Saturday, March 3, 2012

Jeff "Moving to China" Immelt Wises Up, Decides the U.S. is Okay for Manufacturing

At least as long as he can get that 2.9% effective Federal tax rate they've enjoyed for the last ten years.
Things had to be awkward at the President's Council on Jobs and Competitiveness when GE decided to move the whole medical imaging division to China. Here's something the P.R. guys can feel better about.*
From Evolving Excellence:

The Reshoring Story of GE Appliances
Perhaps I'm just an optimist, but it's starting to seem like the discussion on manufacturing in America is changing.  Just a year or two ago it was a struggle to find anyone - outside of manufacturing that is - that believed that the U.S. could be a manufacturing powerhouse again.
Richard McCormack's Manufacturing & Technology News puts this on display in it's latest issue with a story and accompanying interviews on GE Appliances.  Unfortunately most of what I will quote here requires a $495 subscription, but that could almost be worth the stories in this issue.
After decades of neglect, General Electric has a newfound love affair with its appliance manufacturing division. The 122-year-old company created by Thomas Edison has recommitted itself to developing and producing a new line of innovative products in America. It is re-invigorating its 900-acre Appliance Park located in Louisville with $1 billion of investment in a new generation of designers, engineers, workers and production systems. And for the first time, it is applying the lean methodology to all of its operations.
It's a pretty big deal, but perhaps even bigger is the realization - and example - that even the worst outsourcers can learn that total supply chain cost can trump supposed "cheap labor" savings.
When asked by Manufacturing and Technology News if the 80 percent drop-off of manufacturing workers was caused by robotics, automation and high levels of productivity, virtually every GE person who responded said the same thing: No. The loss was due to offshore outsourcing.
So what did they do?
In moving production back to the United States, GE decided that every aspect of the water heater needed to be redesigned through a team approach under a lean planning system that included GE’s sales division, designers, product and process engineers, accountants, executives and workers. It included the involvement of plumbers, retailers and customers. Anybody involved was allowed to suggest improvements. “What this shows is what can happen when we all sit down and work together,” said GE International Union of Electrical Workers President Jerry Carney.
In the process, it made the unit more affordable, reducing the retail price from $1,599 for the product made in China to $1,199 to $1,299 for the unit manufactured in Louisville. The production line uses the common lean practice of a “pull” system based on demand. There are visual controls. Inventory is in plain sight. The factory is bright,
The article goes into considerable detail on those changes, including the fact that they can only claim "Produced in America," not "Made in America" because they could not find a domestic source for some key components required to achieve the domestic content rule.  Sad, but perhaps that will change too....MORE
*Not that GE's P.R. folks don't try with whatever material Immelt gives them. As I said in 2007's "GE gets grant to install GE solar panels on GE headquarters":

The PR flack was quoted as saying:

“It’s a good demonstration project for the technology,” O’Toole said.

Asked why a large, profitable corporation like GE would need financial help from the state, O’Toole said one reason “is to show you have to invest in new technologies. Companies cannot do it alone.”

In other GE news, spokesmen did comment on whether PR spin could be harnessed as an inexhaustible and eternal source of power.