#186 Reconfiguring US for “Smart” Manufacturing and “Smart” Infrastructure (Part #10)

24 Wednesday Feb 2016

Posted by Jordan Abel in Gov't Policy, Possible Solutions, Societal Issues

First-time readers, this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about Revenge Revolution and author, Entry #1. List and general description of entries to date. Annual assessment whether Revolution plausible.

Note: most characters appear in a number of entries, with many entries building on previous conversations. Profile of characters. You’ll catch on quickly. Thanks for your time and interest…and comments.

Scene: Jordan still home recovering from surgery. He anticipates returning to Washington soon. He’s drafting a note as follow-up to a request from POTUS. Series starts #177; conversation with POTUS, #179.

Jordan (thinking out loud): “Maybe I should send POTUS an email with the basic tenants of the plan. That way he can review it and forward to others for review.”

To: POTUS@wh.gov, Subject: Ideas to Reconfigure US Manufacturing to be “Smart.”

Mr. President: this note outlines the framework of a plan to help reconfigure US manufacturing and infrastructure to be “smart.” Being smarter will help US manufacturing become more competitive and help restore the middle class.

The program is also designed to be fair to US trading partners while recognizing this country needs to rebuild wealth generation capability. The “working name” for the program is “ACT FAIRLY.” One of your speech writers can come up with a sexier name. My preference is “Get Smart” but could not make the acronym work.

The acronym FAIRLY stands for:

“F” – Favor US manufactured goods in government purchases. “US manufactured” would require 75.0% or more local content.
“A” – Allow foreign investment but limit the percent foreign market share in any one industry to 25.0%
“I” – Infrastructure – rebuild existing infrastructure and expand to be “smarter” and support additional manufacturing
“R” – Rebuild US factories to be “smarter” and retrain US workers to be “smarter.”
“L” – Legislation passed supporting the proposed program rather than implementing through an Executive Order
“Y” – “You” are responsible to implement. “You” refers to individuals, organizations and government entities.

The proposed program is admittedly more of a vision than a detailed plan. Think of yourself as the Great Carnac. However, I do believe this type program needs a clear vision that is easily understood and one that can guide activities at multiple levels.

I like the an acronym like “FAIRLY” because the country has been so divided economically and socially. While each person might have a different view of how to “act fairly,” I think the outer boundaries of “fair behavior” are likely much closer together than if no reference points are set. We need to mesh the combination of “fairly” and “smart.”

The following paragraphs provide a bit more detail. No doubt you will want to tweak for your own style. Thought this might be a good starting point.

F — Favor US Manufactured Goods. To me the Federal government and state governments should lead the way toward buying US-manufactured goods. One issue is the minimum level of “local content” to qualify for labeling as “US Manufactured.” My suggestion is 75.0% of the wholesale cost must be US content. The content can be raw material or labor or some combination. What cannot be labeled as “US Manufactured” is a product where most of the work is completed outside the US with only final assembly in the US. Final assembly creates little value add and does not create many higher-paying jobs.

Allow Foreign Companies in US. The 75.0% local content requirement still allows foreign companies to have a major US presence. However, the foreign share of any key US market should not exceed 25.0%. For example, virtually all the electronics sold in the US are manufactured outside the US. My question is ‘why?’ when the labor content of electronics is such a low percentage of total cost. If the foreign companies want to work with a US partner, OK, as long as local content is at least 75.0% of the wholesale cost.

The US is a huge market and 25.0% represents a very attractive opportunity for most companies. 25.0% of the US market is greater than 100.0% of most other countries. In addition, foreign companies can partner with US companies and be part of a “US Manufactured” product.

Infrastructure. President Eisenhower led the nation to build the interstate highway system. You can lead the charge to rebuild physical transportation – roads, rail, air and water – and electronic transportation – the internet. Without the upgraded infrastructure, the economic effect of rebuilding the US manufacturing base will be much less. The transportation infrastructure needs to be more than just highways as favored by too many Congressional reps. The entire infrastructure needs to be rebuilt to be “smart,” allowing for smart/driverless cars, smart trains, smart planes and smart watercraft on inland waterways.

