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Corporate Attitudes Toward Introducing the New Manufacturing Technology From the engineering community, symposium organizers heard about persistent frustrations with the failure of firms to adopt beneficial new manufacturing technologies. The objects of these frustrations were frequently nontechnical considerations, such as senior managers unable to recognize the benefits of the new technology, financial analysis techniques such as return on investment (ROI), or hurdle rates that favor quick yield investments. The ferocity of these expressions and their sincerit~persuaded symposium organizers that both an obligation and an opportunity existed to air these subjects in a format that would enlighten participants on the cause and effect of these nontechnical considerations. In the spirit of the symposium, it was hoped to pass beyond the complaints to some constructive debate and, in particular, to examine how, if at all, education could improve the present situation. Participants were asked to address: · Corporate planning and changing manufacturing systems; · Investment criteria and the introduction of new technologies; ~ Management decisions and realization of the full potential of new manufacturing technologies; and 0 How to develop the appropriate team of manufacturing profes- sionals. James F. Lardner, Jack N. Behrman, Michael I. Callahan, and Wickham Skinner participated in the panel discussion, which was moderated by Robert A. Frosch. 75
76 LARDNER I BEHRMAN I CALLAHAN I SKINNER The panel discussion included four persons who have recent firsthand experience with the nontechnical aspects of changes considered in the technical/production operations of manufacturing firms. Planning for Change in the Smokestack Industries JAMES F. LARDNER I am most familiar with the smokestack industries of the "rust bowl," which are among the most troubled American manufacturers. I will address primarily their problems of corporate planning for changing manufacturing systems. Significant problems are faced by these corporations when, in planning for the future, they must deal with major changes in manufacturing systems. Based upon my experiences and observations, the continued pursuit of optimization of each of the specialized fractions of the manufacturing whole is producing an increasingly negative result. Reintegration of all elements of manufacturing should be the true goal of corporate management when creating new or renewing existing manufacturing systems. Accepting this as a goal, however, is an act of faith. In part, the reason is that establishment of a certain critical mass of new technology is required before the corporate bottom line is noticeably affected. Even the most enthusiastic chief executive officer must be concerned when he realizes the resource commitment and investment required to attain this critical mass. It is, however, absolutely essential to achieving results. We need to be more willing to accept this fact and to recognize the consequences of what happens if we do not. When introducing new technologies, commonly accepted investment criteria are increasingly recognized as major obstacles. We currently operate in an environment in which discounted cash flows and internal rates of return are considered fundamental to evaluating investment decisions. In the industries with which I am familiar, the direct labor content in end products has been reduced to an almost insignificant amount as a result of years of concentration on making labor more productive. James F. Lardner, vice-president for government products and component sales of John Deere and Company, has served in managerial positions for Deere and Company in Mexico and Brazil and as assistant general manager for two manufacturing works, manager of the plant and production engineering department, and director of manufac . . . tunng eng~neenng.
