Why can't Americans make things? Two words: business school.

[snagglepuss]

Even if you could reclaim a chunk of those blue-collar jobs, would you have the managers you need to supervise them?


Source: The New Republic

snip

A lot of people talk about reviving the domestic manufacturing sector, which has shed almost one-third of its manpower over the last eight years. But some of the people I spoke to asked a slightly different question: Even if you could reclaim a chunk of those blue-collar jobs, would you have the managers you need to supervise them?

It’s not obvious that you would. Since 1965, the percentage of graduates of highly-ranked business schools who go into consulting and financial services has doubled, from about one-third to about two-thirds. And while some of these consultants and financiers end up in the manufacturing sector, in some respects that’s the problem. Harvard business professor Rakesh Khurana, with whom I discussed these questions at length, observes that most of GM’s top executives in recent decades hailed from a finance rather than an operations background. (Outgoing GM CEO Fritz Henderson and his failed predecessor, Rick Wagoner, both worked their way up from the company’s vaunted Treasurer’s office.) But these executives were frequently numb to the sorts of innovations that enable high-quality production at low cost. As Khurana quips, “That’s how you end up with GM rather than Toyota.”

How did we get to this point? In some sense, it’s the result of broad historical and economic forces. Up until World War I, the archetypal manufacturing CEO was production oriented—usually an engineer or inventor of some kind. Even as late as the 1930s, business school curriculums focused mostly on production. Khurana notes that many schools during this era had mini-factories on campus to train future managers.

After World War II, large corporations went on acquisition binges and turned themselves into massive conglomerates. In their landmark Harvard Business Review article from 1980, “Managing Our Way to Economic Decline,” Robert Hayes and William Abernathy pointed out that the conglomerate structure forced managers to think of their firms as a collection of financial assets, where the goal was to allocate capital efficiently, rather than as makers of specific products, where the goal was to maximize quality and long-term* market share.



http://www.tnr.com/article/economy/wagoner-henderson

[Crazy Dave]

1. American businesses are set up to gain short term and immediate profits

Years ago the Japanese used to lose money for a few months on whatever they were making until they worked out all the kinks, streamlined and optimized the manufacturing process. Then the profits came but you try that long term, looking down the road method these days, even in Japan with the shareholders and board of directors and they will get rid of you in a heartbeat.

[snagglepuss]

4. I remember reading an article in the 80's that left a strong impression, very similar

to your comment. It pointed out that CEO's were becoming interested only in short term profits. CEOs were no longer loyal to any one company because they realized they could command higher salaries by focusing on the short term profits and then move on to another company. The result being less long term investment which would eventually hurt American competitiveness.

[KILL THE WISE ONE]

2. i see it every day. then when the bean counters screwup they change the metric.

They tell me, I just do not understand because I am an engineer.
Don't they realize to get an engineering degree I had to learn how to add.

just as long as the paycheckes do not bounce .......:shrug:

[Mopar151]

3. I am so with you.

I've posted several times here - that part of the stimulus should be about fixing American management - 'cuz it's broken. Far too many of these fools think that gaming the system = actually making money.

[havocmom]

5. "Far too many of these fools think that gaming the system = actually making money.?"

That is the best analysis/summation of what is wrong with capitalism as currently practiced!

NEVER have I seen the situation better defined!

[Mopar151]

6. Don't get me started on mergers & acquisitions....... n/t

[global1]

7. Deceptive And Manipulative Marketing Practice Also Contributes.....nt

[TexasObserver]

8. Recommend

[Demeter]

9. As a Guess: Promotion From Within?

It used to be that one could have a career within a single company, and be rewarded for good work with increasing responsibility and pay.

Maybe I'm too old, but I do remember such things happening....

[Crazy Dave]

11. Me too

I remember once meeting a very well off gentleman about 15 years ago who told me that he started on the loading docks where he worked and made it to CEO. He looked to be in his mid to late 70s at that time.

[seabeckind]

10. The comments on tnr were more telling

Those same business school folks were defending their bias and explaining why it's a good business model. They also said we have to be careful we don't hurt the free trade idea.

I particularly enjoyed the comment by the guy who said if people didn't feel they were getting a good wage in the plant in AL they could just move to WA. Talk about out of touch.

My own personal observations on this shift of focus from production to finance occurred at around the same time we received notice that our Personnel Services Dept was being renamed Human Resources.

[snagglepuss]

14. An interesting observation about Personnel Services changing its name to to

Human Resources, it certainly suggests a different mindset.

[formercia]

18. I remember reading a cable

that said not to use the word 'torture' in cable traffic but to refer to it as 'human resources evaluation.'

[Gman2]

12. It takes a manufacturing engineer. But we have been getting kicked in the balls.

Yaknow, grease monkeys.

[Mopar151]

15. They had to give me the title, 'cuz of ISO

And I was the guy who translated the folklore on the blueprints (aka CAD-toons) to actual material specs. I got it down to a science, issued part numbers to each size of stock, color coded the stock rack, and wrote the common substitutions up in a shop standard. 3 weeks later, I was gone. Apparently, I did'nt cower well.

[kywildcat]

13. Recommend nt

[Blue_Tires]

16. for the longest time, Detroit would hire high-level beancounter

execs from fields that had nothing to do with cars; and even until the late 90s no one could figure why all the passion, innovation, and driving excitement had been extinguished from the product line...

[Vidar]

17. K&R.

[Sherman A1]

19. Precisely

It is management (or rather the excuse for management) that has ruined far too many good companies.

[Edweird]

20. Bullshit. "Business School' is where they taught to outsource in the first place.

'Business school' is WHY our manufacturing was shipped overseas. A bunch of arrogant shit-heads ruined our country.

[yurbud]

21. I wish I saw this soon enough to rec it. This is the problem: get rich quicksters instead of folks

in love with the product.

That is certainly the case with GM, Chrysler, and to a lesser extent Ford (though the last has been catching up quicker than the others).

The MBA's came in and figured an easier way to goose profits was to cut corners on quality and depend on their large market share to just keep people buying out of habit. Enough of us tried Toyotas, Hondas, and VWs to put a kink in that business plan.


Later the got the cancer of goosing quarterly profit by firing thousands of workers. Only someone who has never worked with their hands or designed a product could think dismantling a company to cook the books is some kind of successful. By that logic, the perfect CEO would fire everyone and liquidate the company.

The further evolution is the Enron model: the company that makes nothing at all and simply sets up shell corporations and Ponzi schemes.

The worst thing about these parasites is they are running not just our industry and Wall Street, they are running our economic policy. If we don't figure out a way to pry their cold, dead fingers from our economy, we will end up a hollowed out former super power like Russia, a dessicated corpse.