Like Eisenhower, you can position infrastructure rebuilding as part of national defense. Since every state will benefit from the improved infrastructure rebuilding program, Congressional support should be less of a hurdle.

Rebuild US Factories and Retrain Workers. As we’ve discussed, much of what is labeled in this country as “economic development” is really a wealth transfer from the public sector to a small group in the private sector. The ACT FAIRLY program needs to point out the cost penalties (i) associated with US-based companies relocating within the US; (ii) building greenfield facilities; and (iii)abandoning existing facilities in another location. I think ACT FAIRLY should ban incentives for any intra-US relocation. ACT FAIRLY should also include payment to the existing host city for companies that relocate.

Why should US taxpayers subsidize companies to relocate when existing manufacturing facilities are available in Flint, Detroit, Cleveland, Buffalo, Chicago, New York and a host of other locations? Rebuild the facilities in these cities first before we allow greenfield facilities elsewhere. The greenfield plants need infrastructure. Why build new infrastructure when existing infrastructure exists? If taxpayers understood the true economics, they would not allow such shenanigans.

Re-educating workers is critical also. People are smarter and more willing to learn than we…societal we…give them credit for. If someone is offered a retraining opportunity and turns it down, then go to the next person in line. There are many people looking to improve their economic standing.

The retraining needs to include providing more access to classes in “skilled trades,” especially for high school students. College sounds glamorous but not everyone is suited for college nor interested in college. Besides “skilled trades” does not mean the person is not smart or well-educated.

One of my “heroes” is Tom Silva on This Old House. Tom is an absolute master at solving complex problems using basic math in a very practical way. What’s his formal education? As I recall his profile on the TOH website, Tom graduated high school but did not attend college.

Legislation. While you might be able to issue an Executive Order to mandate the Federal government buys only goods with 75.0% US content, doing so would create another firestorm of charges of “overreach” and “dictator.” Provide the vision and the framework for the idea, then put the pressure on Congress to pass legislation. Some will squawk but the pressure from constituents will be considerable. People expressed their great frustration by initiating the Revenge Revolution. ACT FAIRLY is an excellent, low-risk opportunity for the House and Senate to start acting like adults.

You – Personal Responsibility. Using the bully pulpit I think you can begin to have people look in the mirror and then begin changing their minds about why they should buy US-made products. Some companies will claim costs of US products will be higher and therefore not competitive, However, when people start buying products that qualify as “US Manufactured” then the naysayer companies will begin changing. Same with government. People will begin to demand taxpayer dollars are spent on US-manufactured products and not products manufactured elsewhere.

Summary. Obviously the proposed program needs more discussion and analysis…and name tweaking. However, I caution those who might get involved not to get caught up in paralysis from analysis. Or, as my mother-in-law told her daughters when they were growing up, “Don’t get your panties in a wad.”

The ACT FAIRLY concept is sound and can be implemented. As POTUS you have a great opportunity to lead the transition from the Revenge Revolution to a more dynamic country and fair society. People want a change.

I’m available if you want to chat. Should be back in Washington in a couple of weeks. Thanks for the opportunity to present my ideas.

Best regards, Jordan

#185 One Person Can Make a Difference (Part #9)

17 Wednesday Feb 2016

Posted by Jordan Abel in Corporate Policy, General Motors, Personal Stories, Societal Issues

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Scene: Jordan still in Charlotte and on limited work schedule while recovering from prostate surgery. Jordan calls his office and talks to Gelly, his assistant. Earlier Jordan and POTUS began conversation about rebuilding US manufacturing and the middle class. Series starts #177; conversation with POTUS, #179.

Jordan: “Gelly, could you do me a favor, please?”

Gelly: “Yes, but only because you are so helpless.”

Jordan: “C’mon. I’m not helpless. I’m just a little slow getting around that’s all.”

Gelly: “I must say. Your recovery seems to be progressing more quickly than I anticipated. You pleased with progress?”

Jordan: “I’m pleased with progress and so is the doctor. I just need to make sure my expectations don’t race too far ahead.”

