Chuck Parke said organizations in the United States that consume a tremendous amount of power in manufacturing their product will see a significant competitive advantage in the cost of energy.
Parke, a former vice president for Maytag Cleveland Cooking Products (now Whirlpool Cleveland Division) from 2004 to 2006, was the guest speaker Tuesday evening at the annual meeting of manufacturers at the Museum Center at Five Points.
He described the role of CAI as a mutual support group for manufacturers to share best practices, collaborate on talent development, analyze local labor trends and influence local and state government.
Parke said the companies that survived and thrived during these economic hard times have focused on leadership.
He said there were several issues behind the loss of manufacturing jobs in the United States, with the cost of labor being one of them. Low-tech manufacturing jobs have been shifted to Mexico at a cost of roughly 12 cents on the dollar and to China at the cost of 4 cents.
Also, while American manufacturing increases productivity, most Americans are spending more money on services rather than products.
And, there has been a movement in the last 10 to 20 years to use more contract labor and temporary labor. Those numbers are not factored into manufacturing jobs.
He said in the past, there seemed to be a tendency to trade out poor leadership for cheap labor.
“The organizations that went to Mexico — that wasn’t good enough so they went to China and now are looking for someplace else. I’m not saying that’s the case all the time, but in a lot of cases, they are still chasing something. They haven’t recognized they have a root cause issue within their own management team, but I think we’re seeing some improvement there,” he said.
Touching on labor and energy costs, he said, “I think we’re going to see something in the United States that is going to reverse that trend and that’s the cost of energy. What they’re finding out in the Dakotas, Texas, West Virginia and Pennsylvania in terms of quantities of natural gas and oil, is a game-changer.
“We’ve got that out there ahead of us and as a nation, we’ve got to take advantage of it.”
Parke said companies are beginning to look at the supply chain as part of the manufacturing process. Successful companies will be the ones with a synergistic approach to procurement, logistics, manufacturing, customer relationships and new product development.
Streamlining manufacturing is only part of the key. The next step is to figure out a way to make the five areas work together.
Cleveland Associated Industries President Denise Rice said since inception of the organization in 1965, CAI’s aim has been to build an environment in which manufacturing businesses can evolve, innovate and compete in an ever-changing world.
“Our organization advances the awareness of manufacturing essential to the local economy and provides our members with programming designed to ensure best practices at every level,” she said.
CAI also provides networking opportunities to help its membership grow.
“Our goal is to strengthen the ties of small, medium and large manufacturers throughout the community with person-to-person contact.”
She said the 28 member companies represent more than 6,000 employees who support more than 25,000 people.
Parke is currently executive director for nondegree programs for the Center for Executive Education at the University of Tennessee.