Why Lean Manufacturing is Dead: The Trump tax cuts change everything

Before moving on to more positive topics there need to be some additional information as to why Lean manufacturing is dead, and why it is more cult than fact.  Every company I’ve been associated with for the last twenty years has bought into the nonsense James Womack articulated in The Machine that Changed the World—which is an incredibly negative book about western manufacturing techniques.  While there is a lot to Lean manufacturing that is very worthwhile and should be looked at as the next generation of improved thought over mass production roots imitated in America—it certainly isn’t a silver bullet in solving everything as it was sold to American management.  It really comes down to a battle between two cultures where the obvious favoritism goes toward the Japanese market.

Nearly every fifth page of The Machine that Changed the World Womack and his pals criticize as inferior Western methods with an obvious academic lens of hatred.  The real purpose for the book wasn’t to make American business more profitable on an individual bases—but to make them more global—as the authors played their part in the grand scheme of wealth redistribution that was so common at the time. And for their part, they were very successful, large companies like Boeing, GE, Ford and so many others looked at their competition, the Japanese, and sought to beat them—but honestly it was too late.  I knew that when I worked at Cincinnati Milacron as one of their crack staff of Lean advisors.  They took me to their South Lebanon facility late in 1999 to study these methods by Womack and the gang so to save them from closure.  But before I had a chance to read all the materials they had dumped in my lap, the Oakley plant had almost completely closed down and they refocused their business to just delivery of CNC units as opposed to actually building machining centers. The South Lebanon facility closed in the early 2000s just a few years later. When our crack team of Lean manufacturing surgeons were gathered to save Milacron it was already too late—like the Titanic had already hit the iceberg.  Only it hadn’t sunk yet but those of us smart enough to look at the damage below decks knew it was going down.  A wound like that couldn’t be repaired at sea just as the culture at Milacron couldn’t be fixed by reading a few books too late in the process.

I currently work with a very smart engineer from Wichita, Kansas who could nearly tell the same story of the Boeing plant that closed down there.  While they were sinking they made him a Six Sigma Black Belt hoping to save their own fate from such a tragic end, but it didn’t work.  The employees just couldn’t make the change, they weren’t Japanese—the cultures were just too radically different.  And to Womack’s credit he is correct about most of his observations regarding Western approaches—we all saw what happened to General Motors.  The writing was on the wall way back in 1990 when The Machine that Changed the World was first published.  One of my daughters was born that year and it shocks me that she isn’t yet thirty years old, yet this Lean manufacturing stuff has been sold to the manufacturing world as some voodoo remedy that could stop all these plant closures when in reality it was just one culture dominating another.  I watched before my eyes the economy of southern Ohio cities like Norwood and Hamilton, Ohio evaporate.  The shopping mall I visited most as a child, the Middletown Mall turned into a ghost town within a few years and nearly every major industry died except for AK Steel which still operated as a traditional mass producer with heavily leveraged unionized labor holding it back from being better than it was.  Middletown, Ohio died and so did the people who lived within it. To the west all Trenton had going for it was the Miller Brewery plant which made the safe product of beer.  The tradeoff was again high cost employees protected by a union.  Many companies adopted Lean manufacturing to help get their labor unions under control but the bottom line was that American workers expected too much money for their productive output while Japanese based employees were willing to work for less in exchange for job security for a lifetime.

When you visit a Japanese plant you find that everyone dresses the same, in most cases.  When Westerners visit in their suits and ties they are given hats to wear to show all the other employees that these visitors are equal to the people on the shop floor.  They refer to their upper management as seniors because literally they are the people who have been at the company the longest.  The floor workers in Japan know that if they stay with the company, they will move up the latter so they are content with this reality.  While this solves problems that unions typically are concerned with, the security and income trajectory of their workforce makes a stable investment understandable, while in the West literally labor costs can fluctuate all over the place depending on the type of people who are running those organizations at any given time.  It is possible in America for instance for a sharp tack in the box to become a high level manager in their mid thirties if they worked hard and climbed the ladder at a fortunate company—while this would be very unlikely in Japan.  There, due to Lean manufacturing, that employee would have started on the shop floor as an assembler and might still be working their way into a management job due to their years of service and experience garnered.  This is the primary reason American companies have failed in their Lean offerings—they go through the motions, but they aren’t willing to go all the way and become like the Japanese.  There is more to Lean manufacturing than just a bunch of charts and Japanese words for things—it’s a philosophical approach to manufacturing that is part of the workplace culture.

Obviously in The Machine that Changed the World Womach and his buddies Jones and Roos were a bunch of statistical academics who bought into this global economy garbage and they thought the Japanese were going to dominate that push—which isn’t what happened.  While the Asian work ethic is something that is to be admired compared to the beaten down lethargicism that we find in the West these days—even the Japanese had their problems with just in time delivery when they became the global leaders at the front of the train.  They’ve had their own troubles leading from the top so as the smoke cleared it was obvious that the biggest difference between East and Western practices in manufacturing was cultural and that assumption was that if America wanted to play ball, they needed to become like the rest of the world.  Well, that too is a shifting dynamic that will change as early as 2018.

To act as a companion to The Machine that Changed the World coming straight out of academic circles and into politics was the notion of wealth redistribution.  America raised its corporate tax rate to up over 30% which pushed many American companies into foreign markets.  To the lesser educated minds the work of Womach appear to be genius.  We were led to believe that these companies were leaving because America was so inefficient when in reality it was really due to high taxes.  Politicians were selling globalism to Americans while they skimmed off excess for the IRS to fund all their progressive causes in the process of destroying American manufacturing.  President Trump knew all too well what was going on and before the close of the year in 2017 had the tax rates changed for corporations down to 21% and now we will see the truth that was there all along.  Jobs were mostly inventions of America and the high costs associated with them were due to American labor being higher than in places around the rest of the world.  But the reason for their leaving the United States was artificial due to high taxation.  Where Womach was pushing for a new global economy lead by the Japanese Lean manufacturing system that kept prices down and expectations for employee advancement low—and manageable—everything changed in December of 2017 when Trump signed the tax reform package which lowered corporate rates.

The nationalism Womach criticized so heavily in The Machine that Changed the World is now the economical method of our time.  With the tax rates lowered we find that Lean manufacturing was really just a scam designed to move wealth from one place to another using common sense improvements of traditional mass production utilizing a very competitive workforce by people who think differently than Americans.  Part of the American lifestyle is the assumption that everyone can have a piece of the dream, a house, a yard—a few cars and money in the bank where in other places they hope to have a bed to sleep in and a job to go to—because the rest of their lives aren’t very good.  There is a lifestyle expectation in America that is part of the consideration factor for which Womach completely ignores.  Even the Japanese who transplant to America formulate their lives around it so new methods of manufacturing improvement are due to be revolutionized to meet these market demands.  And Lean isn’t it.

For so many years we’ve all been told that the Decline in the West is inevitable and that it was they who had to change—but nothing could be further from the truth.  The decline of the west was manipulated by people like Womach to sell globalism to everyone as capitalism was the hidden driver of invention within The United States that made the jobs and created the markets to begin with—a little fact ignored by nearly everyone in every sector of academia—from anthropologists to the most astute economists.  America made the necessity for jobs and the markets for income flow—and the spillover effect is why they even have cell phones in places like Vietnam.  Without America nobody would have anything and that is the key to the next generation of manufacturing thinking.  It’s not to elsewhere that the keys reside—it is right in the homeland of America that we must look—and it is there where the great next movements of manufacturing will emerge.

Rich Hoffman

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