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Quality & Value Still Matter – Even In Commodity Manufacturing

Reshoring commodity manufacturing can and does make sense

“Now Main Street’s whitewashed windows and vacant stores
Seems like there ain’t nobody wants to come down here no more
They’re closing down the textile mill across the railroad tracks
Foreman says these jobs are going boys & they ain’t coming back to your hometown.”
My Hometown, Bruce Springsteen, 1984

To me, there’re are few things worse than listening to academics and bean-counters pontificating on the proposition that low-tolerance, high-volume manufacturing has left the US, and won’t – shouldn’t – come back.

As this seductive argument goes, we’ve evolved beyond manufacturing cupie dolls & sweat socks and those things SHOULD be made ‘over there.’ Because US citizens generally won’t pay for quality. Because those jobs making commodity products don’t pay a decent wage. Because we should ONLY be making technically innovative parts, assemblies & products.

Because we’re above it all now.

What a load of horse hockey …

Aside from the fact that this argument borders on racism at worst and a wicked superiority complex at best, the belief that people won’t pay more for quality is wrong. It’s merely bean-counters applying their own sensibilities on price to everyone & everything. And that’s what those without experience do most of the time.

I just watched a brief video from Fox Business News called “Quality Helps US Manufacturers Stay Competitive,” that presents what value is really worth, via Maze Nails – an Illinois-based manufacturer. They began manufacturing nails in the US in the 1880s. And they still are today. Check out the video, and listen for the distinctions between ‘price,’ ‘cost,’ and value.

The Value of Manufacturing In Markets of Consumption

My aforementioned issue with the bean-counters & academia has more to do with what they don’t acknowledge than it does with anything they say. To them, price is the sole factor that drives production and supply chain decisions. And they’re not entirely wrong about that point – many businesses HAVE made those decisions on pure price for a long time. Otherwise, we wouldn’t be in the fix we’re in right now.

But those decisions bring – and have brought – unintended consequences. Using this video as an example, let’s look at a few of those ramifications and results:

  • Focusing on ‘price’ diminishes the importance of quality – When price takes up the intellectual resources of an organization, it naturally impacts the influence of other factors in & on its strategic processes. In other words, maximizing price’s importance will minimize quality. No amount of automation or denial will change that. And what’s the ultimate result?
  • Quality DOES matter at all levels of manufacturing – The value proposition for something as seemingly simplistic as a nail adds up. According to Maze’s president, his nails last up to 5 times longer than imported nails but are only twice the cost. To a bean-counter, there’s justification in following that strategy anyway: “If the product wears out sooner, the customer will be back to buy more product sooner, too.” That is, until the house the bean-counter’s kids live in begins to collapse from using those substandard products. Regardless of the complexity of a product, value must ultimately be placed in the context of the end user. Not a P& L statement alone.
  • Indigenous production & inventories bring value – Shortened supply chains deliver a multitude of value to all customers and stakeholders, primarily through Manufacturing In Or Closer To Markets Of Consumption. The agility to adjust quantities, respond to market needs, sustainability and product development matter – even in those products seen as ‘beneath’ those values.
  • Quality encourages sustainable exports – Because Maze obsesses on quality first and cost second, it is now exporting its nails to Australia, the Caribbean, and Canada – to those customers that understand that quality has a price and that are willing to pay it. That strategy and those customers base their relationships on more than just price – and unlike those product and production sources that do, Maze has built a more stable export proposition. US manufacturers – and our government – should take note of this, to not only grow exports but to make them less susceptible to competition.

Another noteworthy point in this video – from about 1:15 on, you’ll see the camera pan around Maze’s shop floor. How many workers can you spot? I didn’t see one. Not ONE. Automation is an issue we’re going to be wrestling with for as long as we’re in the manufacturing game. But I’d rather deal with that and its impact on employment, than with the nails that hold my house together rusting out in 3 years.

Overall, I guess the biggest problem I have with many current industrial business models is the ‘product vs. value’ mentality so prevalent these days. Rather than following the value chains of their processes and products to identify what and where value is, we often choose to instead look at the sophistication of a product, its obvious characteristics, and internal value to our companies.

It’s the low-hanging fruit that intrigues those bean-counters & academics. But by following it, they can’t see the forest for the trees.

Thank goodness for Maze Nails and those companies like it, where quality and value are still defined by the customer – with a healthy dose of common sense.

AJ Sweatt
Website
1 Comments
  1. AJ,

    Mea Culpa: As we both know full well, I certainly am not the sharpest nail in the box.

    That being said, in principal, I couldn’t agree with you more. But in practice, let me tell you what I actually did.

    I went to Ace Hardware the other day specifically in search of a 30-ft 3/8-inch tow chain that was made in the US. They had it in stock at almost $9.00 per foot.

    I then wen to Home Depot and looked at a 30-ft 3/8-in tow chain that was made in China. They had it in stock at around $3.00 per foot.

    The specifications for the two chains were very similar.

    Given the way that I can abuse a tow chain, I probably don’t need to tell you which one I bought.

    I have met the enemy and he is me! I am guily as charged in your article. My wife has turned me into a short-sighted bean counter.

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