Sunday, September 25, 2011

One possible reason for the decline of US industry?


Foreign Policy magazine has an interesting article comparing US industrial practice to that in Germany. Here's an excerpt.

"We have a line of Cherry office furniture that's just flying out of the showroom," he replied. "Where do you make it?" I asked. "Well," he said, "we cut the cherry trees in West Virginia. They have the best cherry trees in West Virginia. Then we ship the logs to Germany where they peel the veneer. Then we ship the veneer to China where it is glued to the frame and then they ship the finished furniture to us in Wisconsin where we market and sell it." Astonished, I asked in a tone of disbelief, "You ship the logs to Germany? Is there no one who can peel veneer in America?" "Yes," he admitted, but went on to emphasize that "the Germans do it far better than the Americans."

Veneer peeling never shows up on the lists of high-tech industries and is never discussed when there is talk of the need for more Silicon Valley style start-ups and innovation. Nor do veneer peelers need advanced college degrees. Yet veneer peeling in Germany is so high-tech and so innovative that furniture makers are shipping logs and veneer around the world to get something done in Germany that one would expect to be easily done in the United States. Innovation and high tech doesn't have to be Google or Silicon Valley. It may not necessarily take a lot of basic Research spending (although certainly some D spending) or advanced formal education.

What Germany has is a lot of family owned, medium sized businesses and a government and society that are committed to the long term and to keeping German-based production competitive in as many sectors as possible. It also has a system of training and maintaining skills that doesn't turn out PhDs, but does turn out supremely qualified workers. And, of course, to gain full advantage from those skills, it strives through cooperation between industry, government, and labor to keep producers competitive from a German production base.


There's more at the link.

I think the article is a little simplistic, in that it doesn't take into account the nature of the products manufactured in each country, or consider imports, consumption, etc. Nevertheless, it raises interesting questions. Recommended.

Peter

7 comments:

trailbee said...

By removing shop classes in high school, it is automatically assumed that students will probably go to Jc and then onto college for further education. Schools have closed a vital educational portal for those who really do not wish, or can't afford, higher education, but are interested and happy to work in other areas, cabinetry, evolving into fine furniture mfg. being one. I had to go to JC to get into a woodworking class. I was amazed at the number, and age, of my fellow students. No wonder we lose these jobs. Thanks for the post.

Toejam said...

Welcome to 21st century America, where for the past 50 + years everyone has aspired to be a doctor, lawyer, politician or major league sports personality.

I guess veneer peeling 101 isn't offered at Yale, Harvard or Princeton.

Anonymous said...

I believe a lot of the reason people can't get that type of work done in the USA is because of excessive government regulations. Witness the troubles the feds are visiting on Gibson Guitars (which is no doubt politically motivated). I'm sure a lot of company owners got tired of the govt BS and just moved their production to friendlier countries elsewhere.

The reams of govt intrusions on business and individuals sorts of reminds one of the snake that ate itself.

chicopanther

Bob@thenest said...

I was thinking the same as Anonymous as soon as I saw the product had something to do with TREES. It would be a three-ring circus to let EPA, BLM, and other hugging agencies have a shot at a company that "skinned trees" for a living. Can you even imagine the regulatory roadblocks to making a profit at such activity? I can't.

But I can definitely imagine the hordes of huggers blocking entrances, producers, and product, with complete immunity from the authorities looking the other way.

raven said...

Ever notice the big new success (like Google, Craigslist, eBay, etc) often seem to be the ones that side step (for a while anyway) the regulatory burdens put on traditional business?

Germany has long been a center for high end woodworking machinery. And their trade school system is superb.

Anonymous said...

Take your pick: High cost of labor due to tax structure, etc. Min. wage laws. Union rules. Liability issues. Corporate taxes.

The US has made it's own bed where labor cost is concerned.

MechAg94

Anonymous said...

I met a young lady from Germany who had married an American and was now living here. She was so excited for the opportunity to get a university education, she would be the first in her family to do so. Apparently, according to her, each student in Germany is tested and unless they achieve a certain score on this particular test they are denied the opportunity to go on to college and basically assigned by the government what their future job would be. She was assigned the future career of being a hotel chef. Now in America she was finishing her college degree and planning to move on to a Masters degree. Germany may have skilled workers but apparently not completely by choice?

American society values university degrees, anything less is not viewed as having an education. We lost something when we made apprenticing so difficult or less valued. I believe that most of what we truly learn is not necessarily from books and tests but by actual hands on experience. As a nurse most of what I really retained is what I learned while applying it on the job.