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`This Is What The U.S. Must Do To Stay Competitive'


SCIENCE & TECHNOLOGY

`THIS IS WHAT THE U.S. MUST DO TO STAY COMPETITIVE'

Throughout last summer, 15 executives from leading U. S. companies spent two or three days a week doing what they believe must be done by American industry as a whole: cooperating on a strategic vision for manufacturing in the 21st century. "If we don't learn how to work together better, we could end up working for the Japanese," says Roger N. Nagel, operations director of Lehigh University's Iacocca Institute, which served as the hub of the collaboration.

On Dec. 12, Nagel will unwrap the results of the summer camp: a two-volume report called 21st Century Manufacturing Enterprise Strategy. It lays out a daring blueprint that Nagel insists could enable U. S. industry to match -- and surpass -- the ambitious programs under way in Japan and Europe to develop tomorrow's factories. Because the industrialized world is working to reinvent manufacturing, says Nagel, "we have a unique opportunity, now, to restore American manufacturing to world leadership. But it will only get done if we all sit down together." Adds Gino J. Giocondi, vice-president for productivity at Chrysler Corp. and a member of the team that thrashed out the Lehigh report: "If we could wave a magic wand" and implement these proposals, "there's no question the U. S. could regain manufacturing preeminence in 15 years."

BIG GULP. At first blush, parts of the plan may seem farfetched. It envisions nimble carmakers that will take an order, then build and deliver custom-made, defect-free cars in only three days. Assembled from modular components, the cars could later be upgraded easily by consumers eager to drive the latest technological marvels -- but too parsimonious to buy a new car. "You could see the Detroit guys kind of gulp at the practical realities of that," recalls Wyckham Seelig, director of manufacturing planning at American Telephone & Telegraph Co. and also a member of the Lehigh team. The other companies were Air Products & Chemicals, Boeing Helicopters, FMC, General Electric, General Motors, IBM, Kingsbury Machine Tool, Motorola, Texas Instruments, TRW, and Westinghouse Electric.

The study outlines the concept of a three-day car in detail because a similar scheme has been evolving in Japan since 1987. It's part of projects being coordinated by the Japan Machinery Federation and Waseda University. Known in the U. S. as Manufacturing 21, the Japanese program is supported by 200 companies. In fact, according to some observers, the Ministry of International Trade & Industry hatched its grandiose Intelligent Manufacturing System project (page 96 59 ) to avoid being outclassed.

JACK BE NIMBLE. Seelig concedes that some provisions of the Lehigh study strain his imagination. A computer network linking every American factory is feasible and would be a formidable resource. But the scenario also envisions using the network to form instant on-line partnerships, or "virtual ventures," to go after fast-moving markets. In the land of rugged individualism, "that's a stretch," he says.

But if Lehigh's predictions are right, virtual ventures could be essential. The report forecasts a worldwide transition to "agile" manufacturing. In this environment, any high-tech company still wedded to mass production will lose out to nimble competitors who use reconfigurable factories and computer-integrated systems to turn out customized products in a dizzying range of choices.

The strategic plan will be handed out to managers attending an Agile Manufacturing Conference in Lake Buena Vista, Fla. Many of these managers served as advisers representing the 70-odd companies that helped refine pieces of the strategy. Their next challenge will be to sell it to top management and enlist a senior executive from each company for a lobbying effort early next year. Then, Nagel and his partner on the project, Richard K. Dove, a California entrepreneur, plan to descend on Washington with a dozen top executives. "We want to march on Congress," says Dove, "and tell them that this is what the U. S. must do to stay competitive and maintain our standard of living. And that industry is committed to it, even if we don't get any help from the government."

That message, says a senior Senate staffer, would stand a good chance of gaining real attention on Capitol Hill. "Usually we hear: 'My industry is going down the tubes, and you gotta do something about it.' " But the tone of the Lehigh report is different, he notes. "What comes out of this study is that industry has to take the lead" -- including plunking down its own cash before asking for taxpayer funds. The main role envisioned for Washington concerns infrastructure issues that affect all industries. For example, the Lehigh report urges lifting regulatory barriers to cooperative research and development. As a result, says the Senate staffer, the strategy will be far less distasteful to anti-industrial-policy ideologues.

That's by design. "We knew we had to back away from anything that smacked of industry-specific recommendations to get the broad consensus that we want to take to Washington," says Dove. Besides, the study was commissioned by the Defense Dept., which wanted a conceptual roadmap to guide future investments in its Manufacturing Technology program. ManTech's budget has been growing steadily, hitting $280 million in fiscal 1992. But the whole program is now coming under skeptical scrutiny, despite studies showing that ManTech returns $10 in savings for every $1 spent.

In the past, ManTech's focus has been on making existing shop-floor operations more efficient. But given the changing geopolitical scene and pressures on the Defense budget, Charles H. Kimzey, who heads the ManTech program from the Office of the Assistant Secretary of Defense for Production & Logistics, figured it was time to take a fresh look: Rather than upgrading today's methods, maybe Defense could get even bigger returns by plowing seed funds into fundamentally new technologies. Once you start exploring those horizons, he notes, "the distinction between military and commercial technology dissolves."

And following the Lehigh proposals won't break the bank, insists Richard L. Engwall, manager of advanced manufacturing initiatives at Westinghouse Electronic Systems Group. Between the public and private sectors, "we're spending an awful lot of money -- but nothing's coordinated or organized," he complains. If industry were free to pool resources across company boundaries, America might foot the bill for practically zero new funds. Congress will like that.

A BLUEPRINT FOR BETTER

MANUFACTURING

With "agile" manufacturing, cars might be made to order in three days and

products might be designed in a modular fashion, so they can be constantly

updated by replacing major components. Here are some ways to achieve this:

NATIONWIDE FACTORY NETWORK

-- A huge base of diversified suppliers would be linked to a computer network,

possibly via satellite

-- The network would facilitate concurrent engineering -- developing a product

as a collaboration ef the design, production, marketing, purchasing, and

service departments -- either within the same company or among corporate

partners

-- The network would also foster collaboration on "virtual ventures" created

for one project, then disbanded

PLUG-IN SYSTEMS

-- Tomorrow's factories could be quickly reconfigured to exploit unanticipated

opportunities. They would use standardized machines, software, and processes

that could simply be plugged into the manufacturing system

INVESTMENT INCENTIVES

-- A capital-gains tax indexed to the length of time an investment is held

would stimulate spending on manufacturing gear needed for state-of-the-art

production

DATA: LEHIGH UNIVERSITY, BW

ALBERTO MENA/BWOtis Port in New York, with John Carey in Washington and bureau reports


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