Gelly: “OK, so what do you want me to do?”

Jordan: “POTUS called me at home. By the way, did you tell him about my surgery?”

Gelly: “I’ll never tell. And he certainly doesn’t need me to tell him what’s going on in your life. Isn’t that what those agencies are for?”

Jordan: “We had a nice chat about the technology used in surgery.”

Gelly: “Only guys would talk about the machines and software used to cut them open and remove parts. OK, I’ll stop and listen.”

Jordan: “What we never got around to was a story I had promised to tell him. He said to call when I was feeling better.”

Gelly: “So, now you’re feeling better and want me to find out a good time for him to chat, right?”

Jordan: “Yes, please. Earlier in the day is better for me. Thanks.”

Gelly: “I’ll make sure Little Jordan is not in his jammies when POTUS calls.”

Jordan: “You’re tough, Gelly.”

Gelly: “I harass you because I like you Jordan. When I stop harassing you is when you should be concerned.”

Next day Jordan receives call at home.

Jordan: “Jordan Abel, may I help you.”

POTUS: “He doesn’t get it. Relax dude.”

Jordan: “Alright, Mr. President, I’ll relax. I’m just so programmed to answer the phone a certain way.”

POTUS: “I hear you. Gelly said you were ready to tell me the second story, which is about how one person can make a difference. If you have time, I’m ready. Is this another Buick story?”

Jordan: “Yes. Here’s the background. Buick spends lots of money modernizing an old assembly plant. Production then resumes but quality lags.”

POTUS: “How bad was it?”

Jordan: “Second worst plant in North America.”

POTUS: “You mean 2^nd worst for Buick?”

Jordan: “No, 2^nd worst of any assembly plant in the industry. That’s all domestic plants and all foreign-owned plants.”

POTUS: “Quality was that bad after all the money was spent modernizing the plant?”

Jordan: “Yes.”

POTUS: “Big problem.”

Jordan: “The main character in this story works in the Buick service department. Mid-level salary guy but his family is…”

POTUS: “…Let me guess. This is Flint and he’s the first of his family not working on the assembly line? How’d I do?”

Jordan: “Dead on. The family is 3^rd or 4^th generation hourly worker and 2^nd generation UAW.”

POTUS: “What happens next?”

Jordan: “He comes to my office and borrows a report with all kinds of quality data and consumer rankings. Like a JD Power report but it’s developed internally and has much more detail.”

POTUS: “Is he supposed to have the info in the report?”

Jordan: “No reason he can’t. But unbeknownst to me and any other department head, he takes the report and meets with the UAW.”

POTUS: “The same UAW guy you talked to. You know, the one whose son you mentored? Wasn’t he president of the UAW local?”

Jordan: “Probably but the same guy but I’m not 100% sure. Whoever he talked to, he reminded them his family had worked in the plant since Buick was founded in 1903. He also told them the ratings were not Buick’s but from customers. Finally, he told them that if quality did not improve, the company was likely to close the plant and move production elsewhere.”

POTUS: “Close it, even though they’d spent all the money modernizing the plant?”

Jordan: “His analysis was spot on.”

POTUS: “What happened?”

Jordan: “I’ll tell you the results. How the idea was communicated with the rank-and-file, I have no idea…nor frankly, do I want to know. But what happened is quality started to improve quickly.”

POTUS: “Then what?”

Jordan: “Within 18 months, the quality of the plant went from 2^nd worst in the industry to 2^nd best…and within a whisker of being first.”

POTUS: “in just 18 months? Really?”

Jordan: “Really.”

POTUS: “This guy get some kind of award?”

Jordan: “No one even knew about it or talked about until a few years later. Management knew that quality turned around but no other exec I talked to knew exactly what happened.”

POTUS: “So one guy did all this on his own?”

Jordan: “One guy started the ball rolling. But when you step back and think about, this guy had more credibility with the UAW than the entire management team. They trusted him. He wasn’t a suit. He wasn’t out for some political gain…or some promotion. In fact, he risked getting demoted for going outside the system. But he didn’t worry about personal consequences. And he had credibility because of his family history.”