PANEL DISCUSSION: CORPORATE ATTITUDES 77 Thus today, when looking for areas that can provide major increases in productivity, only two remain: (1) using fixed assets much more intensely than we have been able to do so far, and (2) controlling indirect labor costs both blue and white collar. Although it may not be readily apparent, much of the activity of these workers involves structured decision making requiring little intellectual input and of a highly repetitive nature. Manufacturing information systems, computer technology, and programmable automation have demonstrated an ability to substitute for people in this activity, and it is important that management recognizes that most of the future savings will be here. This opportunity to improve productivity and reduce overall man- ufacturing costs has been obscured by current cost accounting systems which do not deal adequately with "indirect costs." This suggests a real need to replace our present methods of analyzing manufacturing costs with new and better analytical systems. There is an interesting difference in the way North American management and Japanese management approach the problem of increasing productivity. Apparently, something in our American culture demands theory to legitimize the action we take. This factor is particularly evident with design groups which have techniques for measuring what they are doing and then evaluating the results against a theoretical optimum. Unfortunately, no significant amount of re- search-based knowledge exists in manufacturing nor is there much of a theoretical basis for measuring the present results against optimum to evaluate alternative plans for change. The Japanese use anecdotal observations and just plain pragmatism to determine how to move a product through a factory faster using fewer resources. If we operated like the Japanese, we would simply eliminate all of the wasteful practices that result from poorly designed and managed manufacturing systems. We need to understand, for example, that the "just-in-time" system is not an inventory reduction program but a manufacturing and quality improvement program. Thinking in broader concepts must invade every American board room and senior management group because there is not time to wait for research to justify actions that are needed to improve American manufacturing efficiency. Identifying and developing a suitable team of manufacturing profes- sionals to deal with problems in the factory may be an easier challenge than changing the perceptions of top management. Based on our experience at Deere and on my observations of other companies, the basic elements for much better manufacturing performance already exist. In my company, we have begun to use the long-discussed
78 LARDNER I BEHRMAN I CALLAHAN I SKINNER techniques of matrix management and multidisciplinary project teams in design and manufacturing projects to solve problems on the shop floor and to address the challenge of just-in-time manufacturing. New technologies require a new kind of organization and manage- ment. This demands acceptance of the principle that leadership of the project will be determined by the competence, knowledge, and skills essential to the project at each stage rather than management-designated authority. Although this principle is difficult to establish in the tradi- tional management structures found in manufacturing organizations, it is fundamental to success. We have found so much good, solid understanding of manufacturing coming out of such projects that we may not have to wait for the results of some of the research we are presently trying to persuade universities to undertake. If universities hope to contribute to the ability of American industry to compete in global markets, they must direct their attention to research which deals with the basic elements of the manufacturing system and how they fit into the whole of manufacturing. Engineers and the Application and Transfer of New Technologies Abroad JACK N. BEHRMAN I will describe a number of considerations that engineers, in particular plant managers and manufacturing officers, must have in mind when considering the application and transfer of new technologies. In doing this, I will emphasize the significance of foreign investment and foreign licensing by U.S. companies in the application of the new technologies. Opportunities to apply an innovation in foreign manufacturing significantly increase the attractiveness of expenditures for research and development. These opportunities arise in the ability to invest abroad in manufacturing to serve either the home, host, or third- country markets (or a combination of these), or in the ability to license new technology to foreign companies for their use and sale abroad. Any of these routes increases the return on investment from application of new technology and thereby enhances the probability of a positive corporate attitude toward introducing new manufacturing techniques. Jack N. Behrman is Luther Hodges Distinguished Professor of Business Administration at the University of North Carolina. Dr. Behrman has served on the faculties of several universities and as assistant secretary of commerce for domestic and international business during the Kennedy and Johnson administrations.
PANEL DISCUSSION: CORPORATE ATTITUDES 79 However, these same opportunities may be served with a lag that is, really new technologies are introduced first in the home market, where they are tested and modified for worldwide market application. In the meantime, the existence of foreign opportunities means that present (and recent) technologies can be moved offshore, where they can continue to serve relevant markets profitably. TRANSFER OF MANUFACTURING TECHNOLOGY ABROAD The attitudes of U.S. corporate managers to transfers of manufac- turing technology abroad depend on four major factors: (1) their own corporate orientation to such transfers, that is, what they are willing to transfer overseas; (2) the kind of industry they are in; (3) the markets that they anticipate serving; and, (4) the policies of host and home government. All these factors are influenced by the economic effects that the technology and its transfer will have on a number of other factors. The primary long-term effect of international transfer of new tech- nology is that it shifts the location of industrial activity. This has important political and economic impacts both abroad and in the United States. A relocation in the site of production shifts many of the benefits of production and trade as well. Even if the production location is not shifted within a foreign country or among foreign countries, product lines may shift. We are now finding that the new manufacturing technology demands a product design that allows parts to be produced in different locations around the world. We are facing therefore a new economic effect from the technology: changing linkages among subsidiaries across national boundaries that alter the degree of integration or separation of pro- duction activities. The initial transfer of technology has several secondary impacts. It shifts the capital equipment used, the site of producing the capital equipment, and the investment required. In turn, these decisions determine the labor skills required to apply the technology; the employment resulting from the technology; the trade patterns that will result, not only in terms of the trade of components, but also of the final product; and, finally, the willingness of the host country to permit that technology to flow in continually from outside, as distinct from attempting to generate it internally. These broad effects, which must be taken into account, will alter the way in which the technology is transferred, or what technology is transferred.
