Turnaround hopes hinge on "supply chain relevance"

Reviving an ailing community is not about building a skilled workforce. It's about offering a relevant value-adding slot in a viable supply chain.

By Art van Bodegraven and Kenneth B. Ackerman

It's an old line, and not very funny anymore: "Will the last person to leave (fill in name of city) please turn out the lights?" We're not picking on Flint for the sake of beating up on the downtrodden, but Flint is an exemplar—the poster child—for communities in economic death throes.

The dynamics of community collapse are complex; Flint has been dying for well over 25 years. But at the core, the issue is that Flint is irrelevant to global automotive supply chains, and that's the death knell. Hey, Flint is irrelevant to domestic automotive supply chains. It may even be irrelevant to the General Motors supply chain.

We tend to think of these collapses in terms of manufacturing, but there are frequently distribution operations closely tied in with manufacturing operations. And there are distribution facilities and operations that can bring down communities when they fail.

There are many reasons for distribution center job losses. An obvious one is the shutdown of the parent manufacturer. Another would be a radical change in sourcing—the network must be reconfigured if goods begin arriving at Los Angeles/Long Beach instead of coming from the next town over. So, this is a supply chain issue at its core.

When a distribution center closes, all may not be lost. If the facility is located in a natural distribution-centric location like Atlanta, Columbus, or Memphis, there may be other jobs in the area, later if not sooner. But if the facility is a legacy of a long-ago acquisition, stands alone in a remote location, or otherwise falls outside the lines of a rationalized distribution network, the lost jobs may have disappeared forever.

Looming realities
It is time to face some grim facts. Those lost manufacturing and distribution jobs aren't going to magically reappear "when things get better"—not when production has gone to Asia or Central America or even elsewhere in the country. They're probably not going to be replaced by equally high-paying positions that use the skills that were useful in the old jobs. For sure, they won't come back because of pronouncements by politicians who exploit the human tragedies involved in order to grab a few more votes.

In general, "economic stimulus" packages other than investments in genuine infrastructure won't do the job either, not when the community and its workforce can't find a relevant value-adding slot in a healthy supply chain.

Cowboy up and deal with it
We don't want to gloss over the genuine misery of real people who get caught up in local economic collapse. And training in 21st century skills is a must, whatever the next steps for a town or an industry. But simply having a capable workforce more or less in place isn't enough to attract industry—and jobs—to a depressed area.

The idea of spending public money (stimulus package or other) on the suffering community may appeal to our humanitarian instincts. But these are generally sops, without long-term and sustainable benefit.

We have got to learn the battlefield hospital techniques of triage. This does emphatically not mean that the most severe cases get the most attention soonest. Somewhat the opposite—the most dire cases, the terminally injured, don't get any attention, and rescue efforts are poured into those with a fighting chance of making it. We need to learn to do the same with economically wounded communities. Our resources need to be concentrated on those that can come back and play productive value-adding roles in a new economic model. That is, the rescue money becomes an investment, with a chance of manifold payback over generations—not just a handout, in which the money metaphorically dribbles through the fingers of the recipients until it is gone.

Repairing infrastructure in a place that is irrelevant to new economic realities is a poor investment. Creating what are essentially tourist attractions in a place to which no tourists come—now or ever—is costly window dressing.

One solution that we may not be paying enough attention to is the prospect, not of hoping that jobs will move into an area, but of newly trained (or previously appropriately skilled) workers moving to where the jobs are.

Perhaps the biggest socioeconomic change this country experienced resulted from the massive movement of labor from farms, primarily in the South, to industries in the North. Think automotive in the upper Midwest, and steel in the same areas. Consider the steel mill that built its own rail spur to the Mexican border to relocate workers—nearly 100 years ago!

Granted, workers may be reluctant to pull up stakes until the housing market has recovered sufficiently to let them sell quickly and make enough profit to fund a move. But with auto (and related) plants closing, with steel mills closing or falling into the hands of foreign owners (and employing a fraction of their former numbers), with manufacturing continuing to shift away from traditional bases (and turning distribution solutions on their heads), isn't it time to re-evaluate possibilities for relocating to where the work is?

Your point is?
This isn't totally about doom and gloom. There are going to be cities that get it together, reconfigure and rebrand themselves, and find ways to embrace changed roles in a new economy. We applaud them and their visionary leaders.

Those that wait for a handout, though, are going to be disappointed, and those that won't take off their rose-colored glasses, bitterly so. So, with all the talk about rebuilding the infrastructure, which has immense implications for effective supply chain operations in the United States, the answers may not be so easy. Our responsibility is to do our best to make sure that politicians and planners at all levels are doing the right things for the long haul, are spending money wisely (i.e., investing), and have their eyes wide open to realistic alternatives. Including knowing when to turn out the lights.

Art van Bodegraven, practice leader at S4 Consulting, may be reached at (614) 336-0346. You can read his blog The Art of Art at blogs.dcvelocity.com/the_art_of_art.

More articles by Art van Bodegraven

Kenneth B. Ackerman, president of The Ackerman Company, can be reached at (614) 488-3165 or ken@warehousing-forum.com.

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