were all we had to worry about, that’d be one thing. But many organizations and news outlets use those import price biased figures as a basis for other important reports or materials. For example, the Federal Reserve uses BLS productivity performance measurements predominantly in their monthly manufacturing regional reports. These faulty BLS numbers also factor into many trade or economic policy and projection decisions made by government entities or companies.

Garbage in, garbage out.

It’s like preparing for a battle, and having totally inaccurate data regarding adversary troop strength and location. That wrong data could get your head handed to you. And these BLS data are likely having the same impact on us as we construct a way out of our manufacturing malaise.

An excellent explanation of the full impact of these miscalculations can be found in a presentation by Michael Mandel, called ‘The Cheshire Cat Economy: Why We Are Underestimating The Impact Of Trade.’

In this presentation, Mandel presents the ‘country’ of Brickland as an analogy for the US:

But then, he introduces the fictional low-cost country ‘LowCostia’ into the supply chain equation, and what it brings (brought?) to the productivity party:

With LowCostia now in the equation, some basic changes occur:

• GDP drops slightly, from $1,000,000 to $990,000.
• Employment falls from 1000 to 500.
• Measured productivity almost doubles, from $1000 per worker to $1980 per worker.

The result of measuring this production shift by ownership rather than location means that measured productivity nearly doubles – but as a result of offshoring, not automation or greater productivity through efficiency.

The cause of this perpetual charade, in a nutshell, is that the BLS continues to use formulae that were created to measure our production in a continental economy, long after we’ve entered a global manufacturing economy. Despite some band-aids applied to correct these discrepancies, they can’t begin to present a clear picture that tells us what has actually happened, nor what is really happening today.

As Mandel concludes, we need to return to ‘production economics‘ to accurately measure not just our progress (or lack thereof), but also the ‘multiplier effect’ of manufacturing jobs on the overall economy.

In all fairness, the BLS is underfunded and understaffed. Worse, even if new fomulae were developed to offset import price bias, it couldn’t possibly accurately account for the performance and shifts in foreign employment, fluctuating materials & logistics costs, labor, and governmental subsidies. And while the Federal Reserve has tried to create a formula that offsets import price bias (see page 30 of this report), it is wildly insufficient to bring clarity to this issue.

The next time you see or read a report that cites BLS productivity numbers directly or indirectly, don’t just be suspicious – be downright skeptical. Because they’re working from a faulty premise. And as a result, these faulty data mean that:

To do nothing about this means we’ll continually make decisions and form opinions based on inaccurate data that could lead to even more disastrous results than we’ve already seen. These discrepancies are serious, and we must call it for what it is – inaccurate at best, deceptive at worst.

But I’m afraid we don’t want to deal with this, or we already would have. We’re happy to just accept it, and move onto the next thing. It’s easier to whistle in the dark, and just tell ourselves that everything will work out OK.

After all, it has up until now, right? Right?

One of the greatest travesties I’ve seen in companies that serve manufacturing or industrial markets is the system for managing ‘leads.’

The approach I’m talking about  immediately renders the prospect or customer as a number. Less than human. It creates the impression that the primary concern of the company is gettin’ the dough and moving on to the ‘next one.’ It minimizes the problems  a prospect is trying to solve, while elevating the company’s bargaining position. And we rationalize this as ‘just how business is done …’

How many relationships – business or otherwise – are sustained or even last after a beginning like that?

Maybe some. But I’ve seen far more partnerships fail under the weight of this system than those that were built on loyalty. And exceeding expectations.

Imagine for a moment the last time you were on the phone with your cable company, power company, or another service provider, trying to resolve an issue. We’ve all experienced the frustrations. How many conversations have we all had, lamenting the crumbling of our entire society & culture, based on our loss of basic customer service and social skills?

I’ve had these conversations, and many, many times with company owners and marketing cats. They share your (our) frustrations when bumping up against the cold, hard truths of relationships built on a lead rather than a need. And then …

They return to their jobs of demanding or sustaining the same type of system that frustrates their own customer base in the same ways.

A customer isn’t a lead to be harvested, but a person serving something that needs help to grow. Yet, a lead-based system permeates an entire organization, where overworked and misdirected resources follow flowcharts or standard practices to build revenue rather than loyalty. Consider this:

• A system that serves leads rather than needs passes the responsibility of gathering the customer’s problems & challenges to sales or applications engineers for engagement – costing time.
• A system that serves leads rather than needs passes basic contact information down the line and counts this as success.
• A system that serves leads rather than needs doesn’t bother following up with the customer – even if the company doesn’t get the sale – to see if they’ve been taken care of.
• A system that serves leads rather than needs pushes automated, broad messaging designed to attract targets, to an audience that has very specific, real needs.
• A system that serves leads rather than needs treats a new addition to a database as success.
• A system that serves leads rather than needs looks to generate a contact, rather than one that shows the potential the customer can realize by partnering with us.

Is this you, or your company? Is the cycle of lead generation a seemingly unbreakable machine that can’t even be discussed or challenged?

Some customer relationships just don’t work out. That’s a fact. But many cease too soon because they begin on a foundation that leads to a self-fulfilling prophecy of disappointment. These systems are often built on measuring a lead reaching a specific point in the chain through the seller’s organization, and less about the progress the customer is making at each stage.

Consider our own frustrations as we deal personally with lead generators. And then we must ask ourselves, ‘Are we generating something valuable, or just an invoice?’

I just stumbled across CNN/Money’s list of Best 100 Jobs for 2012. The list shows those jobs that are expected to grow and earn more money in the US over the next decade.

I was shocked – but not at all surprised – at the number of manufacturing-related jobs that made the list. Maybe you will be too. But probably not.

The answer is zero. Nada. Nuthin’. Goose eggs.

Oh, there are titles that suggest ‘manufacturing’ – somewhat. But you look at the list and you tell me.

Being very, very liberal in my impressions, I counted a total of 10 growth jobs on the list that even remotely dance around the primary creation of manufactured goods. They include Biomedical Engineer, Environmental Engineer, Civil Engineer, Petroleum Engineer, Applications Engineer (no, not a manufacturing process applications engineer – this one is for computer applications), Telecommunications Network Engineer, Construction Project Engineer, and – the absolute closest title to manufacturing I could spot – Supply Chain Analyst.

Check the list yourself, and while you’re at it scope out the average anticipated salaries. You’ll also notice that each job has been rated in four general categories: personal satisfaction; low stress; benefit to society; and flexibility.

Pardon me for stating the obvious, but as manufacturing has finally entered the national debate in a big way, we’re recognizing that we have a serious skills shortage & its impact on our ability to innovate. Various estimates indicate salaries for manufacturers, machinists, and high-tech shop-floor managers at anywhere from $50-70k per year. So how on earth could not one manufacturing job make this list?

Were those jobs simply not considered? Was there some bias from the start? Are we being fed a social engineering agenda to keep manufacturing out of the equation?

I think you know the answer to those questions. It’s a seemingly small thing, this list. But it’s indicative of the disconnect between a necessary and valuable section of our economy and the rest of the population.

This is a sin of omission that none of us that understand manufacturing should accept. Those kids that are gifted to become our next generation of makers deserve a better – and more accurate – message.