Scott Springer, founder of Cowboy Consulting Group, discusses the critical steps needed to bring manufacturing back to the U.S. and make it globally competitive. Springer emphasizes the importance of automation in maintaining cost efficiency and product quality. He highlights how Germany and Japan have excelled by focusing on high-quality production and extensive automation. Springer also underscores the need for a strong workplace culture, arguing that investing in employees' well-being can significantly reduce turnover and boost productivity. Lastly, Springer touches on the importance of favorable tax policies to support reshoring efforts. His message is clear: without innovation and investment in automation, U.S. factories will struggle to stay competitive in the global market.

Want to learn more about Scott Springer's work? Check out their website at https://chelwoodgroup.com/.

Connect with Scott Springer on LinkedIn at https://www.linkedin.com/in/springer-scott/.

Key Points with Timestamps:

• [00:00:30] Introduction to Scott Springer and the focus on U.S. manufacturing.
• [00:02:35] Discussion on rising labor costs in China and its impact on global manufacturing competitiveness.
• [00:04:52] The significance of quality and automation in German manufacturing success.
• [00:11:03] Challenges faced by the U.S. due to the shift from a manufacturing to a service economy.
• [00:14:14] The reshoring movement and how U.S. factories are catching up in quality and cost-efficiency.
• [00:16:09] The impact of automation on job security and the importance of protecting U.S. manufacturing jobs.
• [00:20:18] The role of employee culture in reducing turnover and increasing productivity.
• [00:27:40] The need for U.S. manufacturing plants to focus on automation and quality to remain competitive.
• [00:35:03] The role of tax policy in influencing the offshoring of U.S. manufacturing jobs.
• [00:40:00] Final thoughts on the importance of automating and creating a supportive culture to keep U.S. manufacturing competitive.

Transcript

00;00;00;00 - 00;00;30;20
Craig Andrews
I was in a coma for six weeks while the doctors told my wife I was going to die. When I woke up, she told me the most fantastic story. My team kept running the business without me. Freelancers reached out to my team and said, we will do whatever it takes. As long as Craig's in the hospital. I consider that the greatest accomplishment of my career.

00;00;30;23 - 00;00;51;10
Craig Andrews
My name is Craig Andrews and this is the Leaders and Legacies podcast where we talk to leaders creating an impact beyond themselves. At the end of today's interview, I'll tell you how you can be the next leader featured on the show.

00;00;51;10 - 00;01;02;11
Craig Andrews
All right, today I will. Welcome back, Scott Springer. This is his second appearance on Leaders and Legacies as Scott. The comeback. Because Scott focuses on something that's,

00;01;02;11 - 00;01;13;18
Craig Andrews
very passionate to me. And it's the basic belief that we should be doing more manufacturing in the United States. And just for reference, the number two exporter in the world is Germany.

00;01;13;21 - 00;01;33;13
Craig Andrews
And I don't I'm not upset that the Germans did that. Good for them. But if a country the size of Texas can be the number two export in the world, we should be focused on how we're number two, how we pull ahead of them, and either number one or number two. And Scott has some amazing thoughts on that.

00;01;33;13 - 00;01;58;22
Craig Andrews
He is the founder of the Cowboy Consulting Group. I, he's a graduate of the US Naval Academy, and Scott has turned around a number of company, factories and made them profitable. And so we're going to talk today about bringing U.S. factories back to the United States. So if you are somebody who needs manufacturing, please listen, because this is the roadmap.

00;01;58;25 - 00;02;10;25
Craig Andrews
If you're somebody that has a factory and maybe currently have things offshored part of Scott's messages, do it sooner rather than later. So tune in.

00;02;10;25 - 00;02;12;27
Craig Andrews
Scott, welcome, Alex.

00;02;12;27 - 00;02;15;04
Scott Springer
Great to be back here. I thank you.

00;02;15;07 - 00;02;35;20
Craig Andrews
Yeah. So we were we were chatting and you know, one of the things that we were talking about right before we hit record is things are changing in China, you know? And so everybody's been assuming, hey, you know, China's place to to build. But things have been changing. What's been changing in China?

00;02;35;23 - 00;02;55;00
Scott Springer
Well, I mean, one thing, you know, we got a lot of banking issues and stuff like that, which I'm not too familiar with. But the average wage in China over the last few years, it's been going up quite significantly. You know, we used to be like sub dollar in our US dollar in our wages. You know, that's like $4 an hour and it's continuing to grow.

00;02;55;02 - 00;03;08;05
Scott Springer
Exactly. Show it to you. But it was double digit growth last year in there. Your average wage. Right. So I'm less competitive in the open market, you know. Well that type of work.

00;03;08;07 - 00;03;31;20
Craig Andrews
And when I think about, you know, $4 an hour, I mean, sure, that's a big difference that between you know, the 15, $16 an hour or whatever's being paid in the US. But it's not that big of a difference. And there's a there's a cost there. There are additional costs for manufacturing in China over the US, and would seem like that would quickly consume that difference.

00;03;31;22 - 00;03;48;23
Scott Springer
Yeah. One, I mean, a lot of not all the factories, some Chinese factories, they make high quality product, but usually there's a quality issue with stuff coming from China. And then you got to transportation, you got to ship it from there to the US to bring it in, where they still will be competitive, you know, as long as they have the lower wages.

00;03;48;23 - 00;04;01;07
Scott Springer
When you're making a lot of widgets, you know, whatever you're making and they're small and they're high value widgets like smartphones, you know, like they make a lot of the smartphones are made in Taiwan and, you know,

00;04;01;07 - 00;04;14;05
Scott Springer
South Korea and all that. You can put a lot of smartphones on one container so that your transportation cost is so low per smartphone or per widget, whatever they're making over there, that's like really small.

00;04;14;07 - 00;04;24;10
Scott Springer
That's when they become very cost competitive. When you have a highly manual process with a small, high value product.

