Sidney Hill, Jr.: A winning global strategy: relax, but don't sit still

I think I'm safe in saying a lot of people in U.S.-based manufacturing companies have yet to get completely comfortable with the concept of globalization. They know it's a trend that's not going away, but they remain a bit fearful about what it means for individual companies—and for the workers within those companies.

I recently had a conversation with a guy who gets paid to study such things, and I can summarize his advice this way: relax, but don't sit still.

Alan Beaulieu is a principal with The Institute for Trend Research, a Concord, N.H.-based economic consulting firm. His specialty is tracking macroeconomic trends and developing strategies that will help companies benefit from those trends. I met him at a recent gathering of the Control System Integrators Association (CSIA), a trade group for firms that help manufacturers install factory automation systems.

Beaulieu implores everyone associated with U.S. manufacturing to stop panicking about globalization. He points to the many fundamental advantages the U.S. economy still enjoys:

• A stable, growing workforce;
• A No. 1 ranking in technology and innovation; and
• A No. 2 ranking in the amount of goods exported.

He also notes that the U.S. trails Germany in the “goods exported” category, exploding the myth that China has taken over as the world's leading manufacturer.

Beaulieu is big on dispelling myths. Another one he'd like to quash concerns the eroding American manufacturing base.

“The U.S. and Canada have had 25 percent of the world's manufacturing base for more than a decade,” he says. “And that's not because Canada is growing.”

Beaulieu concedes the U.S. has lost manufacturing jobs, but he thinks it can stem the tide if the right steps are taken. He says goods like cars and heavy appliances can be built in this country long term. The key is automated production processes that deploy the type of technology the CSIA membership helps companies install.

And how does that save jobs? Someone has to manage all that automated production equipment.

There may be fewer jobs in the American factory of the future, but those jobs may be more intellectually stimulating and less physically taxing. In the long run, they may even pay better.

If you don't think this is possible, you haven't followed trends in the auto industry, where the gloom surrounding the closings of Ford and General Motors plants in Detroit has been replaced by the joy of Toyota and BMW plants opening in Texas and South Carolina.

This shift supports Beaulieu's theory that “low-cost capital plus technology can compete in a global economy.”

“It takes innovation and nerve” to fashion a winning global strategy, Beaulieu adds. That can include taking advantage of emerging markets such as China for both sourcing and selling goods. But it also means understanding that global market conditions are constantly changing.

Already, Beaulieu notes, textile industry jobs, which consist largely of manual work, are leaving China for Vietnam, where labor rates are lower.

While acknowledging issues that must be addressed—the corporate tax structure, and health care to name just two—Beaulieu believes U.S. manufacturing can thrive for a long time to come. As long as people remember to relax, but don't sit still.