On the Japan v. China v. Domestic Manufacturing Base

In a recent “discussion” on the topic of the issue of Chinese manufacturing and product quality (and its general impact on domestic manufacturing), I commented that the frequency of bad quality, poor performing, short lived junk I have experienced from the Chinese manufacturing base was becoming intolerable. This includes a recent purchase of a small hobby knife set, whose blades are so poorly heat treated they break like glass at the slightest stress. I have also recently had to replace an expensive set of lathe tools, because the Chinese sourced originals came with a bit size that is unavailable anywhere in the world – pretty idiotic since the reason you use this particular tool system is to avoid replacing the entire tool when the cutting surface becomes dull. This experience is consistent from machine shop items to house goods, to a laptop computer that fails to charge half the time from a poor fitting power plug… I cringe every time I see that little “Made in China” on the UPC code, or little gold sticker. I cringe even more when I get the speech about the inevitability of China taking over manufacturing in my home lighting market…

The contention in the conversation was that my complaints of Chinese quality were unfounded. First, it was proposed, the Japanese supposedly went through a similar phase, and look at them now! That my concerns over the impact on US manufacturing and product quality overall, not to mention our economy, are like the paranoid concerns over Japanese intrusion in the 1980′s, which turned out to be over-stated.

I could not disagree more… now that I have had a few nights to let this sink in. Her’es why:

In 1974, a pack of buddies and I had the opportunity to take  apart a Gen 1, 1972 Honda Civic. The car had been crashed, and the idea was to extract the motor and front drive gear out of it to put into another silly project (which faded). There was the typical American boy comments and jokes about tin can quality and how the Japanese product was inferior to American iron… until we tore the car down. The jokes fades as we discovered the clever lightweight engineering the car employed. The motor was far more sophisticated, with overhead cam and cast header, and electronic ignition, compared to the iron block pus-hrod antiques our own cars had on board (still mostly remaining in production today by GM and Ford).  We found the little Civic not as much tin can as very smartly designed, using as little as possible, with obvious precision, to make a tight little car that was more like a Timex watch than it was the massive tractor based hardware we were driving – except for one of us, who was driving a 1970 Datsun 240Z – which we all coveted.

That same year was the year my grandfather clocked his 100,000th mile on his 1966 Datsun 520, a quirky little pickup that was a gas to drive, and never failed him once. He was always as small car guy, so was my dad. Grandad was a retailer of Crossley cars back in the day, my dad owned VW Beetles. The reputation for Japanese car quality here, is based on the perception that cars need be large and heavy to be of quality. Japanese cars then and now, are neither – thus are considered by some to be of poor quality – little tin cans, and all that. Same noise surrounds the motorcycle industry, where Jap bikes simply kick the snot out of US and Euro bikes. While the chatter is that Japanese bikes are like Bic lighters, a lot of heat but short lived – this is unfounded as well. Yes, they are made from lighter, thinner, less thick metals and more plastic than a Harley. That is meaningless. Well maintained Hondas, Kawasaki, Yamaha, and Suzuki motorcycles have proven to be just as durable as any other. You just need to keep in mind that a lightweight 1000CC 4 cylinder twin overhead cam engine, running at 13,000RPM, making 200HP, will require more attention and care than a 60HP, 1,400CC 2 cylinder push-rod engine with a 5,000RPM rev limit. This is the theory applied to trucks and tractors vs. F1 cars. A tractor will last decades without major overhaul, while an F1 car demands more care and will need complete replacement each season. This is not a quality issue – it is a purposing issue. In the motorcycle business, where we buy and ride for fun, Japanese bikes simply dominate the market. They are fast, light, fun, and amazingly tough. I know this from riding my first Yamaha 80 in the 1960′s, through Yamahas, Hondas, and my favorite Kawasaki’s, including a 79 Kwacker 650 in my garage now being converted to cafe racer. In fact, a 1972 Kawasaki z1 900 today has a resale value greater than a 1972 Harley Davidson… and can kick the stuffing out of a brand new V-rod today.

In reality, most Japanese product has generally been of very high quality. In 1974, the Honda Civic was awarded Car of the Year by Road Test Magazine, and in 1980 again by Motor Trend, for their quality, and overall value. The concern I, and others, had in the 1980′s was not that the Japanese were going to take US manufacturing out with low low exploitive labor rate product.. it was that due to their more efficient use of materials, and a small advantage on labor rate, coupled with their ability to produce superior quality – was a very real threat. Books were written about how they were doing this. Today, legacy quality systems like Kaizan, and Lean Design, remain at the core of quality systems. The GE innovated 6th Sigma system (rating accomplishment in “belts”) is founded on this 1980′s evaluation of Japanese quality. At a time the US was making the Chevy Vega, and Ford Pinto, when American Motors were hiring LSD victims to design their junk (Pacer anyone) – coupled with the escalation of fuel costs making 10mpg lead sled gas hogs obsolete, Japan was sending us fuel efficient cars that were affordable, and proving very reliable. While US manufacturing was distracted by the Viet Nam war and social chaos from a corrupt political system, Japan was sending us better cameras, faster motorcycles, low cost high quality watches, and our heads on a platter. The concern was not that we were facing a country bent on exploiting us as a consuming nation, but that we as a nation who prided itself on quality and product innovation – were being put in our place by the Japanese. Even Germany was struggling at the time. Even the coveted BMWs and Mercedes of that time (1907′s through 1980′s) suffered from poor quality and rust. The British chose that period to take themselves out by attempting to continue to export lightweight cars, with none of the quality of the Japanese at the time. A 1970′s VW too was a ptrry ratty mess, using an engine platform that was literally antiquated, in cars of questionable build quality.