POTUS: “Quite a story. I keep shaking my head. Just one guy who did this on his own. Wow.”

Jordan: “One guy. No committee. No incentive other than trying to do the right thing and save jobs for his family and other members of the community. And he’s not from central casting. He’s overweight and low-key — in some ways reminds you of a Guernsey cow. I mean that in a positive way…but you get the idea.”

POTUS: “Interesting profile for guy that made such an impact. Did GM keep the plant open?”

Jordan: “The plant stayed open for another probably 20 years. They shut it as part of the bankruptcy, and then demolished it. 100 years of automotive assembly history turned into a pile of rubble.”

POTUS: “As a country we’ve got to change. Stories like this one make me inspired by the effort of one individual. The story also makes me sick because 100 years of effort by a lot of people got tuned into a heap.”

Jordan: “I still get upset with the ending to the story.”

POTUS: “What are we going to do, Jordan, to help rebuild US manufacturing? And get those middle class jobs back to Flint and many other locations.”

Jordan: “You want to talk now or later?”

POTUS: “I’ve got to run. And you probably need some rest. Let’s chat some more soon.”

#184 How Manufacturing in US Can Help Medical Patients, (Part #8)

10 Wednesday Feb 2016

Posted by Jordan Abel in Education Issues, Gov't Policy, Innovative Thinking: Ideas and Products, Personal Stories

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Scene: Jordan and POTUS continue conversation about rebuilding US manufacturing and the middle class. Series starts #177; conversation with POTUS, #179.

Scene: Jordan is at home in Charlotte.

Jordan: (answering phone), “Hello, Jordan Abel speaking. May I help you?”

POTUS: “Yes, you may help. This is POTUS. But Jordan, drop the formality. Relax. You’re at home remember?”

Jordan: “How’d you know I was here, Mr. President?”

POTUS: “You know better than to ask that kind of question. How’s the recovery coming?”

Jordan: “Recovery coming along OK. Getting better each day.”

POTUS: “I didn’t know you had an issue. What hanged your mind and why surgery?”

Jordan: “The short version is long-time GP has been monitoring my PSA readings, which have been creeping up over the past several years. About 15 months ago he suggested I see a urologist.”

POTUS: “Higher PSA levels seems to be a problem for a lot of older guys…like you.”

Jordan: “And, you Mr. President, will probably have the same problem.”

POTUS: “I know. Being a big dog doesn’t make one immune from health problems. And we all get older. More details about what happened, please.”

Jordan: “I had biopsy 14-15 months ago and another late last year. After reviewing results from the second biopsy, which were still reasonably good, doctor recommended we explore treatment options.”

POTUS: “Why surgery versus some other treatment? Surgery seems so radical.”

Jordan: “Considered five primary data points. Following is my analysis, not the urologist’s, although I think he would agree with the general statements. For other people, the recommendation might be different.”

POTUS: “Understood.”

Jordan: “#1 consideration – to what extent was the cancer concentrated in the prostate or nearby. By removing the prostate, most if not all the cancer would be removed. #2, if follow-on treatment required, what options are available with each treatment? Some treatments leave few or even no options for follow-on. #3, what is the likelihood of negative effects following surgery? #4, what is the overall health of the patient. #5, what is the age of the patient? If I were much older and had other health problems, surgery might not be the best option, or even an option. But I’m relatively young and healthy so I needed a treatment that reduced the likelihood that prostate cancer would become a primary issue. If you consider all those factors, surgery seemed best for me. ”

POTUS: “OK but surgery’s been around a long time. I’ve heard some horror stories. Is there something different now versus say 5-10 years ago?”

Jordan: “Micro-surgery using robots. With the robots, really semi-robots since the surgeon still controls the movements, the precision is greatly enhanced and size of incisions reduced.”

POTUS: “Just out of curiosity, was the equipment made in the US?”

Jordan: “Forgot to ask. The brand name is diVinci. The diVinci system is a great example how technology can improve people’s quality of life and extend expected lifespan. The product would be a good example to include in your speeches about the importance of and benefits of US manufacturing.”

