Randy Harward spoke at the 2013 Deming Institute annual conference about his experience with applying Deming’s management ideas at Patagonia.
Low energy costs in the USA are a significant factor driving companies to consider moving apparel production to the USA. Energy costs have decreased in the USA (driven by excess supplies of natural gas driving down costs) and energy costs are a significant factor for apparel production.
The energy costs of transporting goods globally (mainly driven by oil prices which have remained high) add to the incentive to produce near customers (so this increases the benefit of producing apparel for USA consumers in the USA – though not for producing in the USA for export). There are also, of course, other benefits to manufacturing close to the customer.
You can run a physical plant cheaper in the USA than you can in China. So if it is just the machinery required, investment and all of the equipment it is actually cheaper here in the USA than in a lot of what we call 3rd world countries. But we aren’t very good at management. So the biggest problem you find is the very very low efficiency, low worker productivity in the apparel industry anyway in the US. It is very low compared to what you find in much of the rest of the world.
And it is all management. That is what I deal with, working with factories to make a process easier for workers, have their involvement in how a product flows through the system.
How do you make that system flow. Well you can only design it or automate it, the answer in the US is often to automate production. You can’t do that in apparel, the design changes are too quick. There is some apparel you can do with automation but mostly you need to use really engaged workers who are really happy to come in and change the system they work in every day.
So when they come in and there is something wrong with it or they can think of a little bit faster way to do it they are engaged enough to do it and the managers let them do that. That does not happen in the US, at least not in apparel. Some of the worst factories I visited anywhere in the world are here in the US… So until we get some enlightened managers in USA apparel factories it is a real struggle: it is not a small factor it is huge.
During another part of his presentation Randy mentions this webcast from Patagonia: What Is Quality for Our Time? Responsible Business and the Patagonia
Related: Applying Deming’s Management Thinking at Patagonia – Respect for Employees, Don’t Waste the Ability of People – Process Thinking at Patagonia – Practical Ways to Respect People in Your Organization