September 15, 2009

The real reason American industry cannot compete

My brother-in-law works at a local factory. He is the lead service tech on the team responsible for maintaining the production line. The line cost $50 million to build. He has 3 workers on his service team and frequently works 60 hour weeks trying to keep up with the myriad problems created on a modern production line. On any given weekday he has a dozen or more managers and supervisors following his three-man team around (four if you include him) inspecting their work, making suggestions, writing evaluations, and so on.

A dozen managers overseeing a four-man maintenance team on a $50 million production line.

In Japan I did some business with Sony Semi-Conductor in Kyushu. They have a dozen production locations, each with at least one line dedicated to manufacturing a specialized processor model. Each line cost between $100 million and $150 million to build. Each line is maintained and repaired by four-man service teams who answer to a single supervisor. That supervisor reports directly to the plant manager who in turn reports directly to Sony Domestic Industries National Offices in Tokyo.

American industry is not failing because of overpaid union workers (although the case can be made that union-negotiated retirement packages are killing us, they are nothing compared to management severance packages!). The real problem is for every person doing the work there are a dozen managers and supervisors drawing much larger salaries, much better benefits, and receiving far grander severance packages when they retire or resign.

Bloated management bureaucracies with insane entitlement packages are the real poison killing American industry. Unionized labor is not helping, but it is more the straw that broke the camel's back than it is the genuine source of the problem.