00;04;25;00 - 00;04;52;26
Scott Springer
Yeah, that's hard too. That's hard for us to beat in the US. But almost any other category I don't. It annoys me that we're not like dominant in so many areas. You know you mentioned Germany right. Germany. Germany's number two exporter and their average wage is higher than the U.S. So why are they exporting more than us? The main reason is, is the quality of their work is so fantastic.

00;04;52;29 - 00;05;04;06
Scott Springer
You know, I've bought I've been to Germany, I bought Japanese and northern Italy and basically that Central Europe area, you know, from, you know, Denmark through Holland,

00;05;04;06 - 00;05;12;13
Scott Springer
Switzerland, northern Italy, Germany, they make fantastic stuff, you know, very, very high quality,

00;05;12;13 - 00;05;15;14
Scott Springer
very precise, very high precision equipment.

00;05;15;14 - 00;05;19;14
Scott Springer
You can do it right. You know, the quality is fantastic.

00;05;19;17 - 00;05;29;11
Craig Andrews
So what is it. So quality is one of the things. What are the other things that allowed Germany to be number two and remain competitive there.

00;05;29;14 - 00;05;33;04
Scott Springer
They automated like a lot of their stuff is automated.

00;05;33;04 - 00;05;41;18
Scott Springer
And in order to run the automation you need like technical people. It's not high school grad only. Right.

00;05;41;18 - 00;05;56;11
Scott Springer
A lot of the workers there, you know, they've gone through trade schools or tech schools. They've learned how to work the automation. You have to learn it in high school, at a tech school, or they went on afterwards and, you know, got trained for a couple of years afterwards.

00;05;56;14 - 00;06;19;18
Scott Springer
If you're at the US high schools, I think they a lot of them do it just just an injustice to the students because they're not necessarily preparing them for jobs. I remember back, you remember back in the 50s, I don't remember the 50s, but back in the 50s and 60s and 70s, there was a lot of technical schools in almost every county where students could go, and they could learn trades, you know, or at least the beginning of the trade.

00;06;19;20 - 00;06;21;22
Scott Springer
And those are almost all gone.

00;06;21;25 - 00;06;34;26
Craig Andrews
Yeah, I grew up, obviously. I grew up right across Chesapeake Bay from the Naval Academy. And to this day, there is a vo tech that's a part of the high school, and it's a separate building. And for the people that go the,

00;06;34;26 - 00;06;49;09
Craig Andrews
the vertical route, they spend half their day over the main building doing English and all that sort of stuff, and then the afternoon or the morning, you know, depending upon what they do, there are they're learning how to be electricians, plumbers, you know, you name it.

00;06;49;11 - 00;06;52;27
Scott Springer
Yeah. A lot of those schools have shut down across the US.

00;06;53;00 - 00;06;53;18
Craig Andrews
Yeah.

00;06;53;21 - 00;07;09;17
Scott Springer
Right. And so now the factory workers coming in, they don't understand electricity, they don't understand electronics, don't understand computers, you know, and how programing works and stuff like that. And that should be it should be taught, you know, for people who want to go down that road.

00;07;09;19 - 00;07;13;26
Craig Andrews
Yeah. I live in a school district now. Obviously I live in Austin, Texas.

00;07;13;26 - 00;07;15;12
Craig Andrews
And I live in the Lake Travis,

00;07;15;12 - 00;07;18;15
Craig Andrews
the school district, there's no vo tech there.

00;07;18;15 - 00;07;24;17
Craig Andrews
You know, and, you know, and that's, you know, basically, if you're going to Lake Travis and it's it's kind of crazy.

00;07;24;17 - 00;07;35;28
Craig Andrews
Texas has this rule if if you graduate the top 10% of your class, you can go to one of the, you know, one of the premier state universities, not for free, but you get admitted to that automatically.

00;07;35;28 - 00;07;36;14
Scott Springer
You made it. Yeah.

00;07;36;21 - 00;07;59;20
Craig Andrews
Yeah. Well, the problem is if you graduate from, like, Travis High School with a 4.0 average, you're not in the top 10%. It's just insane. But that's the schooling of that district. And so they're not putting out people. I mean, obviously there's some very bright students there, but not all of the students from that school should be going to university.

00;07;59;23 - 00;08;08;06
Craig Andrews
And that's not a dig. It's just different skills. I mean, my goodness, a lot of the millionaires today are plumbers, right?

00;08;08;08 - 00;08;31;00
Scott Springer
Oh yeah. Yeah, without a doubt. Yeah. You know, it's the schools. The schools that, you know that don't teach that stuff. Right. And then they, you know, they encourage people to go to college, which is great. College is fantastic. You know, I learned a tremendous amount in college. But it depends on what your major and what your goals are in life.

00;08;31;02 - 00;08;31;17
Scott Springer
You know,

00;08;31;17 - 00;08;56;04
Scott Springer
you know, if if you get a liberal arts degree, you're very limited on what you can do when you graduate with a liberal arts degree, you know, versus graduating, you know, from the Electrical Union Trade school or the plumbers trade school, you know, the union trade school or going to a community college. They're building this big manufacturing and technology center at

00;08;56;04 - 00;09;12;12
Scott Springer
Elgin Community College, which is near my house, and it's to train people after high school to go on, get an associates degree or get certificates on doing robotics, doing electronics, doing electrical work and stuff like that, which is they're becoming the community college is becoming a trade school.

00;09;12;12 - 00;09;22;16
Scott Springer
And it's it's a big campus. It's a little community college. I, I drove through it the other day. I was like, why is this place still a community college? I mean, this place is the size of some universities.

00;09;22;16 - 00;09;36;24
Scott Springer
You know, it's just it's a it's amazing. And a lot of community colleges are doing that around the country is they're picking up the slack that the vocational schools dropped in high school, but now they're learning it after high school as opposed to in high school.

00;09;36;24 - 00;09;55;11
Scott Springer
If they would have learned some of it in high school and then went on to the community college to get their certificates and their associate's degrees and bachelor's degrees in some sort of technology, they'd be so well prepared for the factories. And that's a lot what they do in like, Germany and Italy, you know, I talk to them there.

