Walmart, Manufacturing & Detachment
I’ve never been a Walmart fan. My first exposure was when I was assigned to military bases in the South. It was convenient and economical — but even then, as a young adult who should have been oblivious to the claustrophobia of narrow aisles, I didn’t quite feel comfortable. That was OK — I wasn’t there for an outing, it was merely to shop for items on a list.
Some years later as I managed an industrial sales force in New England, Walmart became our boogeyman. It seemed that as fast as we could find and sell manufacturing accounts…they would close; either simply dissolving non-competitive companies or shuttering locations as manufacturing moved south or to Asia. As we asked “What happened?”, the consistent thread always seemed to be “Walmart!”
At the time it was irritating. In retrospect, it’s clear that:
- shoppers drove the relentless push for lower price goods — Walmart simply responded
- many American manufacturers were inefficient, and inevitable disruptive market forces (and those shopper expectations) achieved what management wouldn’t/couldn’t
- that disruption was no different than those which had powered the growth of the colonies as textile manufacturing moved to New England, then as it moved south, and finally offshore
Nevertheless I’ve never overcome my brand association — Walmart powered the deindustrialization of the US. It’s not fair, I know. And it overlooks the incredible contributions (e.g. logistics & supply chain expertise) that the company has made. (Just as this article will overlook some of the offsetting negatives such as the decay of independent, specialized retail.)
But Walmart’s Olympic ad and related video series have changed my perception. Being so easily swayed, could be I’m unprincipled; perhaps realistic; maybe idealistic. But I’m a manufacturing fan.
From the awesome Aerosmith soundtrack through the sleepy start and building energy, I love this ad.
The other nine are worth watching — make the total of a 15 minute investment. (More American Jobs | American Dream | Meet Mike | Outside of Work | Growing Community | Made in America | Meet Lillia | Meet Cliff | Meet Mike-take 2)
Like puppy, and veteran homecoming videos, one would have to be a sociopath not to feel a glow as you watch them.
Some will probably argue that Mike, Lillia & Cliff (maybe even Lifetime & Walmart) have sold out. I disagree; they’ve been sold out.
There’s something fundamentally good about manufacturing.
Knowledge, expertise, brute force and vision meet in a literal and figurative mashup that creates something new where only elements and abstract ideas had been.
Making something is satisfying and rewarding in a way that “thinking” and blasting bits & bytes into the digital ether are not.
I recently spent a weekend speaking at a conference of the National Tooling and Machining Association. It was great to be in a ballroom full of folks that make things; that know the smell of cutting oil. It was also surreal to juxtapose the background jingoistic demagoguery about declining manufacturing employment with the consistent refrain that these companies can’t hire enough qualified people.
20 years ago there was a problem in manufacturing — it was arrogant and inefficient. Today there’s a problem in manufacturing and it’s an employment and skills paradox.
To recap, we’ve got:
- increasing manufacturing output
- decreasing manufacturing employment
- structural social & educational issues that result in high paying advanced manufacturing jobs going unfilled
That’s not the story we hear told every day.
Manufacturing jobs are a convenient fulcrum upon which to lever public emotion.
Think of the themes in today’s public discourse:
- Everyone should go to college (and therefore, those that don’t are somehow unqualified, and further by extension, jobs which don’t require college are of a lower value)
- The decline in manufacturing employment is because of evil forces (greedy corporations, vile competitors, opportunistic foreigners)
- Manufacturing jobs are valuable only if they have arbitrarily attached to them certain pay and benefits (regardless of the economics of an industry)
- The companies that create and support manufacturing jobs are owned and managed by greedy individuals who view workers as pawns to be exploited. They implicitly deserve, perhaps have even brought on themselves, the increasingly untenable regulatory burden.
Are manufacturing jobs really, inherently good?
Or are they really only good for someone else’s kids? Or as a political cudgel?
Peggy Noonan shined a light on the issue this week. In her WSJ article “How Global Elites Forsake Their Countrymen” she wrote:
The larger point is that this is something we are seeing all over, the top detaching itself from the bottom, feeling little loyalty to it or affiliation with it. It is a theme I see working its way throughout the West’s power centers. At its heart it is not only a detachment from, but a lack of interest in, the lives of your countrymen, of those who are not at the table, and who understand that they’ve been abandoned by their leaders’ selfishness and mad virtue-signalling…From what I’ve seen of those in power throughout business and politics now, the people of your country are not your countrymen, they’re aliens whose bizarre emotions you must attempt occasionally to anticipate and manage. Affluence detaches, power adds distance to experience. I don’t have it fully right in my mind but something big is happening here with this division between the leaders and the led. It is very much a feature of our age. But it is odd that our elites have abandoned or are abandoning the idea that they belong to a country, that they have ties that bring responsibilities, that they should feel loyalty to their people or, at the very least, a grounded respect.
