Modeling U.S. Manufacturing Competitiveness

Few issues are discussed as frequently by American politicians as jobs, and particularly the loss of jobs, ostensibly to cheaper labor markets. The underlying reasons why some firms depart American soil and others do not, however, are not completely understood. The purpose of this study is to propose a model for determining what successful manufacturers are doing to remain competitive and, consequently, not moving to other countries unnecessarily. There is no extant model that effectively differentiates what successful manufacturers are doing compared with unsuccessful (i.e., job-cutting or factory-closing) ones. To develop this conceptual model, we have conducted interviews with manufacturers in our region (one of the poorest in the country and one that has lost over 10,000 manufacturing jobs and 52 of 141 manufacturing plants between 1993-2003). We have also completed an exploratory content analysis of the literature on this subject. From this analysis, we have developed a model that will be described here. The model consists of five primary differentiators: (1) the flow of vital information, (2) the human factor (leadership, teamwork, etc.), (3) issues of cost and efficiency, (4) integration of information technology, and (5) cooperative methodologies. Background of the Proposed Effort and Research Question According to the National Association of Manufacturers, over 3 million American manufacturing jobs were lost from 1998 to 2003. Since manufacturing currently accounts for more than 20 percent of GDP, the problem in the decline of the manufacturing industry threatens the entire U.S. economy (Eisen, 2003). Every million dollars in manufacturing sales supports eight jobs in manufacturing and six in other allied sectors. Debates concerning the overall and long term effects of outsourcing not withstanding, it is clear that substantial numbers of manufacturing plants have closed with a heart-breaking toll on millions of Americans who have been unable to find employment at comparable levels. Although certain economic cycles are inevitable and beneficial to the whole economy, it is also the case that if companies can eliminate inefficiencies and other suboptimalities in their organizations, it may be that not as many jobs need to be relocated. Although most companies have addressed factors resulting in outsourcing, some manufacturing plants have been able to stay open, remain competitive, and even increase their employment levels in a post-NAFTA society. This study is an example of positive organizational scholarship, looking at successes instead of failures. We analyzed in detail over 100 articles and were unable to find any model explaining what successful companies are doing that have differentiated themselves from those that have moved overseas. A number of anecdotes exist, but no systematic research has been done from this perspective. The purpose of this study is to propose a model for determining what successful manufacturers are doing to remain competitive and, consequently, not moving to other countries unnecessarily. In other words, what distinguishes “successful stayers”—those that have retained