00;09;55;11 - 00;10;06;20
Scott Springer
It's like they're getting people out of the tech schools, the tech universities, the technical institutes that they have there, where they learn how to run, how to work in a factory.

00;10;06;22 - 00;10;21;20
Craig Andrews
Yeah. And and, you know, there's an element of focus. So I don't want to get too far off from this. But when you were talking about that, what community colleges are doing, it took me back to my first job out of college. I was working for Ericsson, who made mobile phones at the time.

00;10;21;23 - 00;10;22;19
Scott Springer
Okay. Yeah.

00;10;22;21 - 00;10;42;08
Craig Andrews
And I remember seeing some people walk through the Ericsson engineering facilities. The R&D facilities asked them. I said, who is that? And they said, well, they're with Wake Tech, the local community college, and said, why are they here? They said, they're here to figure out what type of technicians we need. Yeah. You know who I never saw walk through our hallways?

00;10;42;10 - 00;10;49;04
Craig Andrews
Was anybody from North Carolina State University, the premier engineering school, 15 minutes away?

00;10;49;11 - 00;10;50;03
Scott Springer
Right.

00;10;50;05 - 00;11;02;28
Craig Andrews
They weren't walking through our hallways figuring out what we needed to have better engineers. It was the community college. Yes, that was there figuring out what we needed. And I think it's a loss of focus on the things that matter.

00;11;03;00 - 00;11;22;26
Scott Springer
Well, it's we haven't kept up in the United States. You know, the community college is starting to catch up, but we haven't kept up with the progress of technology over the years. You know, I mean, technology is advancing so fast, whether it's, you know, software and other stuff. And we've done a great job with the software side of technology.

00;11;22;28 - 00;11;25;28
Scott Springer
You know, I mean, we've lead the world with software right now.

00;11;25;28 - 00;11;34;22
Scott Springer
But the hard manufacturing, the making of, you know, widgets, we fell behind, you know, over the last 20, 30 years.

00;11;34;25 - 00;11;42;17
Craig Andrews
Yeah. So let's, let's kind of jump back there. There's I mean, for years, I heard the mantra, we're no longer a manufacturing,

00;11;42;17 - 00;11;57;29
Craig Andrews
economy. We are a service economy. And that was what I heard as I saw manufacturing jobs go overseas. Was that right? What was that wrong? What's what's the real picture? What what should we have been saying?

00;11;58;01 - 00;12;14;26
Scott Springer
Well, I agree with the statement back. You're talking about like 1020 years ago when manufacturing was moving overseas 30 years ago. Yeah, I agree with that statement. It was moving offshore. But the reasons why is, you know, I think that was not portrayed accurately.

00;12;14;26 - 00;12;28;09
Scott Springer
We just didn't keep up with technology. We didn't automate. We didn't, you know, when you get into manufacturing and you're selling widgets, you know, around the world and also we become more of a global economy.

00;12;28;09 - 00;12;44;04
Scott Springer
The whole world has become a global economy as opposed to local, you know, when you're local, it's like, yeah, you're not going to go overseas. But when you can, like ship stuff around the world relatively cheap and easily, you know, the supply chains are so diverse and so, so much better than they were 30 or 40 years ago.

00;12;44;06 - 00;12;50;16
Scott Springer
You know, the containers moving overseas. It's unbelievable how much goods moved in and out of all the ports around the world.

00;12;50;16 - 00;13;02;27
Scott Springer
But we just we just fell behind. We just kind of we got comfortable is what it was. As opposed to staying ahead, you know, it's like you win the Super Bowl. How many people won the second Super Bowl back to back.

00;13;02;29 - 00;13;08;19
Scott Springer
Not many over the year. You know because you get comfortable, right.

00;13;08;19 - 00;13;29;03
Scott Springer
You know no one's repeated yet. Yeah. It's been a couple, you know, repeats. But it's just people get comfortable. And when we were number one in manufacturing, we got comfortable. We didn't think because when you're number one, everybody, you're a target. Everybody wants to be as good as you.

00;13;29;05 - 00;13;47;03
Scott Springer
Japan became the best manufacturing you know country in the world back in the 80s and 90s. They were the best. They were they were incredible right. And Germany caught up. And now Germany in Japan they still make fantastic widgets you know whatever whatever they're making.

00;13;47;03 - 00;13;48;10
Scott Springer
But we get comfortable with like

00;13;48;10 - 00;13;56;19
Scott Springer
with USA, USA, made in the USA, it's like, yeah, but let's make the best product, let's make the best product at a lower price.

00;13;56;19 - 00;14;10;09
Scott Springer
And somebody in another country who's making a not best product, you know, and that's how you stay on top. Yeah. Make the best product at a lower price. Deliver to the customer.

00;14;10;11 - 00;14;14;09
Craig Andrews
So we are where we are. You know, we've

00;14;14;09 - 00;14;16;14
Craig Andrews
and and the,

00;14;16;14 - 00;14;30;27
Craig Andrews
the reshoring effort has started. There's already some things coming back and one, I guess let's start here. What's driving the reshoring from your your perspective? What's driving, you know, the,

00;14;30;27 - 00;14;32;24
Craig Andrews
return of American manufacturing?

00;14;32;26 - 00;14;55;02
Scott Springer
I think we are. We are getting better. We're starting to catch up to the the best companies, best countries. Right? So we're we're starting to make higher quality product at a lower cost. You know, we always buy Chinese American made. We always had very good, high quality product, but we didn't necessarily have it at the lower lowest cost.

00;14;55;04 - 00;15;08;15
Scott Springer
We're getting better and getting smarter at making it at a lower cost than we were 20 years ago. 20 years ago, we were just throw bodies at a manufacturing process and didn't automate.