80 LARDNER I BEHR1kIAN I CALLAlIAN I SKINNER Specific decision criteria for a company looking at technology abroad begin with the market to be served. If it is the domestic market in the host country, say Mexico or Brazil, the company will then transfer the technology appropriate to the consumption or industrial needs in that country. If the host country is to be used as a base for sales in a regional market, say Southeast Asia or Latin America, then total market demands in the region and the level of the market in terms of sophistication or growth are of concern. If a particular location is to serve the international market, as out of Singapore or Taiwan, that market, which is generally at the highest level of technological demand, then determines the kind of technology going into the host country. Now the company must face the question of political and economic uncertainty in the host country the greater the uncertainty, the less likely a corporation will transfer high or new technology. The corpo- ration does not want to lose the technology, nor does it want to prepare would-be competitors. High-technology transfers therefore motivate the corporation to control the transfer of technology to the foreign subsidiary through either investment, a precise licensing contract, or a tight contractual relationship. In response to relatively low levels of control or certainty in the host country, corporations increase their so-called "mobile activities" investment that is, the ability to pick up the operation and move it somewhere else fairly quickly and at low cost. If little control and certainty exists in the host country, corporations seek ways to reduce the impact of losing even what control there is. One way to increase certainty is to link the activities in any one country with activities in another. In this way, if production in country A is taken over by the government, it is not particularly valuable to the government. Product lines with rapidly changing technology are largely capital goods, industrial goods, or more sophisticated goods. Thus high technology is primarily introduced in and moved among the advanced countries. The developing countries are trying to pull high technology into their orbit. Brazil, for example, is going to buy or develop its own technology and produce and sell its own electronics. It is literally restricting the number of customers who can be served by foreign affiliates. No matter how much technology relative to informatics has been transferred into a Brazilian subsidiary, it will simply not be used to serve the local market. The Brazilians are not satisfied with merely obtaining mass consumption goods, or low-technology goods, even if they could sell them worldwide. They are concerned about the prospects of remaining backward or technologically dependent. Even if a U.S. company transfers technology and helps the Brazilians adopt
PANEL DISCUSSION: CORPORATE ATTITUDES 81 it, it still stands to lose the investment through the kinds of creeping controls Brazil has imposed. Another factor affecting a company's decision to go overseas with technology and what technology to transfer is the absorptive capacity of the host company or country, if a new company is being set up. Absorptive capacity includes the user's ability to know: (1) what technology he needs, (2) how to get it, and (3) how to retain manufac- turing engineers able to operate it and to instruct labor. In some studies we have made of technology transfers, the ability of the user to identify and to learn how to absorb the technology has been the critical fault, not the ignorance of the licenser or the investor in how to construct or to transfer the technology. From the standpoint of corporate strategy, no company prefers to manufacture abroad. All prefer to produce at home, where the culture, economy, politics, work habits, and management orientations are known and presumed more "predictable." From this solid base, companies can then serve foreign markets through exports. It is also preferable to develop the technology at home, in-house, but since it cannot all be done this way, some is imported as needed and some exported as demanded. These exchanges are minimal or lead to interlocking arrangements (cross-licensing and patent pools), as was the case in the l910s, 1920s, and 1930s. The closing of markets in the 1930s, which continued after World War II, led companies to consider offshore manufacturing or licensing for manufacture abroad. The major trade-off is the loss of control, however, and companies prefer 100 percent ownership through in- vestment. Licensing of technology can result from the desire not to expose the company to substantial capital risk through foreign invest- ment, the small size of the market abroad, or the host governments' insistence on licensing as compared to investment (as in Japan in the l950s and 1960s). Licensing can also occur when the licensee has complementary technology wanted by the licenser, or when the licensee is to become a supplier of intermediate materials or components at a lower cost than available to the licenser at home. The decision as to the mode of overseas ties is seldom made on the basis of technology alone. The kind of technology transferred tends to be dictated by the market size and sophistication, its growth and change, the ability of the affiliate or licensee to utilize the technology, and the capacity (scale of) production. The ability of the foreign labor force to apply given technologies is a critical limiting factor, and the company's ability to reshape, unbundle, or modify the technology so that it can be applied by less skilled workers has been a strong
