AMERICAN COMPANIES: READY TO COMPETE?
A survey of the big competitive issues facing American companies
When Peter Drucker was asked more than 25 years ago, "What will be the biggest management
changes in the 1980's?" his response included this statement:
"By 1990, we will have learned, I hope, what the Japanese learned from us.
We taught it to them:
People are a resource and not a cost. The Japanese accepted that idea and we haven't."
Drucker did not mean to imply that people were not a cost, but rather that they were also a resource
which should be employed to deliver economic value to customers much greater than their costs,
and therefore increase profitability through increased productivity. Some American businesses have
been extraordinarily successful in gaining productivity increases to help to reduce costs, increase
quality and improve customer satisfaction, worldwide competitiveness and profitability. But, when
productivity is not cost competitive then businesses tend to find ways to outsource or offshore
functions in order to be more competitive and to improve customer satisfaction.
In some commercial sectors, many American businesses have significantly increased productivity
over the past 25 years. Simplification of work processes and great emphasis on innovative advances
provided by all sorts of technology, especially software, have helped to achieve improved
productivity and increased economic performance. But, for many Americans the irony is that in
those very sectors where American commerce has successfully improved productivity, the loss of
jobs and economic production to international competition has been the most severe. In America's
services sectors, where employment growth had been the most significant, the increases in
productivity have been the poorest and employee earnings improvements have been the least. And
according to Robert Reich, a former U.S. Labor Secretary, the median household income in
America has been declining for the last four consecutive years.
American manufacturing workers may now be caught "between a rock and a hard place." Some
comparative data, taken from The Economic Report of the President and other sources, makes the
case. For example, in the 40 crucial years from 1960 through 2000, manufacturing jobs in America
fell dramatically from 28.4% of total American jobs in 1960 to only 13.1% of all jobs in 2000.
since then, these trends have continued. By 2003, only 14.7 million American manufacturing jobs
were still in America, or about 700,000 less than the 1960 level of 15.4 million. By 2003 the
percentage of American jobs still existent in manufacturing had fallen to only 11.3% of total
employment. Just in the greater Chicago area alone, 100,000 factory jobs were lost in the three
years ended 2003.
However, thanks to rising productivity in manufacturing industries, in real terms manufacturing