Race to the bottom

I've worked in the manufacturing sector in one capacity of another for most of the last twenty years. I've seen fads in management come and go, along with their proponents. I've seen consultants wade in and get paid big bucks to make huge changes that leave everyone other than the consultants in a worse position as a result.

I've seen stuff. Scary stuff.

But I've also seen manufacturers surviving. I've seen companies make cuts to the bone and beyond. I've seen employees accept a whittling-away of their wages and benefits because in this economy they realistically have nowhere else to go, and because they have a shred of hope that maybe someday things will get better, or at least back to somewhere closer to where they were before everything went to hell.

There's a lot of stuff driving this. My industry is fairly unique in that it manufactures a range of products that many consumers would rather steal than buy, and that they steal without the slightest trace of remorse - indeed, with a sense of self-righteously sticking it to the man.

But another thing that drives the downward death spiral across many industries is the unhealthy lose-lose relationship between retailers and manufacturers. Listen to this article from NPR's All Things Considered to get a sense of the scope of the problem:

Costco-Coke Spat Highlights Retailers' Strength - All Things Considered, December 14, 2009

Pay special attention to what is said between 1:10 and 1:40 - and realize that this does not only apply to "Chinese and Asian manufacturers."

This is not just a situation in which retailers and manufacturers are locked in a deadly embrace. Consumers are demanding lower prices, and have fewer dollars to spend in the first place. In some cases manufacturers are pinched between retailers and the clients for whom they are manufacturing the product. And like consumers, clients demand ever-lower prices for the same product, even as raw materials and other associated manufacturing costs actually increase, to the point that some manufacturers are looking at the possibility of manufacturing at a loss just to hold onto market share.

And what is the end result?

Imported Chinese drywall that poisons people and corrodes metal. Imported toys that are soft and pliable and bright and shiny thanks to the addition of toxic lead. Imported ingredients for pet food that have had their apparent protein content inflated by the addition of melamine, which has the side effect of sickening and killing the pets who eat it. Stores filled with goods that are pale, cheap imitations of items sold in decades past.* Items that have been manufactured in a half-assed, low-quality way because that's all the effort the manufacturer can afford to put into them.

Manufacturers know that if they can't keep up, the clients will try to find someone who can do the job at their price point. Consumers drive the system by valuing price over quality. Everybody plays a part, and everybody shares in the blame.

Is there a way out? I have no idea. I fear that we are heading for a future filled with cheap, useless dollar-store trinkets in place of the useful and functional things we want and need, a future where America's last remaining manufacturers have been driven from these shores, resulting in an economy where no one actually makes anything.

And all we'll be able to do then is look around and ask: How the hell did we get here?



*Do you have any old box fans around, maybe twenty or so years old? Go buy a new one and compare the quality and workmanship. Even just the size and heft and the tip resistance.