82 LARDNER I BEHRlklAN I CALLAllAN I SKINNER contributing factor in the move of many companies overseas-espe- cially into low-wage countries. Many companies have developed technologies and designed products so that processes and components can be rebundled and produced in diverse locations and then brought together in several places for assembly. Technologies have not been a significant factor in decisions to invest overseas in advanced countries, for U.S. companies have simply applied the technology appropriate to the foreign market. New tech- nologies give the developer a differential advantage in foreign markets, but the existence of such technologies does not drive the foreign investment decision. It does, however, sometimes drive the host government's willingness to accept such foreign investment (when it would prefer that the investment be made by local companies). Application of a given technology abroad opens opportunities for still newer technologies, whether from within or outside the company. This happens because new markets are opened to the company, expanding its ability to shift production and processes. Its total scale is larger. Further, if the application abroad is through a licensee, the company can develop or adopt new technologies quite readily, since it will continue to receive royalties on the older technology as long as it is used by the licensee. The company is not, itself, locked into the older technology. Even where the investment is direct (its own), and the operation abroad is for production of a component (e.g., semicon- ductors), the company's capital is so small compared to the value of production that any shift in technology can be adopted abroad if workers are trainable, or the production can be moved back home if the new technology requires higher-level skills. Only when the technology requires huge capital expenditures for equipment in place (e.g., petroleum refining) does the application of technology abroad tend to lock in the mode and scale of production as well as its location. Even here, new arrangements for contracting versus direct investment have increased the flexibility of such U.S. companies around the world. EDUCATION OF MANUFACTURING ENGINEERS Engineers need to be aware not only of how economics and politics affect the transfer of technology abroad but also how technology selection and transfer affect corporate structure, organization, own- ership, location of production, integration, flexibility, and other factors. For example, the company transferring high technology very likely
PANEL DISCUSSION: CORPORATE ATTITUDES 83 wants to control the technology. It will therefore organize activities between itself and the host country, or the subsidiary and the parent company, in such a way that it keeps control not only organizationally and financially, but marketwide and technically in terms of ties with the R&D center. In other words, the company simply fans out from the center and maintains a high degree of integration. Low technology is treated in a less controlled fashion and, in fact, may even be divorced completely from the center. If the foreign country becomes interested in having that technology itself and nationalizes the subsidiary, the loss is then small. The parent company therefore regards ownership as very important with high technology and less important with low technology. Integra- tion of the company's activities is much more important with high technology than with low technology. Thus the type of technology transferred affects the organization and operation of the business. Even the nature of the industry matters. For example, the chemical industry is now much more ready to license technology overseas. Because a very large investment is required to go into petrochemicals and because the sector is controlled by governments-even the market is controlled-licensing becomes an appropriate means of transferring technology. The chemical companies are willing to do this, but in electronics the desire is for investment, ownership, and control not . · . licensing. Technology transfer also has a number of impacts on business which the manufacturing engineer should know and which should be built into the education. Thus the prerequisite is to complement engineering and technology skills with an awareness of social, political, and economic effects. Engineers will then understand management's prob- lems in looking not only at the market for the product, but also at the organization and control of the company itself. Harvard Business Review recently published an article on business schools and what their jobs are. The association of business schools is working on how these schools can be part of the solution of the manufacturing problems question. We are, no doubt, a part of the problem at present with regard to some of what we teach on methods of cost control, accounting, and setting financial objectives. Some companies have created a block to diffusion of technology within the company because of the financial targets they have handed individual managers around the world. None of these managers is about to transfer the latest developments in technology which they made in Belgium, even over to Germany, because each is a profit center and the Belgians do not want the German profit center to beat
