OK, so we didn't pile on the Boeing vs. Northrop Grumman/EADS KC-X airborne tanker contract fiasco over the past few months. Sure, we covered it plenty (see here and here), but since the brouhaha over the awarding of the contract to - oh, horror - NG/EADS (a foreign company!) we've taken a wait-and-see tack. After all, everyone else seems to be asserting opinions, so why add to the excessive bloggage, right?

But now, Boeing is 3 days into a strike by The International Machinists and Aerospace Worker, which means they have no indigenous machinists to build their aircraft and parts. In the days leading up to the strike, Boeing had offered an 11% increase in wages, as well as improved bonus, pension and healthcare concessions. But that isn't what sent the machinists to the picket lines.

It was Boeing's intention to increase outsourcing of it's manufacturing overseas to improve its bottom line. The machinist's union wasn't having anymore of that, and they walked.

Wait a minute - just a few months ago, the Web was overrun with cyber-hooey from pundits and politicians, nearly all screaming bloody murder that the U.S. government was shooting itself (and citizenry) in the collective foot by giving work to NG/EADS. As the line went, that work would be best given to a U.S. company that would ensure U.S. workers - and the tax base - would get the benefits.

So isn't this a gross contradiction? Will Boeing getting the KC-X tanker contract be "good" because Boeing will use U.S. workers (as said a few months ago), or is Boeing planning on outsourcing like crazy (like, say, " ... 70 percent of all of the parts for its 787 aircraft ..."). Is Boeing American or unAmerican? Will they outsource or not outsource?

The fact is, if Boeing wants to outsource everything Katmandu to improve profits and efficiency they should be allowed to do it. And if the machinists want to challenge that, they should strike. This is democratic, like it or not.

But Boeing's portrayal as a patriotic protectionist on the one hand, and an outsourcing addict on the other is disingenuous and flat-out ridiculous.They can't be both at once, and only when it suits them.

It seems to me that between the tanker deal and the machinist strike, Boeing's in one heck of a PR pickle. It'll be interesting to see which Boeing emerges in the next few months.

In a recent survey from Deloitte, U.S. manufacturing executives say they consider North America "the most desirable region for expansion over the next three years."

But before you go out and start pulling out the champagne, you should know - there's a catch.

First, the good news: the confluence of recent financial events is absolutely influencing U.S. businesses and where they choose to expand.

In terms of the executives' agendas for expansion, the survey found that sales and services topped the list with 76 percent planning to expand sales in the United States, 58 percent in Canada and 67 percent in Mexico. Sourcing of raw materials and parts (50 percent in China, 49 percent in the United States, and 43 percent in Mexico) and production (44 percent in the United States, 37 percent in Mexico and 37 percent in China) rounded out the top three priorities.

Overall, the vast majority of respondents said North America will not lose competitive ground in those areas over the next five years. And a significant number said they believe North America will become even more competitive by 2012 in sales and marketing (45 percent), information technology (41 percent), customer service (37 percent), R&D/engineering (36 percent) and finance/accounting (34 percent). A small percentage predicted that North America will be less competitive globally in these areas by 2012, with the balance being neutral.

The only dark spot is production capability. Despite plans to expand in North America in the short term, survey respondents painted a gloomy picture of this region's ability to compete over the long run with lower-cost locations for production, especially Asia.

More than half of survey respondents (61 percent) said they expect North America to become even less competitive globally as a site for production by 2012. The key barriers to making production competitive globally were seen as labor cost (cited by 71 percent), tax policy (66 percent), work rules (66 percent), lack of availability of skilled labor (51 percent) and costs of raw materials and energy (56 percent). Not surprisingly, these were the issues most frequently cited by executives surveyed as areas that governments should address as matters of public policy.

"The simplistic way to view manufacturing is to look only
where production is located. It's clear that a more accurate way to measure
the economic impact of these companies is to look at where all operations
are located, including sourcing, research and development, distribution,
finance, marketing, and all of the other functions necessary for a company
to thrive. In most cases, executives are telling us that North America
provides a competitive business environment for most of these activities."