00;15;08;15 - 00;15;13;26
Scott Springer
There was some automation in some places. You know, a lot of the food plants, the big food plants, like, you know, the crafts and,

00;15;13;26 - 00;15;14;22
Scott Springer
the nurses and all that.

00;15;14;22 - 00;15;15;27
Scott Springer
They were highly automated.

00;15;15;27 - 00;15;20;25
Scott Springer
But other places, it was still a very manual process.

00;15;20;25 - 00;15;36;29
Scott Springer
So when it was manual, it's, you know, it's easy to beat that price. You know, wages go up every year. You know, cost of living adjustments, at least, you know, and merit adjustments, wages are going to be going up. So your costs are going to be going up every single year.

00;15;37;02 - 00;15;52;20
Scott Springer
When you automate and you start reducing the amount of people you need to make a widget, that amount per widget that the price goes up is a lot smaller, and therefore you become more competitive.

00;15;52;22 - 00;16;06;13
Craig Andrews
Now there are some people that are listening to that and they're saying, well, if I'm going to lose my job to a robot, you know, what's the difference between me losing my job to a robot and may lose my job to,

00;16;06;13 - 00;16;08;29
Craig Andrews
somebody in China?

00;16;09;01 - 00;16;31;04
Scott Springer
See, I never took it that way. Whenever I worked in plants and automated, my goal was to make sure that the people there always had a job. And it was up to my competitors to make sure that they didn't have their people lose their job. I protected my people's jobs. Right? So when you look at the country as a whole, we want to protect our manufacturing people.

00;16;31;06 - 00;17;04;28
Scott Springer
We don't care if Chinese factories lose labor because their business goes down. We care about the US manufacturing companies being competitive worldwide because, you know, we're not just competing against U.S. other US manufacturers anymore. We're competing against worldwide manufacturers. So we want our manufacturing companies to be the best. Right. And I always had I always had a rule in all of my plants, you know, when I was automating, when I was upgrading and making places more efficient, we would never lose.

00;17;05;01 - 00;17;23;04
Scott Springer
No one would lose their job because of you know improvements in the plant. Right. They might lose their job if sales went down. So let's make sure our costs are low enough so that the jobs don't go away. And then but if people left on their own, for whatever reason, they retire. They decide to go work somewhere else.

00;17;23;07 - 00;17;42;27
Scott Springer
They lost a job due to attendance, whatever it is, you know, you generally have a little bit of turnover. We might not replace everybody. You know, we might not always have 100 people in the plant, but no one will lose their job because of improvements made in the plant. And I always, I always had that rule of my plants and it, you know, that gets the buy in.

00;17;43;00 - 00;17;58;13
Scott Springer
People aren't worried about their losing their job. Right. And it also creates that confidence that the jobs are going to be there long term. If we're if our plant can produce at a lower cost than other plants, the people in that plant have some job security.

00;17;58;16 - 00;18;12;17
Craig Andrews
Right? Yeah. One one of the things that we talked about before was the environment in the plant. And, you know, you asked me, you know, I'd been you know, I've been to factories overseas and,

00;18;12;17 - 00;18;18;14
Craig Andrews
you know, I've been to the Samsung factory in Gumi city where they make Samsung phones. And

00;18;18;14 - 00;18;25;15
Craig Andrews
at one point, you know, multiple times while I was there, I ate at the, the cafeteria, you know, we were working.

00;18;25;15 - 00;18;32;02
Craig Andrews
And then we went to the cafeteria and had dinner and then the lunch and what have you, and then went back to work.

00;18;32;05 - 00;18;36;04
Scott Springer
And the cafeteria, the factory workers were eating there. Right.

00;18;36;06 - 00;18;37;23
Craig Andrews
Exactly. Yeah.

00;18;37;25 - 00;18;56;01
Scott Springer
You don't see that much in the US, right? We have lunch rooms where everybody brings their own lunch. They can buy a lunch. Right. And I, I think we talked about this, you know, in another conversation. You know, I've been overseas too. You saw that the Samsung I saw down in South America and in Europe at a few factories I've been to.

00;18;56;01 - 00;19;13;18
Scott Springer
It's like where they take care of their employees better. They create a better culture. They take care of their employees, they feed them, you know, there's lunches and meals provided. You know, sometimes it's a subsidized, you know, like one quarter price. But they feed them. They take care of them so that they're well fed.

00;19;13;18 - 00;19;17;16
Scott Springer
You don't see that very often in US factories.

00;19;17;18 - 00;19;25;02
Scott Springer
Like I was at a factory just a couple weeks ago. Small, small factory. Not going to say the name, obviously.

00;19;25;02 - 00;19;42;24
Scott Springer
And, you know, one thing I wanted to see was I saw the that they were having problems with turnover. And I looked at their lunchroom area and it was a dump. I mean, it was like this rickety old fold up table, rusty metal chairs, plastic chairs that the people had to sit on.

00;19;42;29 - 00;19;59;10
Scott Springer
And it was like, kind of like out in the fat in the corner of the factory. It wasn't like a air conditioned room. So like in the summertime it was like 90 degrees. And, in the lunchroom, you know, it's like, who wants to work in that environment? You know, it's like it's not nice. It wasn't. It wasn't nice at all.

00;19;59;12 - 00;20;18;06
Craig Andrews
Well, so picture me as the NBA coming to you with my spreadsheet saying, hey, we're spending too much on cafeterias. We need to cut here, you know, as an MBA, using spreadsheets to make the decision to not do that. What would be your counter argument that you would make to me saying, no, no, no, no, you need a better lunchroom.

00;20;18;08 - 00;20;21;11
Scott Springer
How much are you spending on turnover?

00;20;22;17 - 00;20;47;13
Scott Springer
How much are you spending to hire people with your turnover rate? Because it's turnover rate. There's two cost to turnover. You get the cost of turnover. The cost to rehire HR people, recruiters, whatever. Paying for that. There's a cost associated with that. And that's a hard cost right. The other cost is the efficiencies in the factories like it takes I would say like I ran a lot of packaging lines over the years, you know, and I ran refineries too.