POTUS: “Are you OK if I mention your experience?”

Jordan: “You know I’m uncomfortable about personal acknowledgement. But, if citing a real person in the story, and one that you know, helps build credibility, go ahead. Lots of guys face the prostate problem and they should know diVinci is not your father’s surgery.”

POTUS: “Thanks for agreeing. There’s lot of areas where technology and manufacturing can help the medical community and patients. This will be a great example.”

Jordan: “”If you’ve got a few more minutes, I’ll tell you a couple of funny stories connected with the surgery.”

POTUS: “I’m all ears. Been a rough day and I need some humor.”

Jordan: “At discharge the nurse is running through her list of ‘do’s’ and ‘don’ts.” Part way through, she says “no sex.” At this point I break out laughing and ask her how I’m supposed to have sex when there’s a catheter inserted you know where.”

POTUS: “That’s funny. Sounds like a good skit for Saturday Night Live. You got another one?”

Jordan: “With this micro-surgery, some air is inserted in the body cavity to provide more space to operate.”

POTUS: “Sounds painful.”

Jordan: “I think the excess air in post=op was more painful that the incisions. Anyway the goal is to expel as much of the remaining gas as quickly as possible but without any undue strain. They don’t want you to press so hard you’ll damage the stitches and cause more bleeding. So you have to let the air work itself out.”

POTUS: “How long’s that take?”

Jordan: “I made no progress until later in the 3^rd day.”

POTUS: “Progress being what?”

Jordan: “In the 50+ years I’ve known my wife, I don’t think she’s every complimented me on ripping one off.”

POTUS: “She complimented you? Wow, I need to remember that. What day was that…?

Jordan: “…Saturday.”

POTUS: “Then what?”

Jordan: “We started to laugh.”

POTUS: “Doesn’t laughing hurt where the incisions are?”

Jordan: “Hurts big time, but it was worth it. By the way, she’s been a real trooper, especially about emptying ‘the bag.’ She deserves the Clara Barton Home Nurse Award.”

POTUS: “Glad you are in good hands. Tell her I said hello. Also glad you are on the mend. Let’s chat more soon. We need to continue to discuss how to rebuild US manufacturing and the middle class. But when you’re ready.”

Jordan: “Thanks for calling, Mr. President.”

#183 Are Wall Street Traders Really Traitors? (Part #7)

03 Wednesday Feb 2016

Posted by Jordan Abel in Corporate Policy, Gov't Policy, Personal Stories, Possible Solutions, Societal Issues

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Scene: Jordan and POTUS continue conversation about rebuilding US manufacturing and the middle class. Series starts #177; conversation with POTUS, #179.

POTUS: “Jordan, you’re taking a tough stand. Aren’t you making it harder for manufacturing companies? Won’t companies just leave…or just start the company outside the US and not worry about regulations?”

Jordan: “Might be making it a little more difficult. But a counter is having tax breaks for US made products.”

POTUS: “You talking about tariffs for imports? We’ve got all these trade agreements between the US and other countries.”

Jordan: “What I’m suggesting is goods manufactured in the US – manufactured, not just assembled in the US – get some sort of tax relief. The goal is to make it less attractive for executives to locate outside the US.”

POTUS: “What about companies relocating in the States? Should there be some sort of penalty?”

Jordan: “Like banning Charlotte from recruiting companies from New York, Ohio, Michigan and elsewhere. Like I said earlier, recruiting from another state seems more like stealing to me.”

POTUS: “Couldn’t we allow states still to recruit but say ban any tax breaks or other type of incentives? Another approach would be to levy a tax on the company for relocating.”

Jordan: “Some type of tax or penalty seems reasonable. At a minimum companies should pay for displaced workers and the loss in tax base in the community they’re bailing out of.”

POTUS: “What do we do about the influence of Wall Street? The Street seems to put lots of pressure on companies to meet quarterly earnings targets.”

Jordan: “I view the so-called pressure as an excuse by CEO’s to cut expenses and mask poor management. Some tweaks to operations are always necessary but the company is either being run fundamentally correctly or not.”

