Federal Reserve Bank of Dallas Estimates 3,314,400 Jobs Will be Outsourced to Low Wage Countries by 2015
NEW YORK, Oct. 22, 2007 — D’Addario & Company, Inc., the world’s largest manufacturer and distributor of music instrument accessories and the global leader in the design, manufacturing and distribution of strings for musical instruments is going "LEAN" to achieve "Kaizen," Japanese for "Continual Change for the Better."
D’Addario is undergoing the company-wide overhaul to avert outsourcing, stay competitive, and remain manufacturing in the U.S. for another 100 years. Originated by Toyota, LEAN means" pursuing perfection by eliminating waste through continuous improvement." While many U.S. firms are staying profitable by outsourcing their manufacturing, D’Addario is using a Japanese system to keep manufacturing in the U.S. D’Addario CEO James D’Addario said, "Our Italian culture taught us the art of making strings for musical instruments. America taught us that even when you’re on top you must strive for improvement and we want to keep improving, in the U.S., which has been good to us and has been our manufacturing home for 100 years."
D’Addario hired international consulting group PRIMEX (specialists in providing cost-effective assistance to small and medium-sized businesses) and received a seven figure grant and job protection from New York State. According to New York State’s Empire State Development Corp., "D’Addarios commitment to Long Island in the face of other offers [will] preserve 700 jobs."
What It Takes To Be LEAN:
- Commitment begins by hiring PRIMEX who rates D’Addario against the performance of World Class Companies.
- After goals are established, PRIMEX works with D’Addario LEAN Champions who run LEAN Teams. Twelve people, representing a cross section of D’Addario, switched career tracks to become LEAN Champion Leaders.
- Teams train employees to "perform required changes in processes.” The training is extensive, hands-on and performed "on the floor under actual situations."
- Every area and level of employment (from top executives to factory workers) is assessed. Work processes are monitored and rated and results are measured.
- Only "achievable and sustainable" results are implemented. Once implemented, the whole process begins again, making D’Addario "Kaizen."
The D’Addario Story:
Manufacturers 87% (industry standard is 50%) of products stateside and enjoys #1 market share in guitar strings, woodwind reeds and guitar accessories making all types of percussion heads and bowed instrument strings with products enjoyed by performing artists globally; some of which include Sheryl Crow, Bruce Springsteen, Rolling Stones, Joe Satriani, Peter Frampton, John Scofield Band, Linkin Park, System of the Down, and Metropolitan Opera & Paris Conservatory musicians.
Known in the industry for “building the better mousetrap". First to make phosphor bronze and coated guitar strings. Manufacturers 500,000 strings a day. Just invented revolutionary S.O.S. guitar tuner based on physics.
Designs & builds all its machinery in-house. Partners with famous musicians on R&D.
Dates to 1680s Salle, Italy when Donato D’Addario made strings for lutes and harps from sheep’s guts. 425 year-old, 9th generation family business has 14 D’Addarios working in-house.
Gives back through foundations and organizations like Little Kids Rock, an inner city music education program.
Last but not least; this company, like jazz itself, defines cool.
D’Addario Going LEAN to Position Itself to Face:
- Increasing competition.
- Technological changes.
- High Cost of Capital.
- Growth (management of).
- Workers demand for higher levels of involvement.
- Fixed or Falling prices.
- Market Fragmentation where the demand is for many products at low volume.
What to Expect at the End of Phase One by End of 2008:
- 25% Productivity improvements.
- 50% Reduction in FG (Finished Goods awaiting sales: from 50MM to 25MM) and WIP.
- 30% Less space utilization.
- 60% Quality improvement.
- 50% Reduction in cycle time.
D’Addario Will Become "LEAN" by:
- Changing the Culture.
- Demonstrating Leadership.
- Developing and empowering Work Teams.
- Developing effective Communication Channels at all levels of the business.
- Continuous Improvement.
- (Total Lean Change Over Completed by End of 2010)
Systematic Elimination of the 8 Wastes Originated by Toyota:
- Excessive work in process.
- Transportation of parts/materials/tooling.
- Non-Value added process steps.
- Excess inventory.
- Excessive people motion.
- Undervalued people.
According to Wikipedia
Kaizen means "to take it apart and put back together in a better way." Kaizen is a daily activity whose purpose goes beyond improvement; it humanizes the workplace, eliminates hard work (both mental and physical), teaches people how to do rapid experiments (using a scientific method) and teaches people how to learn to see and eliminate waste in business processes.
Outsourcing At a Glance - Data Compiled by D’Addario & Company, Inc:.
D’Addarios commitment to Long Island in the face of other offers [will] preserve 700 jobs. (Empire State Development Corp, 8/9/2007).
With so many mass-market goods made off-shore, American-made products ... have come to connote luxury (The New York Times, 9/6/07).
Seventy-six percent of consumers who look for U.S.-made products say that they have a hard time finding them, and the reason for this is simple: We’ve given away our manufacturing base through “free” trade (The U.S. News and World Report, 6/5/05).
According to current trends, it is estimated that 3,314,400 jobs will be outsourced to low wage countries by 2015 (Federal Reserve Bank of Dallas, 2/2006).
’There is clearly a benefit for taxpayer dollars to go to support the economy in this country.” In today’s stagnant labor market ... lawmakers must take steps to keep jobs from heading overseas (Wired, 7/23/03).
The recent spate of products recalled ... were all made in Southern China’s low-cost manufacturing hub that’s notorious for its lax regulations (CNNMoney.com, 8/14/07).
In the heat of the 2004 Presidential race in the United States, John Kerry compared outsourcing to treason (The New York Times, 9/4/07).