The Internationalization of U.S. Manufacturing Causes and Consequences (1990) / Chapter Skim
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4. Keys to Success
4. Keys to Success
Pages 41-56
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From page 41... ...
manufacturing companies and the nation's manufacturing sector. Though specific steps needed to maintain global competitiveness will vary by company, the following themes can be applied across the board as the foundation of corporate and national success in the internationalization process.
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From page 42... ...
- , cat identifying the key technologies that determine the firm's ability to compete in specific product segments now and in the future, . creating the capability to exploit existing expertise and update that expertise constantly, assessing the technological capabilities of competitors and tracking relevant technological developments from sources around the world, and · orchestrating this entire body of knowledge to maintain a technological advantage.
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For instance, the decision to manufacture or buy a specific part cannot be based only on cost. It also requires an assessment of the part's importance to the final product; the importance of the final product to corporate success; opportunities to gain competitive advantage through improvements in the part; and the design, engineering, and manufacturing capabilities gained as a direct result of making that part.
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From page 44... ...
the design and manufacturing expertise necessary to participate in the large refrigerator market.2 Strong capabilities in manufacturing-related functions will be increas~ngly critical to international success. Building a system of constant improvement in manufacturing is an example of a core competitive capability that provides unique advantages.
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From page 45... ...
Horizontally, the interaction between design and manufacturing capabilities can be a strong basis for unique competitive advantages: improvements in production processes foster improved product designs, and design improvements, demanded by customers or to match competitors, force further advances in manufacturing processes. Vertically, manufacturing capabilities at the final product level drive capabilities at all the intermediate levels from subassemblies and parts to materials, tools, and methods.
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The exercise is not trivial, but it has become absolutely essential to long-term success in the international manufacturing environment.
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Maximizing value to the customer, for instance by mobilizing unique manufacturing capabilities to provide distinctive product features and to facilitate responsiveness, is the strategy most likely to build global market share for U.S. manufacturers.
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These firms use technology and total quality control practices to command premium prices and strong customer loyalty as well as to reveal and minimize the costs of quality to strengthen profit margins, creating resources for innovation. Loctite Corporation, for one, has used a quality aggression strategy to become a leading producer of engineering adhesives and other specialty chemicals for world markets based on quality products and continuous advances in chemical technology.
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Finally, short product life cycles in a growing number of industries are creating advantages for firms who are first to market. In the current international manufacturing environment, managing the technology commercialization process requires an ability to be both a technology pioneer and a quick follower.
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Because internationalization has created unprecedented competition among countries for manufacturing investments, a conscious effort is needed to build and leverage the national assets that will spur manufacturing activity in the United States. This country must have a comprehensive set of national policies that will ensure competitiveness with rapidly advancing foreign locations policies that support a U.S.
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2. Build intellectual assets The competitive imperatives emerging in the international manufacturing environment are placing a premium on intellectual assets.
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Improvements in national intellectual assets must include a focus on building the infrastructure to facilitate continuing education and retraining. Twoand 4-year technical colleges play a key role, but to be effective they must have a close relationship with industry.
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merchandise trade statistics, the U.S. General Accounting Office found that monthly trade balances are highly volatile and do not necessarily indicate changes in trade performance, that the accuracy of export statistics is questionable, and that existing data do not reflect changes in global production wrought by internationalization.8 Though improvements in trade data are essential, attention should be paid to broader issues: 1.
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4. Retain high value-added manufacturing as a key national competitive capability by providing a favorable manufacturing environment The question of what manufacturing capabilities are essential to national well-being tends to arise in policy discussions only in the context of national defense.
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Although job creation or protection is a major political motivator, potential employment effects need to be assessed in terms of the quality and knowledge content of the affected jobs, not just quantity. When direct government intervention is deemed necessary to retain specific manufacturing capabilities, it should be done in a way that least distorts trade.
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From page 56... ...
Much as corporations will participate in international networks to help strengthen and exploit their competitive capabilities, the United States should take part in the interdependent global economy in the context of a strong domestic manufacturing and technology base with the capability to participate in high-value markets. With the internationalization process accelerating, a policy mix that builds core national competitive capabilities in high-value manufacturing, interacting with the global market to exploit and strengthen them, is the only sure way to achieve the ultimate national goal to advance the national standard of living.
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