POTUS: “If the company is being run properly, any earnings shortfall in one or two quarters should work itself out. Is that what you’re saying?”

Jordan: “Exactly what I’m saying. Sophisticated investors understand that. Warren Buffett is a perfect example. Did he build the value of Berkshire Hathaway by focusing on quarterly earnings?”

POTUS: “No.”

Jordan: “So there’s the lesson for investors. Be patient. We’ve allowed the traders on Wall Street to gain the upper hand. As a result management start to focus on the wrong issues.”

POTUS: “Are we letting the tail wag the dog, as it were?”

Jordan: “We…societal we…are letting Wall Street traders have too much influence on the way businesses are run. The time horizon for traders is minutes, not months or years. The political right would be apoplectic if they ever heard me say this, but the traders are more like traitors. They really don’t care about this country.”

POTUS: “C’mon. Wall Street traders are traitors? How can you say that?”

Jordan: “Because the traders have no loyalty to the company or the country. They do not care if a company goes under, the company moves production off shore and ruins a town. The traders care about one thing – making money on every trade.”

POTUS: “Keep talking.”

Jordan: “Think about it. Pension funds and individuals…but mostly pension funds…have large securities portfolios. What are the pension funds supposed to do?”

POTUS: “Protect the money of employees, current and former.”

Jordan: “Do you think the employees believe its smart business to ship jobs overseas and eliminate their own job?”

POTUS: “That seems like a silly question. Of course not.”

Jordan: “Well, CEO’s are doing exactly that. Why? To boost quarterly earnings so some a-hole doesn’t start trying to drive down the stock price and encourage a hedge fund to begin a takeover. I sound like a broken record, but do you think for a microsecond the traders care about the company?”

POTUS: “I hear you Jordan.”

Jordan: “Who does care about the company, or at least should care about the company?”

POTUS: “Employees, the pension fund…”

Jordan: “…and maybe some of the executives. Then why do we have all these laws that permit manipulation of stock prices? Even worse is allowing investors to raid companies.”

POTUS: “How do you propose we stop that?”

Jordan: “Mr. President, I don’t know. But what I do know is the American worker is getting screwed and wealth is being transferred from the worker to a small group of investors and some countries outside the US.”

POTUS: “What about unions? Wall Street and the execs are not the only ones playing this gig.”

Jordan: “I’m not naïve. Some unions were a problem 15-20 years ago. But they’re not now. And I contend the unions never were as big a problem as a lot of people claimed.”

POTUS: “I’ve heard stories where unions drove companies out of town.”

Jordan: “I have to. And there are likely a few examples. But people forget, unions are made up of people. People with kids and families. And people with feelings.”

POTUS: “Some people will claim you sound like some screaming liberal.”

Jordan: “For some issues, I probably am. I’ll give you an example of why I feel this way. Years ago, when I was at Buick, our department ‘hosted’ students during their co-op work period from Kettering University – it was General Motors Institute then. One session the son of the president of the UAW local was working in our department. A short time after the co-op work session ended, some of us attended a meeting with the UAW. The president and I chatted a while and then joined the rest of the group. I got all kinds of semi-nasty questions about why I was talking to the president.”

POTUS: “How’d you respond?”

Jordan: “I told ’em I was asking how his son was doing in school. And that the president thanked me for taking his son under my wing.”

POTUS: “You think that happens very often?”

Jordan: “Probably not, but it should. We were a couple of guys trying to help a young man get an education. What’s so terrible about that?”

POTUS: “Sounds as if both of you were trying to do the right thing. You have another example?”

Jordan: “Yes.”

POTUS: Remember the second story, please. I’ve got to head to yet another meeting.”

(Continued)

usrevolution5

~ USA Headed for a 5th Revolution! Why?

Monthly Archives: February 2016

#186 Reconfiguring US for “Smart” Manufacturing and “Smart” Infrastructure (Part #10)

#185 One Person Can Make a Difference (Part #9)

#184 How Manufacturing in US Can Help Medical Patients, (Part #8)

#183 Are Wall Street Traders Really Traitors? (Part #7)