What stopped the Japanese from completely decimating US, German and English production was not quality failure… it was capacity, labor, raw materials, and economics at home. They simply built a market that they could not continue to expand and support – so prices had to go up, and their focus became more fine. Today, this continues, with the dominance in many markets, supporting trillions in US consumption. It also includes miving manufacturing to the US and elsewhere, putting displaced US workers back on the job. Further, underlying all of this is a Japanese culture that supports quality, honor, and pride in workmanship. They also employ consultive communicative design processes, which means when customers offer criticism, they respond with improvements.

The concern with Chinese imports is a consistent, seemingly irreparable commitment to cranking out volumes of low grade, low cost commodities, with minimal quality control – to flood markets into submission. This, coupled with a massive population to exploit by its communist government… and the character of the Chinese threat is an order of magnitude different than that posed by the Japanese. Chinese products have been imported here since the 1930′s, and in some sectors, was founded on quality – like porcelain wear. However in the time it took the Japanese to move from obscurity to dominant quality player (roughly 20 years), the Chinese have only expanded exploitive low cost manufacturing as their core value add. Quality has remained consistently a lower priority across the board.  The flooding of low grade commodities into every sector of the US market has created a decline in expectations of customers, a devaluation of quality as a core value, and a depreciation of manufacturing asset value of every country in the world.  What the Japanese and Germans have brought us in escalating quality, durability, and engineering expertise, and the US has brought with productivity and consistency… the Chinese are slowly but certainly eroding into a market filled with cheaply made, short lived, poor performing product, shipped like tidal waves into every market. With this, complete market segments have been removed from the US landscape, with no hope of recovery. Clothing, shoes, small appliances, house-wears, school supplies, small electronics, watches, jewelry, books, printed materials, drywall, power tools, machinery… with each year we ignore this erosion of value of our own productive population, they are lost to permanent unemployment.

You can correct quality and productivity problems, as long as there remains a market one can derive profitable sales from. This was how we responded to the intrusion of German and Japanese imports, and attracted them here to manufacture good to be exported. Combating an intrusion of low-low priced goods that demands use of labor rates that cannot be met here, with masses of products sold to retail channels so cheaply that replacing returns can be absorbed.. leaves us defenseless and vulnerable. If the countries exploiting this situation do so with a philosophy that places greater emphasis on domination at all cost, over delivery of product value, there is little we can hope for.  China has made it clear they intend to sell here everything they can, while maintaining high defensive walls against our selling back to them.

The exploitation of cheap labor is as old as the industrial age. It is an inevitable process of commerce that one will seek the lowest cost avenue to reach highest investment return. For this reason, any impact on the home market, it’s people, and general economy are only important as a need for a buying market to support sales. Out current economic condition is the result of this exploitive cycle. We have been exploited as consumers willing to dig deep debt holes to buy more junk than we need to keep corporations earing at the highest levels of profitability. We have been exploited as sheep who will support our own destruction to protect an open market that is designed to deliver to us less, to move out money into profiteer pockets. We are being exploited by a government who maintains a warring stance to support corporations who profit from such acts, to protect countries and raw materials that will be used against us in future exploitation. We are being sold a bill of goods that any effort we make to protect our own productive population is an  act of protectionist treason against the constitution and free market system of capitalism that feed us all.

Bottom line is simple. Each year, we have fewer choices as to where the products we pay for come from, while fewer of us each year are employed to add value through conversion of raw materials to product. Each year we are seeing our tech jobs move to Asia, our engineering jobs to India, and our working class experiencing a lower standard of living than prior generations. The idea that we should ignore all of this in support of a free market system – is preposterous. This market is not free at all, it is a fixed game supporting the free-for-all profit taking of massive corporations, who now see us as a secondary market. We’ve been down this road before, when manufacturers were so draconian in their treatment of labor here that labor unions were spawned, and labor laws created to stem the tide of destruction.

In the 1980′s we faced a manufacturing power that had products and lessons for us to learn. These improved us here, with a more focused effort on quality and ingenuity that we have built the most productive working population on, who delivers excellent value in quality and price.

In 2010 we face a manufacturing power that has contempt for us as people, who see us as consuming cows, who are paying our manufacturers to abandon us here. This, while delivering to us ghost products, that look like what we want, but are facade junk that is short lived and poor performing. We cannot defend ourselves from this. We can’t go back to domestic exploitation of labor, we’ve seen how corporations wield that power. We can’t devalue our own economy to level the playing field overall, as this will crush those already burdened with the mess we’ve made for ourselves by not managing the dynamics of the trade balance now.

I have no faith at all that Chinese product will ever be of the same quality as that made here, in Germany, Italy, Spain, or Japan. I have seen very little indication that we will see anything more than an expansion of the exploitation, more shoddy junk from stores, and continued erosion of our home market as a result. With each market turning into 100% made in China, the options to find products of quality to stem the tide of landfilling becomes less and less viable. This removes any pressure to resolve quality issues, and simply presses the low low prices strategy further, until all you can buy anywhere is non functional, super-cheap junk, trinkets parading as actual product.

2010 is not 1958, it is not 1980… We face new challenges today from two countries (China and India) that out number our own population by a factor of 7, with exploitable labor forces we cannot hope to compete with. Because of this, we must redress our consideration of the dynamics of free trade, and deploy controls that allow us to support our own people, our working class, and establishes an expectation for quality that supports R&D, without handing an unfair advantage to thieving corporations that will use any protective legislation to rob us blind. This is a huge and critical challenge, requiring new thought and new approaches. Failing any attention to this will result in our eventual failure as a nation.