00;20;47;13 - 00;21;10;05
Scott Springer
And, you know, distillation plants and stuff like that, but like on a packaging line, which I'm more familiar with. It takes a good year for a factory worker to become very proficient at that line. You know, they might be able to operate it by themselves in a couple months, two months, not like a week, you know, even though some places they do that in a week.

00;21;10;08 - 00;21;33;26
Scott Springer
But it takes a good few months for them to become be able to operate on their own without a whole lot of interaction. It takes a good year for them to become really proficient at that manufacturing line. But if you're turning people over, if you got a, you know, double digit turnover or some place a triple digit turnover, you never get to that point where the operators are proficient at their lines.

00;21;33;28 - 00;21;55;19
Scott Springer
You see that and the efficiencies, you know, the overall equipment effectiveness, the right when you got higher turnover, you have lower, oh, the longer people around you see that. Oh climbing just naturally efficiencies down the line climb as people are there and they become they know how to run the line. You know it's not just having a procedure.

00;21;55;19 - 00;22;04;13
Scott Springer
They actually know the idiosyncrasies and how to get a few extra widgets out per minute or per hour, you know, depending on what they're doing.

00;22;04;15 - 00;22;05;10
Craig Andrews
You know.

00;22;05;12 - 00;22;08;11
Scott Springer
The turnover kills by it's.

00;22;08;13 - 00;22;13;12
Craig Andrews
So let's talk about bringing, manufacturing back to the US.

00;22;13;12 - 00;22;17;04
Craig Andrews
You know, what do we need to do? And,

00;22;17;04 - 00;22;19;23
Craig Andrews
one of the things that you talked about, you said there's three types of,

00;22;19;23 - 00;22;25;14
Craig Andrews
plants. There's union plants, highly manual and nonunion automated plants. Yeah.

00;22;25;14 - 00;22;34;00
Craig Andrews
First off, why does that matter to this discussion? And and then how do we tie that in to have more manufacturing in the US?

00;22;34;02 - 00;22;34;10
Craig Andrews
Yeah.

00;22;34;11 - 00;22;38;28
Scott Springer
There's well start to like the union plants. Right. And I worked in a couple of union plants.

00;22;38;28 - 00;22;58;23
Scott Springer
Some of them are automated. Some of them are not. If they're not automated, they're swimming upstream. They're not going to be around for long. Right. So a lot of the union plants unfortunately have shut down over the years. It was very a very manual process where they had like an army of people, all under the Union that were doing a lot of manual work.

00;22;58;26 - 00;23;17;03
Scott Springer
A lot of those factories that I've seen over the years, they fight the automation because the union, they, you know, they want to keep their population higher. You know, there's a lot of strength in that. But at the same time, it's a or a strategy because you're competing against other companies that are not doing it manually.

00;23;17;05 - 00;23;17;17
Craig Andrews
Well, John,

00;23;17;17 - 00;23;23;11
Craig Andrews
that happened in your neck of the woods with John Deere here just somewhat recently in the last several months.

00;23;23;13 - 00;23;43;00
Scott Springer
Yeah, yeah, they moved over, you know, it's like it was from what I heard they were resisting automation, you know. And so it's like, oh well we'll go somewhere else where we can automate, you know. And it wasn't it's not a matter of the hourly wage. You know, there were unions always fight that. Oh we want to keep the hourly wages higher.

00;23;43;02 - 00;24;08;27
Scott Springer
So that's not been my experience. It hasn't been higher than the factories that I worked at which were nonunion factories. You know, I worked at two companies and where we had union plants and nonunion plants. And at both of those companies, the nonunion plants hourly wages were higher than the union plant. Hourly wages. But the performance of the nonunion plants far exceeded the union plants at those companies.

00;24;08;27 - 00;24;30;24
Scott Springer
Not every companies like that. Right. You know, there's some phenomenal union plants out there. But it's just a different mindset. I think, you know, it's like you got to think long term. You can't think this year membership dues. You got to think we want to be in this factory for 50 to 100 years. What do we need to do to stay in here?

00;24;30;26 - 00;24;31;18
Scott Springer
Right.

00;24;31;21 - 00;24;39;29
Craig Andrews
And the John Deere case, they went from having, you know, a handful of union jobs to zero union jobs. And the factory moved to Mexico.

00;24;40;01 - 00;24;45;28
Scott Springer
Yeah, yeah. Making the same product, you know, just more automated. There was

00;24;45;28 - 00;24;54;10
Scott Springer
when I was running one plant that I had, one of my operators, he was saying, he's like, I was working at the factory. I forget what they were making. You know, they're making something. And,

00;24;54;10 - 00;24;57;27
Scott Springer
he's like, yeah, we they shut down our plant. They moved it to Mexico.

00;24;57;29 - 00;25;19;18
Scott Springer
He's like, okay, you know, and I dug into it a little bit more. You know, it wasn't because of the wages. They had a dozen people running their manufacturing line, or 15 people. They had quite a few. They were in a union and they were resisting the automation in that plant. Right. So he couldn't automated. So they had like 12 to 15 people.

00;25;19;21 - 00;25;37;02
Scott Springer
So they built a new plant in Mexico. Right. But they automated that line. They have four people running the same line, making the same product down there where took 12 to 15 people up here. Why it wasn't the wages. It was a lack of automation, you know.

00;25;37;05 - 00;25;43;18
Craig Andrews
So so dealing with the union plants, what's the path forward with for them.

00;25;43;21 - 00;25;59;14
Scott Springer
I think you know and there's two you get the trade. I think the trade unions do a fantastic job. They train their people for their job and then they protect their jobs. Right. So I think that's a they're fantastic. You know, whether it's electrician, the pipefitters, the plumbers, the carpenters union, they do a great job.

00;25;59;14 - 00;26;00;17
Scott Springer
Best, best in class.

