Could the U. S. Become Top Exporter Again?

Many would say this is an impossible goal since the U. S. lost its top ranking to Germany in 1992, and China replaced Germany as the top exporter in 2009.  I say it’s possible if American companies get back to what made them great in the first place – unique, innovative products made to high quality standards by a well-trained workforce.

For nearly 60 years, American manufacturing dominated the globe.  The United States led the world in innovation.  American companies like Ford, Boeing, Maytag, IBM, and Levi became household names.  American manufacturing became synonymous with quality and ingenuity.

Of these companies, Maytag was bought by Whirlpool, IBM sold off its PC business to Chinese company Lenovo, and Levis are now made in China just like every other brand of jeans manufactured.

When I drive around with my granddaughter, we play a game to see who can see the most “slug bugs” (VW Beatles).  They are easy to spot, even in oncoming traffic, because they have such a distinctive look compared to other cars.  Nearly every other car looks like peas in a pod – you can’t tell what automaker they are until you see the logo.

The unique appearance and features of a VW Beatle are examples of what those of us in marketing and sales call Differential Competitive Advantage (DCA).   Other examples of DCA thrusts are:  wide selection, customization, convenience, speed of service or product delivery, innovative cutting edge technology, fills a wide range of needs or a special need, specialized know-how, and lowest price.

There are no marketing rules that apply to every type of company, and there are no quick fixes or “magic pills” that will work for every company.  There is no such thing as a sustainable competitive advantage – it will change over time.  However, the universal law of marketing is “What’s in it For Me (WIFM) so that the DCA of your product has to answer that question.

To be successful at exporting, American companies need to have an innovative product that fills a market need in other countries.  They need to know their potential markets, know each possible way to reach that market with a persuasive message and use marketing methods that produce the maximum leverage with minimum effort.

For years now, I’ve been hearing that American companies had to outsource manufacturing offshore to remain competitive.  To me, this means that these companies gave up on marketing their products using their differential competitive advantage (DCA) and were down to competing on the price level.

German companies don’t compete on price; they compete on the perceived benefits of their reputation for high quality, precision-engineered products.  Germany’s average manufacturing wage is higher than the United States, the highest of all the European Union countries.  They have strong unions that offer more benefits and vacation time than any American companies or unions.  Germany was able to keep its position as the top exporting country for 17 years belying the argument of American companies that high union wages drove them to offshore manufacturing to be competitive.   It’s even less of an argument in my territory because only a handful of companies are unionized.

I believe that there is also an intangible factor in Germany’s success in exporting – the pride company owners have in their country and their products.  German company owners want to be successful as German companies, not global companies.  My research revealed that the majority of German companies are privately owned, not publicly traded.  This gives them the leeway of following their own measure of success instead of being responsible to their stockholders for the next quarter’s earnings.

Too many American based companies refer to themselves as global companies instead of American companies.  These companies are “globalist international companies” because they no longer have loyalty to the United States.  Their loyalty is to their bottom line, their stockholders, and their future bonuses, and they will do whatever it takes to make their bottom line look good even if it causes harm to themselves and their country in the long run.

American companies need to get back to producing their products in America.  If the majority of the components, parts, and assemblies in a product are being made offshore, is it really an American product?   Will companies who source offshore be able to produce their products if their overseas supply chain was disrupted to the point that they couldn’t get parts?

Do companies who outsource really understand the Total Cost of Ownership (TCO) of comparing the cost of sourcing parts and assemblies domestically rather than offshore?  Do they recognize the hidden costs of doing business offshore?  If not, the Reshoring Initiative of the National Tooling and Machining Association (NTMA) can provide a useful worksheet to calculate TCO.

There is no question that outsourcing offshore will continue for the foreseeable future, especially for the multinational companies that have products to sell within the countries in which they set up manufacturing operations.  Manufacturing products locally for consumption within a foreign country will be crucial to profitability as transportation costs continue to increase.

American manufacturers must be willing to continuously invest in their products to improve performance quality, and cost, but they must also be willing to improve the skills of their workers to be more competitive in the global market. Germany and Switzerland lead the world in their apprenticeship and workforce training.  Apprenticeship programs have virtually disappeared from American industry, and we must rebuild them to follow the example of Germany and Switzerland to train the skilled workforce needed for the 21st Century in the United States.

There is no lack of American ingenuity and creativeness.  The monthly meetings of the San Diego Innovators Forum are filled to standing room only with men and women who want to learn how to successfully convert their innovative ideas into products for the global marketplace.  Those of us on the steering committee are trying to help them to produce an American product, sourced in the United States instead of sourced offshore.

In his second annual message to Congress, December 1, 1862, President Abraham Lincoln said, “The dogmas of the quiet past are inadequate to the stormy present.  The occasion is piled high with difficulty, and we must rise – with the occasion.  As our case is new, so we much think anew, and act anew.  We must disenthrall ourselves, and then we shall save our country.”

We must arise to the occasion of our economy in crisis by thinking and acting anew to restore our manufacturing industry as the world leader.  American companies need to rejoin Team USA by making innovative, high quality products in the United States that can be exported to fit an unfilled niche in other companies.  Of course, no American company could succeed through exporting only; they need to have sufficient domestic customers also.  American consumers need to “connect the dots” to wake up and realize that buying cheap goods in China doesn’t create American jobs.  Buying cheap imports rather than buying “Made in USA” products is a big factor in our high unemployment rate.  We Americans need to be more like the Germans and be willing to pay a little more to buy products made in our own country.  By doing this, we can regain our position as the world’s top exporter and “Win the Future” as President Obama encouraged us to do in his State of the Union Address last week.

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