Booz & Co: Don't Knock Manufacturing

Last Updated Jun 10, 2008 1:16 PM EDT

Manufacturers are at a "Make or Break" moment in the face of fresh regulatory and competitive challenges, according to a recent study in Booz & Company's "Strategy + Business."
CEOs often treat their manufacturing operations as "cost cash cows" when it comes time to make cuts based on tough competitive from low-cost producers or new regulations. Another issue is that manufacturing makes from 15 to 20 percent of worldwide greenhouse gas emissions that are bought for regulation, write authors Kaj Grichnik and Conrad Winkler in their report.
But all is not lost. Creative executives use their manufacturing units as innovators of operations and technology that can drive company performance elsewhere. Examples include packaging maker TetraPak, Procter & Gamble, Novartis, Lego, Boeing, Toyota and others. Such companies have been able to find ways to do more with less and thus keep their manufacturing nimble and productive.

Executives, the authors say, must wind ways to invest wisely, streamline supply chains, encourage positive labor relations and transform "old, fossilized plants." The government has a big role to play, although the authors admit that hasn't exactly been figured out, yet.

My view is that manufacturing is key to this or any other economy. It was wrongly dumped upon by geeks back in the 1990s as being too "Old Economy." That, of course, was before the geeks realized that their wonderful information age products could be just as easily commoditized.