Manufacturing in the Balance

When speed to market is everything, separating design and development from manufacturing doesn’t make sense

Inexpensive labor has defined the last decade in manufacturing. The future may belong to technology.

When GE expanded manufacturing of home heaters and refrigerators at its facility in Kentucky last year, the reasons included big wage concessions the company had won from local workers and the advantages of being closer to its U.S. customers. But in an article in the Harvard Business Review last March, CEO Jeffrey Immelt explained that one of the biggest factors in GE’s decision to bring back manufacturing from China and South Korea was the desire to keep appliance designers near its manufacturing and engineers.

“At a time when speed to market is everything, separating design and development from manufacturing didn’t make sense,” Immelt writes. Now, someone who has an idea for a dishwasher that has fewer parts and weighs less can actually try to build it. These designs won’t be so quick to end up in knockoff products built by GE’s suppliers, either. “Outsourcing based only on labor costs is yesterday’s model,” says Immelt.

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Why not Human R&D?

Thank you, Sirs. From my point of view in Italy, I'm not acquainted with asian horizons; but i'm surely acquainted with Eastern Europe landscapes. That manufacturing in low labor cost Countries benefits the final buyer or consumer, is all but a demonstrated theory. Italy, an almost 70 million inhabitants Country, has become a net importer of almost everything, even tomato and apple from China, steel products from everywhere - though Italy's industry since long needs steel only for what's left of its manufacturing industry, that is, construction industry. Italian cars are made in Eastern Europe, in Central and South America; the manufacturing costs of italian car making plants are not high due to labor cost but because of plants' inefficiency, and this is due to plant design and management. This brings me to develop this point: car design processes are very inefficient when carried out by italian car maker(s) but - wonder of wonders - a leading german car maker has bought an important italian car design company. And the german cars are assembled all over the World.