84 LARDNER I BElIRMA:J I CALLAlIAN I SKINNER them. This attitude toward motivating managers comes from business schools. What I was suggesting earlier is not that manufacturing engineers go through the business school courses, but that they understand that business must face political and governmental issues. Similarly, eco- nomic impacts, the impacts of technology on company integration, and the resulting constraints on the transfer of technology must be heeded as well. Manufacturing engineers must understand all these effects and contribute to the solution by demonstrating that competition is not going to be on the profit line, but on the quality and cost line. Competition around the world these days is based on cost reduction, not profit maximization. Business schools must recognize this situation, but this argument must be made repeatedly by the manufacturing community. This community must show how to raise quality and cut costs by adopting new procedures. This will help the bottom line, but that is not the purpose of the company-its purpose is to remain competitive and survive. Engineers need to recognize and understand these issues, but I do not suggest sending all engineers to business school. Manufacturing Issues in the Semiconductor Industry MICHAEL J. CALLAHAN As probably the only participant from a semiconductor manufacturing organization, I will briefly describe our industry and some problems we face in manufacturing which are not much different than those of almost any industry. According to the forecasts, the semiconductor industry will more than double its sales volume by the end of this decade. It has been and will continue to be in a state of continual technological change and subject to high competitive pressures. In 1983, for example, there were 35 worldwide manufacturers of semiconductors, each having net sales greater than $100 million and not one having greater than 20 percent of the market. In Silicon Valley, a new semiconductor company seems to appear every month. Many of them make it; many do not. Michael I. Callahan, executive vice-president and chief operating officer of Monolithic Memories, Inc., has a degree in electrical engineering from the Massachusetts Institute of Technology. Prior to joining Monolithic Memories, he served in a number of positions in both operations and management at Motorola.
PANEL DISCUSSION: CORPOMTE ATTITUDES ~5 This rapid growth, coupled with technological c.hange stimulated primarily by competition, has required enormous capital investments on a continual basis. Over the last five years, for instance, semicon- ductor manufacturers have annually invested over 15 percent of sales in capital expenditures. In the next five years, this number will probably increase to more than 20 percent of sales. While a significant portion of this investment is certainly for capacity expansion, we are continually upgrading existing manufacturing areas. Any manufacturing line in our business will probably have either replaced or upgraded 90 percent of its total equipment within a five-year period. These upgrades- are usually stimulated by improved processes rather than the desire for increases in raw productivity. The technology changes made, however, have continually increased productivity in the industry. Over the last 10 years, the sales per employee of the semiconductor manufacturers in this country have more than doubled, and we have tripled the value added per employee over the same period of time. Thus significant improvements in productivity were achieved not driven primarily by raw productivity issues, but by technology change and improvement. Industry manage- ment, who in most companies have an engineering background, not only accept change in the process and manufacturing systems, they encourage it. U.S. semiconductor manufacturers face very strong competition from companies in Japan. Success in this competition will depend on continued capital investments and development of innovative products and processes; however, this will not be enough. We must further address the manufacturing processes themselves, placing greater em- phasis on production issues rather than just on technological change. We must significantly shorten cycle times in manufacturing processes, handle small lots of material efficiently, and develop "just-in-time" delivery systems for ourselves and, most important, for our customers. A short-cycle time for any manufacturing process significantly increases the learning rate of the engineering community working on the manufacturing process and thus drives programs in production cost reduction. Cycle time reduction is critical to our gaining the competitive edge for cost and price leadership. Furthermore, the increased capabilities resulting from process innovations and improve- ments in manufacturing equipment have put us in a position where we must customize products for the end-user. Devices are becoming so complex that we are putting major portions of their systems onto one piece of silicon. Thus the personality differences between our cus- tomers' products reside in the components we build, with the result