00;26;00;17 - 00;26;21;11
Scott Springer
Like everybody should model the other unions. The factory unions should model themselves after their, you know, if they can get them to the factory unions, if they can get them to have, like a trade school, like a factory trade school, or get something in their contracts where they only hire people from the community colleges that have gone through the tech programs.

00;26;21;11 - 00;26;56;00
Scott Springer
They're that would be fantastic, because you're raising the caliber of the person in there, and they got to support the automation, right? Too often they're they're fighting the automation and the improvements of the factories. And if you're doing it, you you're a dinosaur. It's like you're back in the 1950s and 60s and it's right now it's 2024. You know, it's like if you're not automating, if you're not increasing the number of units you can make per hour, with less people not working harder, you know, sometimes you get rid of people and they work harder.

00;26;56;00 - 00;27;18;01
Scott Springer
That's not the way to do it. You know, it's like I always try to automate my plants where we were making more widgets, right? And the people on the line, we had less people on the line, and the people on the line were working less hard than we had before. The automation, making more money, right? Yeah, making more money.

00;27;18;02 - 00;27;40;05
Scott Springer
You're not working as hard. You're working smarter. You're making more widgets. Your total cost go down. It sounds simple, but it's, you know, it is hard, you know, to figure out how to how to do that with automation you need in each factory to make that happen. But sometimes you gotta think out of the right, you know, you got to just go with a blank slate sometimes and figure out how to do it.

00;27;40;07 - 00;27;47;07
Craig Andrews
So how about so that's union plants. What about nonunion automated plants. What's what's the path forward there.

00;27;47;10 - 00;28;17;12
Scott Springer
I think keep going around keep automating. You always have to look at efficiencies and quality right. Sometimes you have automation and you know they buy the cheaper automation which doesn't run as well. But you have to make really good product. Your product has to be your quality percentage needs to be 100%. 99.9999 you know, I Deming, you know, we try to hit six sigma, you know, which is like 1 in 1,000,000 defects, right?

00;28;17;12 - 00;28;28;24
Scott Springer
Always trying to strive towards that. Very seldom do you hit 1 in 1,000,000, but always be striving towards it as much as you can. I think people get comfortable. I remember a couple factories. There's,

00;28;28;24 - 00;28;42;29
Scott Springer
there's a thing called ECHL acceptable quality limit, you know, and it was like when I walked in, in fact, I was like, why are we trying to manufacture to acceptable quality limit eclairs, normally 2%.

00;28;43;01 - 00;29;01;13
Scott Springer
So it's like two out of every hundred is bad. And they're saying that's fine. It was like, no, no, no, you got to change your mindset. That's the wrong mindset. You can't be manufacturing to ECHL, right? You got to be manufacturing, trying to manufacture for Six Sigma as much as you can. Yeah. Most people you can never achieve it.

00;29;01;13 - 00;29;03;13
Scott Springer
You know there's too much variability.

00;29;03;13 - 00;29;20;16
Scott Springer
But you get as close as you can, you know, and at least be better than everybody else in the industry or closer to Six Sigma than everybody else in the industry. Then you have a really good shot of, you know, being cost competitive and quality competitive to other companies.

00;29;20;18 - 00;29;21;04
Craig Andrews
You know,

00;29;21;04 - 00;29;37;28
Craig Andrews
years ago when I was in semiconductors, we were shipping parts to Siemens and we were shipping them in three frequency bands, was the original definition. Then somebody, you know, as another project came along, they said, we want this fourth frequency band. And

00;29;37;28 - 00;29;46;02
Craig Andrews
and so we actually, you know, we actually used our knowledge of, of the Germans and their rigid adherence to schedule and all that.

00;29;46;05 - 00;29;47;27
Craig Andrews
Yeah. And we asked them, we said,

00;29;47;27 - 00;29;58;11
Craig Andrews
okay, for us to incorporate this, are we allowed to change the schedule? And they're like, no, no, the schedule, you know, the schedule cannot change. It's like, okay,

00;29;58;11 - 00;30;06;19
Craig Andrews
in that case, we won't be able to meet the same requirements in this fourth frequency band that we meet in the other three.

00;30;06;22 - 00;30;15;14
Craig Andrews
They're like, that's okay. You know? So we were understanding the way they went. And so I sat down with our, with our product,

00;30;15;14 - 00;30;17;02
Craig Andrews
testing team, our product,

00;30;17;02 - 00;30;20;07
Craig Andrews
verification team. And we were going through the,

00;30;20;07 - 00;30;28;16
Craig Andrews
the spec looking at what we were going to sign up for and what was so bizarre, our product engineer kept trying to sign up for more stringent,

00;30;28;16 - 00;30;32;24
Craig Andrews
specs than our statistics showed that we could support.

00;30;33;00 - 00;30;54;26
Craig Andrews
Like, now I was using four and a half Sigma. I said, Scott, we don't sign up for anything tighter than four and a half sigma. And he kept on our product engineer kept trying to sign us up for stuff tighter. I'm like, no, we have agreement from the Germans that we specify what we can. Yeah. And and so we went through every single thing.

00;30;54;26 - 00;31;01;07
Craig Andrews
We signed up for four and a half Sigma. We had 100% yield on those parameters.

00;31;01;10 - 00;31;08;03
Scott Springer
Yeah I mean what's four and a half sigma is going to be like 1 in 100,000 right. You know roughly.

00;31;08;06 - 00;31;09;01
Craig Andrews
Yeah.

00;31;09;03 - 00;31;27;17
Scott Springer
And the 1 or 2 that slipped through probably didn't have an impact. Yeah. You could have been so far off that didn't have an impact on, you know, the final product or where you're shipping or no one noticed it. Right. But at the same time, you know, you're a four and a half sigma, you're shipping four and a half Sigma, right.

00;31;27;19 - 00;31;43;21
Scott Springer
What can you do? Like companies can't get comfortable there. You almost got to like what can we do to get the Five Sigma. Where do we where's our where's our potential gaps? If that's a point by the times you go into a factory, it's like the gaps are glaring. You know, they're everywhere. You can see where the quality defects are coming from.

