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Companies build global competitiveness.

US manufacturers are becoming more formidable global competitors by expanding their operations into major foreign markets and developing new global strategies. But some major companies still lack the commitment and aggressiveness to completely globalize their businesses and take the lead in shaping world markets.

These and other conclusions are drawn from the latest Coopers & Lybrand survey of American manufacturing, Made in America III: The Globalization of Manufacturing. The survey was launched to examine the proportion of American companies now operating in the global manufacturing arena, their readiness to compete, and the initiatives they have taken to bolster their competitive position in world markets.

'On a positive note, manufacturers now realize their competitors are across the ocean, not just across the street," says Henry J. Johansson, chairman of Coopers & Lybrand's manufacturing industry practice. "And in recent years they have taken significant steps toward challenging this competition in world markets.

"But altogether too many manufacturers are still reluctant to implement far-reaching tactics to give them global superiority, not just parity," Mr Johansson says.

Coopers & Lybrand graded manufacturers in four areas critical to world market competitiveness. It gave them a B" in globalization readiness, a B-" in understanding the challenge of global manufacturing, a "B+" for corporate strategic response, and a C+" for their manufacturing competitive response.

The survey was based on interviews with chief executive officers as well as other top executives of 150 US-headquartered manufacturing corporations with sales revenues of at least $250 million.

The first survey, conducted in 1987, revealed several vulnerable areas of US manufacturing's competitive position: a lack of focus on foreign competition, reluctance to implement new technology, and problems in human-resource management.

The second survey, a year later, looked farther into America's readiness to compete on the basis of its human resources. It revealed US manufacturers' slowness to improve worker relations, fulfill training requirements, establish long-term human-resource initiatives, and implement participatory-management principles.

This third survey indicates that manufacturers-particularly very large, multinational, discrete product manufacturers-have made substantial progress toward competing in global market.

The executives in this group consider at least some of their product lines globally competitive.

The survey responses show that, although a significant number of executives do not envision their operations ever becoming completely globalized, most executives today, however, are pursuing a global strategy. Their primary attraction to globalization is access to worldwide market opportunities and the desire to achieve a competitive advantage.

But, regardless of manufacturers' efforts to meet the threat of global competition and benefit from market opportunities, Coopers & Lybrand's industry experts conclude that American businesses are not moving quickly enough to be global leaders.

"Global competition is extremely aggressive," Mr Johansson says. To ensure success, American manufacturers must exceed their foreign competitors with careful but aggressive strategies."

Part of that strategy, at least for a significant minority of executives, emphasizes the start-up of subsidiaries and manufacturing facilities to support important or expanding markets. Those executives who define any product line as global" are more likely to say this, suggesting that new startups are replacing mergers and acquisitions as the globalization trend of the future.

In addition to the presence they have already established in western Europe and Asia, manufacturing executives anticipate that, during the next five years, global market expansion will be strongest in Eastern Europe, and that they will develop a manufacturing presence in that area.

At the same time, their strategy includes only a limited implementation of just-in-time philosophy, although they predicted a rapid increase in the next five years. Executives today report a significant level of implementation of operating philosophies such as just-in-time and total quality, and they predict the use of such systems to expand significantly in years to come.

Executives also predict increasing implementation of other manufacturing tactics including manufacturing products at facilities around the world for shipment anywhere; centralized capacity management; a single global management structure; automated core processes at manufacturing facilities worldwide; and centralized, worldwide management of raw materials, components, and parts.

The vast majority of executives claimed that they could respond to local market preferences on a worldwide basis, which is a solid indication of their competitive confidence.
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:US manufacturers
Publication:Tooling & Production
Date:Feb 1, 1991
Words:684
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