Apparently for SMB manufacturers, there is safety - and bucks - in numbers. But how scalable and long-term this strategy becomes may all depend on the motive and how it's accomplished.

To fight the battle against low-cost manufacturing countries and shifting sources for discrete parts, materials and services, manufacturers everywhere are forming alliances and groups to provide tight geographic solutions clusters for buyers.

Forget for a moment - if that's possible - about the sense this makes with fuel and shipping costs where they are, or even about which country or region is the best candidate for coopetition.

Profit can play just as strong a role as survival to motivate previous competitors to cooperate.



For a perfect example of how coalitions of manufacturers are forming to reinvent the notion of competition and services in manufacturing (without a low-cost threat involved), check out Wikinomics: How Mass Collaboration Changes Everything (see the story of Chongqing and its formidable motorcycle designing and building network in China, beginning on page 219).

The Chongqing network is a free-forming, loosely based organism of drifting designers and engineers and machinists and assemblers that somehow work and collaborate as one of the world's most successful (re: profitable) motorcycle building businesses.

In the U.S., several regions and states have seen SMB manufacturers form coalitions to forego competitive relationships to survive.

No state has seen more setbacks than Michigan, and it has produced two examples of a more structured approach to coopetition:

• Defense Contract Coordination Center (DC3) - This entity was created to connect military purchasing bodies with qualified Michigan-based manufacturers that match their needs.
• United Tooling Coalition - This consortium of manufacturers have banded together to provide a one-stop, regionally tight destination for several services - dies, molds, machining, prototyping, design, fixtures, engineering, and more.

It looks like the shortage of manufacturing & technology labor in the U.S. is playing havoc with the U.S. military and government.

The dilemma is covered in a piece from the front page of yesterday's New York Times titled "Top Engineers Shun Military; Concern Grows" and authored by Philip Taubman.

According to the article and its sources, the erosion of engineering talent to manage military projects has "reached crisis proportions."

Over the last decade, even as spending on new military projects has reached its highest level since the Reagan years, the Pentagon has increasingly been losing the people most skilled at managing them. That brain drain, military experts ... say, is a big factor in a breakdown in engineering management that has made huge cost overruns and long delays the maddening norm. Mr. Kaminski's generation of engineers, which was responsible for many of the most successful military projects of the 1970s and '80s, is aging, and fewer of the nation's top young engineers, software developers and mathematicians are replacing them. Instead, they are joining high-tech companies and other civilian firms that provide not just better pay than the military or its contractors, but also greater cachet - what one former defense industry engineer called 'geek credit.'

... the central problem is a breakdown in the most basic element of any big military project: accurately assessing at the outset whether the technological goals are attainable and affordable, then managing the engineering to ensure that hardware and software are properly designed, tested and integrated ... Without it, projects can turn into chaotic, costly failures. Increasingly, that has become the case. What is more, the loss of government expertise has magnified the difficulties associated with another trend: In recent years, the Pentagon has transferred more and more oversight responsibility to its contractors, who themselves often lack sufficient systems-engineering skill and the incentives needed to hold down costs.

I can’t decide if solar energy is right for manufacturers as an energy source.

On the one hand, anything that gets us away from dependence on oil is nothing but a good thing. On the other, manufacturing businesses – especially SMBs – likely can’t justify the hefty initial investment in current solar technology.



Please spare me the argument that it pays for itself, or that “you can sell back to the grid” to offset costs. Those are long-term issues for businesses with wicked cash flow and shrinking margins. And the energy needs of a manufacturer are much greater than most other businesses. Besides, if any technology gets the nod first, it’s likely gonna be for something that automates or improves the processes of the business.

For a quick video overview of solar power with consideration for manufacturing applications, check out this video from Cisco over at bMighty.com.