00;31;43;24 - 00;32;01;24
Scott Springer
But once you get to the point where it's like you're a four and a half sigma, it's like, what can we do to get the five sigma? You know? And if the if it's not cost prohibitive, do it. You know, do that, do that little tweak to get the Five Sigma. Now if it's $1 million to get the Five Sigma, it's like, yeah, I probably will do it.

00;32;01;26 - 00;32;12;17
Scott Springer
All right. But if it's, you know, thousand dollar upgrade to a line or, you know, a slight tweak in a procedure, do it in the Five Sigma.

00;32;12;20 - 00;32;13;23
Craig Andrews
Yeah.

00;32;13;26 - 00;32;17;23
Scott Springer
Keep pushing, keep pushing the envelope up. You know.

00;32;17;25 - 00;32;25;07
Craig Andrews
So we've talked about union plans. We've talked about nonunion automated plans when we haven't talked about as highly manual plants.

00;32;25;09 - 00;32;54;00
Scott Springer
Yeah. Those that's that's one way I don't think you can compute long term. You know unless you automate. I've, I've been to a few factories where it was people are making minimum wage or very low wages. Right. And they're doing it. It's a very manual process. Right. The problem with that is when you get that low wage, highly manual process, the only way to get out of that is automating.

00;32;54;02 - 00;33;27;06
Scott Springer
But if they're at minimum wage and there's a enough people to fill the jobs, which in a lot of places there are, there's, you know, sometimes there's tens of thousands of people willing to work for a minimum wage. You can't justify the automation. You know, you justify the automation because you really can't produce or you're replacing people, you know, that's the justification or sometimes it's an electricity or energy savings by having, you know, automation.

00;33;27;09 - 00;33;50;13
Scott Springer
But when you get that low wage, it's hard to justify automation financially justify. So some people will automate to stay in the business long term. But sometimes, you know, at that point it's almost like your strategy is like, well, we got about three more years and we'll be out of business. You know, we're doing great now because somewhere else they're going to, you know, there'll be manual work somewhere else that'll that'll be fine.

00;33;50;16 - 00;33;51;05
Craig Andrews
Yeah.

00;33;51;07 - 00;34;14;00
Scott Springer
You know, those are the ones that should go overseas. You know, when you got, you know, an army of people in a factory doing manual work at a minimum wage or just a hair above minimum wage, I was at one place where most of the people were at federal minimum wage, and the leads were $0.25 more an hour.

00;34;14;02 - 00;34;38;28
Scott Springer
It was not a not a high quality work crew. You know, the work was an interesting place to work. You know, I learned a lot while there, but it was like not a place that I wanted to work long term. You know, I like the automation. I like people like taking pride in their work and like the work that they're, you know, the equipment and they love their equipment they're working on versus like just manually doing stuff, you know, as fast as you can.

00;34;39;00 - 00;34;54;19
Scott Springer
Because at that point when you get that, you know, high number of people, low wage, it's how fast they can work all the way. Right? You know, there's no the equipment is not determining the speed. It's the people determining the speed.

00;34;54;22 - 00;35;03;20
Craig Andrews
So something else I think we have to think about. And that is policy. And, you know, one of the stories I've shared with you from my past is, you know, when I was in,

00;35;03;20 - 00;35;12;09
Craig Andrews
the semiconductor industry, I had a product that just cost too much to make, and we were totally manufacturing it offshore. And,

00;35;12;09 - 00;35;28;29
Craig Andrews
one point I, I got a quote from a, an assembler in Colorado, and they were charging half the price we were paying in Asia to assemble the product, which was so first off, and this was this was,

00;35;28;29 - 00;35;30;27
Craig Andrews
this was approaching 15 years ago.

00;35;30;28 - 00;35;44;08
Craig Andrews
No, this was born 15 years ago. So this was 15 to 20 years ago, at least on that product, we could assemble at half the price in the United States as we were paying in Asia. Yeah. And when,

00;35;44;08 - 00;35;48;19
Craig Andrews
when I was able to find that Amazon and it was a manufacturer, I was an assembler that I'd worked with before.

00;35;48;19 - 00;35;50;06
Craig Andrews
They had done high volume.

00;35;50;06 - 00;35;56;21
Craig Andrews
I, I trusted them immensely based on my prior experience. And when I came out with that price,

00;35;56;21 - 00;36;06;25
Craig Andrews
you know, management said, well, let's run it through the cost model and let's look at. And so I went and found the, the financial guys. They kept them in the basement there. And,

00;36;06;25 - 00;36;09;19
Craig Andrews
and they're putting it through the cost model.

00;36;09;19 - 00;36;35;27
Craig Andrews
And they said, Craig, we need to change your tax rate. Mike, what? They said you're currently paying 5% tax rate on your profits because all of this business is going through a Singapore office. We're going to change your tax rate to 35%. And it's like why is that? And they said because it touches US soil. When it touches US soil, it has to be taxed at the American corporate tax rate.

00;36;36;00 - 00;36;53;05
Craig Andrews
Yeah. And that just it infuriated me that we had a tax policy that made it advantageous to give ship jobs overseas. It wasn't because the American worker wasn't competitive enough. It was because of our tax policy,

00;36;53;05 - 00;36;59;01
Craig Andrews
shifted and encouraged the, the offshoring. And a number of years ago,

00;36;59;01 - 00;37;08;02
Craig Andrews
you know, the that tax rate came down from 35% to 20%, but that's about to expire, and it's going to go back up to 35%.

00;37;08;04 - 00;37;18;21
Craig Andrews
And so, you know, you've been talking about the, you know, the processes in the factory which people need to start doing. But we also as,

00;37;18;21 - 00;37;26;20
Craig Andrews
as voters, as business owners, we need to advocate for tax policies that encourage us manufacturing.

