20 January

It's time for America to export ... but what?

How to bring the American economy back

Everybody has an idea to stimulate the US - but none of these deal with the fundamental problem - for a massive economy increase, you need massive product exports.

All the rest is window dressing. You won't get back any ROI at all on most of what's been touted, be it in finance, education, auto, retraining, etc. Forbes has half a good idea with small business stimulus - but it doesn't guarantee any reasonable ROI.

So let's be hard assed businessmen, leave the Ponzi/con schemes aside, and only consider what will/has before grown back the economy, namely large scale product exports, reversing the service industry direction of the past 30 years.

But globalization has meant that manufacturing has been best done outside of the US, and we've neglected/sold off/destroyed equipment/plants/people/skills/relationships since, so we have little capability to do, let alone compete.

But that can be compensated with the tremendous resources of the US, and a heritage of American mastery of production still retains the basics - it can be brought back. The more difficult part is the policy of what products to make.

You can't compete with China/India/Korea/Malaysia/Russia on cost/volume/brand - that's gone. No way to fill the shelves of Walmart ever. And it is more likely that imports will take more than 91% of domestic auto sales in short order. So what do you produce? Read more...

Rumsfeld and Cheney were fond at one point of running down European countries, insulting their manufacturing as being mere chocolate makers. Apparently it slipped their notice that key products manufactured by them are sold to China/India/Korea and the others, holding price points more than 20x locally produced comparable products. Does this give you enough of a hint?

We've long been dominated by the rush to the bottom with the "triple zero point" - (cost reduced, power reduced, size reduced) - that has dominated the semiconductor industry. This is the core of the retail consumer electronics side of consumption, once the driving part of American influence, but now descriptive of the loss of such influence.

The vulnerability of this, as noticed by Japan in competing with rising Asian competition, was to push quality and standards beyond what new and less mature country manufacturing culture couldn't bring off. Germany's manufacturing base has taken this even further, creating extreme enterprise products that are relied upon by China and others as necessary. They have taken quality and skill to the limits of instrumentation to measure.

When I was at Tandem Computers, we'd sell tremendously expensive American manufactured systems to countries like China, Vietnam, and Malaysia. Why would they buy them? Lowest total cost of ownership. Lowest possible down time.

Enterprise goods are all about quality and function that makes up for lack of diligence in any culture. Diligence is necessary to maintain brand equity and private label manufacturing - too easy to lose face, which is why one can maintain such high margins.

However, enterprise alone is not enough - just a beginning (or beach head strategy). Next comes the understanding through careful product marketing and management discovery of unmet need for pushing the product barriers beyond current accepted levels, and driving new standards for products across the board.

The race to the top has already begun.

Posted by william at 19:43 | Comments (1) | Trackbacks (0)
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Re: It's time for America to export ... but what?

This makes sense, the part I understood.

Posted by: Chilly at October 22,2009 19:03
Re: It's time for America to export ... but what?

Although I didn't understand the comments about 'diligence', the rest of the essay made very good sense, I think.

Posted by: Chilly at October 22,2009 19:06
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