That detachment explains why those leading the national dialog focus merely on a symptom — declining manufacturing employment — which is falsely cast as a proxy for declining manufacturing output. In fact US manufacturing has grown steadily, even as manufacturing employment has fallen.
Carrying on about job protectionism laments last decade’s problem (and ignores factors that contributed — not least of which our irrepressible expectation to buy more, cheaper.) It’s a cynical, shrill cry of the shortsighted, protected and detached trying to rally their unprotected and vulnerable countrymen — and it ignores the enormous, looming job crisis.
Tariffs & regulations won’t solve the old problem that’s the focus of debate…and they certainly won’t solve the coming problem!
Market access and proximity are large factors in decisions around where to locate manufacturing facilities. Want to sell to the enormous growing middle class in Indonesia? Building a plant in Wichita isn’t the first step that comes to mind, is it?
Not all foreign manufacturing by US companies is bad. Some of it accesses new markets, some critical supply chain components, and some lower labor cost. And foreign firms manufacturing in the US create jobs here too (in fact according to one study, most of the new manufacturing jobs here!)
Putting aside the question of shareholder activism (nobody discusses the potential exposure of boards of directors and executives to litigious opportunists for their decisions to sacrifice cost cutting opportunities) we can look at market forces impacting manufacturing.
The force disrupting industry today isn’t a new one. Technology drove previous industrial revolutions as farm workers moved to factories, for instance.
In prior iterations, however, the jobs disrupted by technology were concurrently replaced with new jobs. There was dislocation, uncomfortable change for many, new skills to be acquired and changes in lifestyle — but there was work. It’s not entirely clear that will be the case going forward.
Automation of the last 20 years has supplemented human labor. It’s added efficiency, safety & precision to repetitive, dangerous and critical tasks. And it’s created many related jobs — albeit not as many as it’s eliminated. (Thus rising output with falling employment.) But it’s on the cusp of accelerating at a rate which will eliminate up to 50% of jobs and create many fewer. And those, even more than the current machine shop jobs which remain unfilled due to lack of skills and training, will demand entirely new skill sets.
I’ve written about “The Real Jobs Issue that Nobody’s Discussing” and in his introductory remarks to an article this week, the normally optimistic John Mauldin acknowledged “Confession: Longtime readers know that I have glibly used the phrase, ‘I don’t know where the future jobs will come from, but they will.’ Because that has been the case in the past. But when you begin to closely examine the data, you see reasons why that positive outcome for jobs may not repeat in our future.”
Is 3D printing inherently bad? Of course not. Is a “lights out factory” built around automation and the IoT (internet of things) bad? No.
Is a public discourse focused on “fixing” an irreversible trend while completely failing to explore the coming acceleration absurd? Indeed.
If the current participants in the public discussion honestly believe that their proposed solutions will address the problem, then their strategic perspective and repertoire of policy tools are both inadequate to meet the challenges.
If it’s instead simply a craven attempt to amass power knowing that in fact the proposed solutions won’t address the problem, then it’s similarly destined to fail.
Neither scenario bodes well for the industries and workers whom they claim to support.
But is it important to know which we face? Either shortsightedness or pandering? If the outcome is the same, it may not be a critical distinction. But there’s a certain comfort that comes from awareness of the forces at work. And as diagnostic tools go, the state of Manufacturing Day is a good one.
Manufacturing Day will be held on the first Friday in October this year (Friday, 7th) as it has each year for the last several years. Oddly, for all the discussion around “jobs” and arresting the decline of American manufacturing (which is a red herring), there is no mention of Manufacturing Day in the public political debate. Think of the opportunity — a ready made nationwide political rally of unprecedented proportions is available for the taking. And yet it is untaken.
Seizing that opportunity wouldn’t necessarily indicate that a group has more than a cynical, passing interest in securing votes. But a failure to do so is a pretty powerful indication that the desire is simply to rail about an emotive issue without interest in addressing the background challenges.
The real risks to American manufacturing and prosperity aren’t even on the radar of today’s candidates.