00;37;26;23 - 00;37;53;01
Scott Springer
Yeah. Tax the people don't attack. We don't tax. The businesses make, allow our businesses to be competitive internationally. Yeah, right. You know, because it's like, you know, it's like you're the good you they're going to do 1 or 2 things like Eisenhower did this back in the 50s. He set the corporate tax rate so high on purpose so that corporations were forced to distribute that money to dividends to the people and reinvest in their businesses.

00;37;53;03 - 00;38;14;16
Scott Springer
So he almost didn't want companies to make money. Right? Right. And, you know, it's like small businesses like I, you know, talking to small business just not too long ago. And it's like they made sure they made no money every year as a business because they don't want to pay the taxes. Right. So they reinvested in their business or funneled it to the, you know, the employees and the owners and stuff like that.

00;38;14;16 - 00;38;42;07
Scott Springer
Just distribute all the money and, you know, as distributions and, you know, stuff like that, make sure you they made know the business itself. You know, it was a C Corp made no money. Right, right. You know, so say you either have the tax rates so high so that people need to take that money and push it out into the economy, because that's what you're doing when you're doing that, when you're giving it to the people, when you're investing in the business, you're supporting the economy more,

00;38;42;07 - 00;38;51;12
Scott Springer
if the corporations are giving it to the government, I mean, who's you take 35% say you got a $10 million company, 35%, or making $10 million, you

00;38;51;12 - 00;39;12;12
Scott Springer
know, $3.5 million. What's going to provide more benefit to the economy? The government spending $3.5 million, or that corporation taking that $3.5 million and funneling it to new equipment, training, employee wages, employee bonuses, stuff like that.

00;39;12;14 - 00;39;14;17
Craig Andrews
Yeah. And the fact is,

00;39;14;17 - 00;39;16;13
Craig Andrews
the reason we were,

00;39;16;13 - 00;39;18;23
Craig Andrews
we were running our profits through the,

00;39;18;23 - 00;39;36;14
Craig Andrews
through Singapore, we spent millions of dollars, millions of dollars creating that entity in Singapore just so we could save tax. And that's the the problem is, yeah, people are creative. They find ways to work around these these taxes. And who gets hurt is the American worker.

00;39;36;16 - 00;39;40;25
Craig Andrews
Now I would say more broadly America as a whole. So I tell you what, we're

00;39;40;25 - 00;39;42;02
Craig Andrews
as we wrap up,

00;39;42;02 - 00;40;00;08
Craig Andrews
we've covered a lot. Do you have any parting thoughts for businesses in terms of whether they are a consumer of manufacturing or whether they're a manufacturing company? What are your parting thoughts as you look ahead?

00;40;00;11 - 00;40;23;23
Scott Springer
My biggest parting thought there's two things. Take care of your people. Create that great culture so that people want to stick around. That'll help improve your manufacturing profile in general. The second is, is if you're not automating either with, you know, software, AI or mechanical, you know, robots, automated equipment, there's a lot of different types of automation.

00;40;23;23 - 00;40;24;28
Scott Springer
You can do,

00;40;24;28 - 00;41;02;29
Scott Springer
automated forklifts or whatever. If you don't have a plan in place over the next several years to automate, I guarantee you somebody else does. Yeah, right. And so if you don't have that plan in place and you can, you know, whether you act on it or not, somebody else does. And within a few years, people are going to be passing you up because all the tools are out there for people to utilize all the fantastic automation nowadays, you know, especially in the last 5 to 10 years, the, the, the types of automation compared to 20 years ago, like when I got into manufacturing 25 years ago, you know, automation was

00;41;02;29 - 00;41;18;07
Scott Springer
pretty cool back then, but it doesn't even compare to the stuff that's out there today. You know, no comparison. It's so much at a lower cost. You know, it's AI and it runs better. And it's just it's it's amazing what's out there nowadays.

00;41;18;09 - 00;41;45;17
Craig Andrews
Well, I hope anybody that's listening, whether you're a consumer of manufacturing or whether you have a manufacturing facility, I hope they make it their mission. I hope you make it your mission to make America number one or number, the number one or number two? Exporter in the world, because we can do it absolute. And, Scott, I think you've laid out a brilliant roadmap.

00;41;45;19 - 00;42;09;13
Craig Andrews
And I hope people will call you. And because you actually help we know and talk about this, you know, these things because you actually help companies put them to work and you make companies, you make their factories profitable. So, so for those listening, call Scott, call Scott, get started. Help, Scott. How do they reach you?

00;42;09;15 - 00;42;17;25
Scott Springer
My email is probably the best Scott at Sherwood group.com Seattle word group.com Sherwood group and

00;42;17;25 - 00;42;26;12
Scott Springer
Sherwood Consulting Group is my company. There's a bunch of us who do different things for factories, make them more efficient, run better, faster, you know, lower cost.

00;42;26;15 - 00;42;34;12
Craig Andrews
So I hope I, I hope you get very busy because I want to see America become,

00;42;34;12 - 00;42;38;15
Craig Andrews
a great manufacturing powerhouse that we once were.

00;42;38;18 - 00;42;45;16
Scott Springer
Yeah, we can definitely do it. And we have all the tools. We have all the abilities. It's just a matter of executing and making it happen.

00;42;45;18 - 00;42;48;21
Craig Andrews
Yeah, well, thanks for sharing that, Scott.

00;42;48;24 - 00;42;52;20
Scott Springer
Thanks for having me. You're great news. Good time again.

00;42;52;20 - 00;43;19;16
Craig Andrews
This is Craig Andrews. I want to thank you for listening to the Leaders and Legacies podcast. We're looking for leaders to share how they're making the impact beyond themselves. If that's you, please go to Alize for me.com/guest and sign up there. If you got something out of this interview, we would love you to share this

00;43;19;16 - 00;43;21;11
Craig Andrews
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00;43;21;13 - 00;43;44;23
Craig Andrews
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00;43;44;25 - 00;43;53;00
Craig Andrews
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00;43;53;00 - 00;45;55;05
Craig Andrews
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