86 LARDNER I BEHRAIAN I CALLAlfAN I SKINNER that the numbers required of any particular part type of these complex devices may be relatively low by today's standards. This is a complete departure from what we have historically regarded as economies of scale. However, we must learn how to process small lots quickly and economically at high-quality standards if we are to remain competitive in the future. Today, our customers are trying to lower their inventories and develop low cycle times in their own factories. To be competitive worldwide, we must generate the capital needed to improve equipment, not inventories. The Japanese invest higher levels of sales in new plants and equipment significantly more than we do as a whole. Our customers want their vendors to deliver products "just-in-time.'? We could hold inventory for them, but for obvious reasons this is not an acceptable solution. Better forecasting will help, but in my view, streamlined, short-cycle-time manufacturing systems are the answer. Modeling a manufacturing system on a computer terminal while sitting in an office is not the way to do it. Systems can only be designed by people who understand the technologies and equipment they are dealing with, and these individuals are manufacturing engineers. However, these same manufacturing engineers, who come from all disciplines, must be taught additional skills and be capable of func- tioning in a manufacturing rather than a laboratory environment. In semiconductor manufacturing, engineers need exposure to that part of the manufacturing discipline dealing with flow optimization. Why is this taught in the business school anyway? Manufacturing engineers must be taught how to mode! and optimize flows, how to manage inventory, and most important, how to manage people. Direct labor operators are an enormous source of problem-solving information and often have many years of experience. Probably very few of the top engineers in my company, or in many companies, have ever taken a single course in any of these subjects, so we must try to broaden the training for our engineering students to touch on these and other subjects. Just as important, they must view manufacturing as a professionally and economically rewarding discipline. Good examples of this are our industry's manufacturing engineers, many of whom have advanced degrees and work on the manufacturing floor, developing and improving processes. A good indication of the esteem in which they hold manufacturing engineering, even though they do it 90 percent of their lives, is that they are called process engineers, not manufacturing engineers. If they were called manufacturing engineers, we would have a hard time recruiting half of them into that profession. We will only
PANEL DISCUSSION: CORPORATE ATTITUDES 87 accomplish what we have to in this area when industrial management and university educators indicate that they regard the manufacturing discipline and profession as highly as the professions of research and development and design. Challenges to be Met WICKHAM SKINNER My overall conclusion, after three years of research on the intro- duction of new manufacturing technology in about a dozen firms, is that progress is very modest. When one considers the urgent require- ments for restoring our competitive edge and improving industrial productivity, it is quite surprising that industry has not moved more quickly to take hold of up-and-going technologies. Essentially, there are four reasons why progress is so slow. First, a lengthy period of tinkering and adjusting is usually required to start up the equipment, get the bugs out, and handle the interfaces with other, conventional processes. Second, the vendors serving industry are very disaggregated. Few turnkey contractors or operators or producers will put the whole equipment or technology together. Third, decisions to introduce technology are adversely influenced by our financial and accounting colleagues. The introduction of new manu- factur~ng technology typically must be justified on the basis of paybacks and discounted cash flow. The hurdle rates are high, particularly a few years ago when interest rates were so very high. New technologies change the cost mix and subsequently may alter the financial structure of the business, but the extraordinary fact is that major investments in new manufacturing technology can seldom be justified by cost savings and paybacks. Their powerful advantages arise from their significantly improving the company's strategic ability to compete. Fourth, in observing how manufacturing management decisions are made, there is a clear need for champions to introduce changes, bring them to the attention of top management, and come back with the money. Many smart manufacturing managers will hesitate to champion an appropriation at high levels, for it will inevitably mean a big Wickham Skinner is James E. Robison Professor of Business Administration at the Harvard Business School. Dr. Skinner's career has ranged from chemical engineering to production control and project management at Honeywell Corporation to academic work in business administration.
