Sick Six Sigma
The sky is falling. The sky is falling. We are doomed. All is lost. America will never manufacture anything again. We have lost our ability to compete and all that is left for us to do is morph into a service provider nation. Foreign workers will work for a shiny bag of beads and a bowl of rice. We are destined to be a country of financial advisers and baristas. Our backbone industries are failing and the Republicans have misguided us into a disaster in which nobody will ever make or buy anything again. Woe is me.
Sorry about that. I was just watching some old Democrat campaign commercials. All these gloom and doom predictions from the liberal leftist snake oil salesmen, selling imported snake oil, make it appear that our only hope for salvation from complete collapse is to heave billions of dollars at the terminally ill manufacturing sector. The recent salvo started in September when the Democratic controlled Congress approved $25 billion in “low interest loans” to be given to those beacons of progressive American manufacturing; the union controlled Big Three automakers. It has progressed from there to the point where that patron saint of the working man, Barney Frank, will hold hearings with the United Autoworkers Union big wigs and the CEO’s of these Detroit disasters to see how much more taxpayer tithing it will take to keep them all happy Democrats. But I have a suggestion for old Barn’. Instead of inviting the automakers CEO’s to this soiree; why not invite their Six Sigma black belts?
To be sure our manufacturing sector is facing some strong competitive headwinds blowing out of just about every industrially developing nation. Couple this with a looming global recession that does indeed have fewer people buying fewer things, and you end up with some very shaky forecasts. Manufacturing jobs in the United States have been on the decline. But the reality is that the number one focus of manufacturing is to reduce the number of man hours it takes to produce a manufactured product. If manufacturing is to survive in this country, and it will, it must look at cost reductions in absolutely every area available, including personnel.
Technology has played a huge part in the reduction of old fashioned manufacturing jobs. The days of a journeyman punch press operator who was missing three fingers but still able to tweak his machine to make less than perfect material turn out a nearly perfect part are gone. It’s all about speed and quality in today’s manufacturing environment. The standards have been raised for the raw material going in as well as the inspection level of the finished parts coming out. Computerized equipment is now doing in minutes what it took crews of employees hours to do in the past. Companies are investing huge sums of money in this equipment with the sole purpose of increasing profits through reduced man hours and increase quality.
The Detroit auto industry has been demanding and receiving price reductions from their suppliers on an annual basis since General Motors was a Corporal. They have told their suppliers who they can buy from, what they will pay for it and how much profit they can make. They have insisted their suppliers build facilities in other countries and who they will form joint ventures with in still more. They have, for the most part, completely taken over their suppliers businesses and much like their own run many of them into bankruptcy. The price reductions they have received have been used to improve profit margins not to reduce the selling prices of their ill conceived and ill received new models. It’s has not been a price per part issue that has caused these legendary companies to become legendary failures. So how does throwing money at a bad business plan make sense? It doesn’t, that’s where the Six Sigma team comes in.
Six Sigma is a problem solving process used by most successful manufacturers. The important word in that last sentence was the word process. It forces a process of discovery that eliminates jumping to conclusions and prevents spending time and money on solutions that will not solve the root cause of the problem. The process is taught in classrooms and applied on shop floors. One involved in this program advances through each stage of development and if successful receives what is known as a belt, very similar to the belts awarded in the martial arts. Black is the highest ranking color of belt but there are even more advanced ranks within the black belt level. Just make the mistake of referring to some QC guy as a black belt if he is in fact a double black belt and you will immediately be made aware of the Six Sigma pecking order.
The guiding acronym of Six Sigma is DMAIC. Had this process been developed by some savvy entrepreneur I’m and certain he could have come up with a catchier acronym like DAISEY or DUMMY, but DMAIC is what we got. It stands for Define, Measure, Analyze, Improve, and Control.
Define – why is the issue a problem, Measure – what is the problem, Analyze – what is the root cause of the problem, Improve – What will be done to fix the problem, Control – verify the fix.
Six Sigma demands that problems be turned into numbers, if you can’t turn the problem into a number than you don’t know enough about the problem. It takes all this raw information and funnels it down like a hillbilly still so only a few drops come out the other end. It forces participants to abandon preconceived ideas and focus on all possibilities. As it relates to the auto industry, so far nobody has been willing to realistically analyze the problem much less been able to quantify it. The problem is not that GM, Ford and Chrysler may go into bankruptcy; the problem is what drove them there. It certainly wasn’t their cars because nothing and nobody is driving those. But unless the root cause is fixed you can expect to continue the merry-go-round of endless hearings followed by shamed union and car executives promising to do better followed by government concessions and agreements to give them more money followed by impassioned calls for new hearings because they are about to go broke again.
The future of manufacturing in America lies in our ability to do things better not necessarily cheaper than our competition or with limitless government financial support. Six Sigma and Lean Manufacturing are just two examples of how manufacturers improve their processes to increase competitiveness. Over the past 12 months many OEM manufacturers have actually moved manufacturing work back from overseas suppliers. This was not done in patriotic support of American manufacturing. It was done because it made financial sense to do so. Much like the recent spike and drop in gasoline prices, Congress cannot control supply and demand markets, regardless of how much money they throw down the hole trying.
It will be interesting to see if anybody mentions cost per man hour or production levels per man hour of the Detroit facilities versus the transplant facilities down south. It will be interesting to hear how the Union will justify the American taxpayers picking up the benefits and legacy costs of their dues payers. It will be interesting to hear how the CEO’s justify the American taxpayers hard earned dollars paying for their years of bad business decisions and worse union concessions. It will be interesting to hear if anybody on the Congressional side of the table asks the “backbone of America” car makers how much of their cars are actually made in America.
In Barney Frank the automakers have found a man that never met a problem he couldn’t make worse by injecting welfare. In the automakers Barney has found folks more willing to be injected than John Kerry at a Botox clinic. The problem is after it’s over, much like John Kerry, the taxpayers will find it impossible to smile.
