Something's happening hereSomething's happening here

Making things, the manufacture of something from ''nothing,'' was a critical human event that catalyzed the development of modern society.

What becomes of that society if we''re no longer making things?

Running an American manufacturing business can be a pretty challenging duty these days. True, current GDP numbers look like the good old days are rolling back in. Yet many of us hold our breath. Why? If you''re like me, perhaps it''s because you are hearing that tune in your head, that old song...

There''s something happening here; what it is ain''t exactly clear.

Most of the now-senior executives in manufacturing can remember Buffalo Springfield''s refrain from For What It''s Worth. We have seen changes in our own times. What''s more, we felt them as they came on; undefined, uncertain, unclear. From a generational bubble, to seismic movements in racial, sexual, political, and technical areas—all these and more were, and remain, tectonic shifts we sensed through our feet before we saw with our eyes. But all the while, we knew something was happening here.

When the ground starts moving, it''s time to take a hard look at what you think is important. What is the bedrock belief that we manufacturers hold dearest? It is our conviction that for a society''s economy to be successful, someone has got to make something from nothing. Whether it be a crop grown from seed to harvest, a glass blown from sand to crystal, a shirt woven from cotton to button-down, or a medical device molded from polymer to product: Unless someone makes raw materials into something useful, society cannot flourish. What''s more, there must be enough of the makers to undergird the larger service economy. After all, we can''t simply just do each others'' laundry.

The making of epochal change

In his Pulitzer Prize-winning book Guns, Germs, and Steel, Jared Diamond retraced mankind''s societal progression back to its very earliest days. For a variety of fortunate environmental reasons, the human race gradually transformed itself from a collection of nomadic bands of hunter-gatherers into established villages that used food production and basic metalworking. The introduction of the concept that some people make things was a dynamic, epochal change. And because of it, more people were then free to perform still other heretofore unspecialized occupations. Thus, the new professional "service" roles, from medical to military, stood on the shoulders of those who were the makers of raw stuffs and products.

At our most fundamental core, we manufacturers believe this still. We believe that our nation must be owed more than it owes. And to do that, it must sell more than it buys. And to do that, it must make more than it has made for it. In all modesty, we believe that American society must have us—and in a great enough depth and number—or it shall whither to an emaciated shell.

Look at another "maker" business, the farming industry. A century ago, nearly 40% of our population worked the land. Today, 3%. Is that a bad thing? Twenty years ago, about 25% of American workers were devoted to manufacturing. Today, 16%. Is that a bad thing?

Free-trade advocates use these examples to demonstrate the inevitability of technological and productivity improvements. And in that observation alone, perhaps they cannot be wrong.

But the base assumption, however, that society is always better off when increased productivity releases people from their current employment, is much like saying that a family is always better off by having more children. Is more always better?

The fact is, it depends. I, for one, cannot deny that it appears to be a good thing that it requires fewer of my countrymen to fill my plate. The idea that it is intrinsically better if fewer people can produce what society is using has a good heft to it. By freeing-up workers to do other things, the rationale goes, new and more productive activities will evidently be realized.

Really? Like what?

That''s the real question. And it is one with no current answer. The forthright response essentially comes down to either a blind faith that what has happened in the past will necessarily happen in the future, or not. What did happen to all those farmers? Some went to other maker jobs, some to service jobs, and some to welfare rolls. No one can really say with any specificity; but suffice it to say, the economy absorbed them. And here''s the point: Wherever they went, the vast preponderance of them now hold jobs that were simply beyond the imagination as the transformation began.

So where will the manufacturing folks go? Either you believe that new and unseen technologies and industries will rise up and absorb them, or you don''t. As we ship our metal stamping, injection molding, and toolmaking jobs to Asia, perhaps new methods to make things will develop here and employ the displaced workers.

All this requires is that we imagine things that are currently beyond our imagination. Simple as that. And perhaps that is what shall happen. But if so, it ain''t exactly clear.

Same outcome, different reasons

We should also be mindful that what happened to the farmer, and what is now happening to manufacturers, were and are driven by different catalysts. While we can see what happened to the farmer, (supply overtook demand because productivity overtook supply), we must admit what did not happen to him. Identical foodstuffs did not arrive from Mexico and China, thereby forcing the U.S. farmer under. Nor do I recall that farmers themselves went to China, had their crops grown there, and shipped them back here for sale.

To the contrary, they winnowed themselves, right here, each and every one exposed to the same societal costs and burdens as the other. American manufacturers, on the other hand, are getting blasted by both barrels: Productivity is overtaking supply, and, supply (foreign) is overtaking productivity. And I somehow suspect that, unlike the farmers, manufacturers will not be rescued by a government program that will pay them not to run their machines.

A manufacturer I know recently completed the installation of automation equipment that will reduce his direct labor content by 30%. In human terms, it amounts to 150 fewer people needed. Asked what he thought about it, he replied, "It''s great—for me, and those who remain. But for our economy at large, I''m not so sure. Where will they all go and earn what they got here? Certainly, not at McDonald''s. I mean…what if we all did it?"

I attended an executives meeting recently where the speaker was Mr. Dick Schulze, founder of Best Buy, a true American business success story. During the Q&A, I respectfully asked him two questions. First, what percent of his $20 billion of products is made in the U.S.? A minority, he replied, straightforwardly. Second, having witnessed firsthand the exodus of American electronics manufacturing first to Mexico and now to China, what does he think a continuing manufacturing emigration portends for our country?

I fully expected Mr. Schulze, whom I greatly admire and respect, to reply, "Trade is trade; and if you can''t stand the heat you shouldn''t be in the kitchen..." Or words to that effect. Instead, he replied, "That''s a very, very good question. I''m glad you asked it, for I am extremely concerned that if we lose the good-paying jobs that manufacturers provide, we will lose the consumer buying-power we need to buy our products. I don''t have the answer, sir, but it is a very good question. And I''m concerned about it."

There''s something happening here. Even terrific business leaders like Best Buy''s Dick Schulze can only sense it; uncertain, unclear, unanswered. Like things before, we can feel the ground shifting under our feet. Maybe the day is coming when we join the farmers as a 3% economic entity. And maybe it''s a good thing. Or maybe it''s not. What it is ain''t exactly clear.

Stan D. Donnelly ([email protected]) is the CEO of Donnelly Custom Mfg. Co., in Alexandria, MN. The company is an injection molder dedicated to custom, short-run projects. If you would like to contribute to As I See It, please contact Editor Jeff Sloan at [email protected].