88 LARDNER I BEHRAIAX I CALLAHAN I SKINNER investment for the company, usually a risky one, and such investments may not only mean betting a division or a plant, but also a career. Managers know that once they undertake these efforts, three or four years of trouble and hardship are needed to make them work better than the status quo. The result is a very conservative approach on the part of manufacturing managers. In looking back at the major changes in industrial history, the gradual development of textile machinery took 30 or 40 years, as did mass production powered by coal and oil in the process industries. The so- called "American system of manufactures," studied very ably by Johns Hopkins professor David Hounshell (From the American System to Mass Production 1800-1932, Johns Hopkins, Baltimore, 1985) took 40 years to incorporate interchangeable parts, in spite of the benefits to the manufacturer. A study by David F. Noble (Forces of Production: A Social History of Industrial Automation, Knopf, New York, 1984) shows that 40 years were required for the use of numerically controlled machine tools to become well established. Thus from a historical perspective, it has always taken a long time to diffuse technological change. But can we say, "Well, that's history. That's the way it'll be." Of course, we must not. The new manufacturing technology represents too great a hope for regaining our productive and our competitive edge. What then can be done to improve the current disappointing rate of progress? The present industrial scene is one of considerable pressure and dissatisfaction. In 30 years, I have never seen more frustration between top managers and manufacturing managers, as well as more frenetic activity toward working our way out of our current industrial dilemma. At top corporate levels, senior executives urgently demand changes, improvements, and ideas, as well as lower production costs and better quality from the manufacturing function. But at the factory level, manufacturing managers complain that they must meet short-term monthly and quarterly goals and that they are held accountable to "archaic" accounting systems, the same systems that have focused for 100 years on minimizing direct labor. And in spite of pressure from all sides, production managers are skeptical of high-priced, fancy machines and computerized systems equipment. They see these in- novations as risky, and they would rather experiment on a small scale than make massive changes. The hang-up stems from corporate attitudes. Those few companies which have made great gains by taking advantage of new manufacturing technologies did so by demonstrating top level leadership and man
PANEL DISCUSSION: CORPORATE ATTITUDES 89 agement commitment. But far more prevalent are those top managers of manufacturing firms who are neither knowledgeable nor comfortable with their industry's equipment and process technologies. This is the major educational problem: the development of technologically com- petent and confident top management. The great American industrial leaders of the past, such as Lowell, Singer, Carnegie, Ford, and McCormick, supplied both corporate and technological leadership. Today, the top management of American manufacturing is dominated by marketeers, financiers, controllers, and an extraordinary number of lawyers. Top management is not supplying adequate technological leadership. They do not have the judgment required to make large-scale investments in new equipment and process technologies which are calculated risks and seldom pay off in dollars for many years. The fact that production management courses are seldom included in advanced management programs or seminars contributes to the persistence of the vacuum of technology at top management levels. Ultimately, we should see manufacturing people at the top again in reasonable proportions, but this requires further breadth and conceptual skills from manufacturing managers, attributes which are now the exception and not the rule. Meanwhile, the initiative for new manu- facturing technology must come from manufacturing management because corporate attitudes at top levels often reflect technological illiteracy. So we have an educational dilemma. Paradoxically, manufacturing managers need to acquire financial skills and learn to think in a competitive and strategic mode as effective top managers do, while top managers need the technological competence and confidence derived from experience and training in production. Until each acquires the other's strengths, their own individual strengths become in fact a corporate weakness, for in their work together they mutually debilitate and frustrate. Meanwhile, our industrial malaise goes on. This situation can resolve itself, of course, in Darwinian fashion over a period of time, but the job of educators is to identify such problems and speed up the process. In the face of the problem, however, our present educational curricula for both engineers and managers have not only failed to identify and solve these problems, but contribute to them! By typically excluding manufacturing from top management courses and management education from engineering courses the problem gets compounded. Since the new industrial competition is fundamentally based on technology, our education of managers and engineers is too often failing the country's needs.
