“Essentially, we are successfully using Chinese battle strategy against China manufacturers. As Mei Yaochen wrote, ‘Without strategy, you cannot control the opponent.’ So we have Americanized the dragon.”
Michael McKeldon Woody is the president and founder of International Marketing Advantages Inc., a consulting firm specializing in strategic marketing, international business, and mergers and acquisitions based in Providence.
On Oct. 31, Woody launched a Kickstarter crowd-funding campaign to fund his vision for a television series focused on U.S. manufacturing success stories that he plans to call “American Dragon.” Woody talked with PBN about the state of U.S. manufacturing and how domestic manufacturers can more effectively compete with overseas competition.
Woody holds a bachelor’s degree and an MBA from Providence College.
PBN: What would you say is the biggest misconception about the state of the U.S. manufacturing industry?
WOODY: The biggest misconception is that manufacturing is dead in this country, and that small to mid-size U.S. manufacturers cannot compete successfully against overseas companies, particularly those from China. The lion’s share of the manufacturing jobs we lost over the last 15 years were lost to China. Yet, prices are now rising dramatically on China goods due to higher labor costs, currency appreciation and increased transportation costs caused by oil price hikes. China is also half a world away, which means it takes longer for goods to arrive, necessitating higher volume orders from U.S. customers. Finally, China manufacturers do not, in general, do a great job on product quality and product safety, which has become increasingly important given the more stringent guidelines from the Consumer Product Safety Commission.
PBN: You offer a simple, three-word solution to the challenge of overseas manufacturing competition – Fewer, Faster, Finer. What does that mean, and how can these principles help U.S. manufacturers succeed?
WOODY: These three principles strike at the main weaknesses in the China manufacturing business model.
The “Fewer” principle means shorter, and/or more customized production runs. Keep in mind that the China manufacturing business model was built on the concept of long runs of commodity products. However, today’s B2B buyer wants to minimize parts inventory to keep costs lower, and today’s consumer wants a product more tailored to her own individual preferences. A small U.S. manufacturer who can cater to the desire for smaller or more customized orders in a B2B or consumer environment creates a competitive advantage that an overseas manufacturer cannot match. The use of 3-D printers is an extreme example of the “Fewer” principle in action.
The “Faster” principle simply means quick turns on product orders. If it takes an overseas manufacturer three months to ship a product, you must find a way to ship it in three weeks, for example. This allows the customer to maintain lower inventory levels and maximize their cash cycle. And if you are making a consumer product, being “Faster” allows you to satisfy the consumer’s desire for instant gratification.
The “Finer” principle means manufacturing safe, high quality products. The Consumer Products Safety Improvement Act has dramatically altered the manufacturing landscape in favor of companies that are meticulous about quality. I’m a strong proponent of those tougher guidelines because they force U.S. importers to think twice about the integrity of their supply chain before they bypass U.S. manufacturers for overseas sources. If China manufacturers will sell lead-tainted toys to Mattel, what would they sell to a smaller importer?
Of course, it is most effective if a manufacturer implements all three principles. Given the competitive situation, two out of three may not be enough.
PBN: Why is it important to share the success stories of local manufacturers?
WOODY: It’s important to share the success stories of small, local manufacturers for three reasons. First, we can all learn from these stories. If Vibco down in Wyoming was able to lower their minimum production order size by speeding up their machine set-up time, another manufacturer might see that and use it. If Trans-Tex in Cranston is able to reduce lead times by ending the batch-processing of orders, another company might pick up on that idea, and compete better because of it.
Secondly, I am hoping these stories will inspire consumers and B2B buyers to pay closer attention to the country of origin when making a buying decision. It may not always be feasible to buy U.S.-made, but only a small change in buying habits can make a profound difference. It has been estimated that for each new manufacturing job as many as two jobs in ancillary businesses are created, so if we reshore merely 10 percent of the manufacturing jobs we lost to China the U.S. unemployment rate would drop 2 percent.
Thirdly, it will help young people to better understand that manufacturing can be an exciting and rewarding career, with a high degree of job security.
PBN: You recently launched a Kickstarter to attract crowd-funding for a television program of your invention called “American Dragon” that would showcase such success stories. How much funding have you raised so far?
WOODY: Our initial goal is $15,000 and after five days we’re at 7 percent of our goal. We’re encouraged because these types of crowd-funding initiatives are a lot like a snowball rolling downhill. We’re still near the top of the hill and the snowball is a little bigger than we hoped at this point.
PBN: Why “American Dragon”? What does that name mean to you and to the manufacturing industry?
WOODY: I use the term “American Dragon” because the dragon has traditionally been a symbol of China. But in reading Sun Tzu’s “The Art of War” I realized that we can turn those strategies against China manufacturers to win back jobs from China. For example, Master Sun writes that to win the battle with an opponent one must “appear where they cannot go.” This is what led me to the principle of “Fewer.” China manufacturers cannot create “Fewer” because their business model is built around long production runs.
As to “Faster,” Cao Cao writes, “Use swiftness to wear them out.” How can a China manufacturer be swifter than a U.S. manufacturer when it comes to producing and selling in the U.S.?
Finally, Zhang Yu writes, “…make your move when a gap opens up.” The renewed focus on product quality and safety here in the U.S. is the “Finer” gap that China cannot bridge.
Essentially, we are successfully using Chinese battle strategy against China manufacturers. As Mei Yaochen wrote, “Without strategy, you cannot control the opponent.” So we have Americanized the dragon.