Isegoria

China's outsourcing appeal is dimming, for multiple reasons:

With fuel prices at record highs, the cost of sending a standard 40-foot container of goods has gone from $3,000 in 2000 to about $8,000 today, squeezing profit. [...] Soaring energy costs, the falling dollar and inflation are cutting into what U.S. manufacturers call the “China price” — the 40 to 50 percent cost advantage once offered by Chinese producers. [...] The model of outsourcing to China emerged at a time when oil was going for $20 a barrel. In the past few months, oil has been trading at about $110, and many experts say it will eventually hit $200.

This bodes well for certain American manufacturers:

Midwestern steelmakers are doing booming business as steel exports from China to the United States slowed down by 38 percent in the first seven months of the year while U.S. steel production rose 10 percent. Manufacturers of furniture, electronic appliances and textiles are also among those shifting production back.

The most prominent company in the group might be Thomasville Furniture, which was criticized a few years ago for sending several thousand American jobs overseas. It announced in June that it was returning production of an entire line of upholstered and wood furniture to the United States. The company says it will add 100 jobs in North Carolina.

(Hat tip to Al Fin.)

I don’t know who Trevor Blackwell is — evidently he created something called Anybots — but I love his take on Founder Stories:

Early on, when a reporter asked me how I came up with the idea for Anybots, I answered honestly that I made a list of all the ideas I thought might really change the world in the next 20 years, and picked the one I thought I could contribute most to. His eyes glazed over. It’s unprintable. What reporters want is a classic “founder story,” a highly developed art form that isn’t taught in English Literature classes. The archetypal founder story goes like this:

I was doing something romantically appealing to my target market. As I reached the peak of achievement, I had an inspiration: make a product people will like.

In generic form it sounds completely fatuous, but consider the following real example of the genre meant to wash right over an uncritical reader:

A former bakery owner and professional bicyclist, he was choking down PowerBars for energy in the middle of a daylong 175-mile ride. “I couldn’t make the last one go down, and that’s when I had an epiphany — make a product that actually tasted good.”
— Gary Erickson, founder and CEO of Clif Bar. Quoted in Fortune Small Business, October 2003.

This is a very carefully crafted story. It has the simplicity, economy, and punch of a Reader’s Digest anecdote. Some talented marketers probably spent hundreds of hours polishing it. Each of the 45 words it contains pulls its weight. Notice in it the three key elements of a founding story:

• A quest which is romantically appealing to the target market,
• An epiphany,
• A trivial and obvious idea claimed as original.

The quest is necessary to set the stage for an epiphany. You can’t just say, “I was sitting around the house in my underwear trying to think of a business to start, and decided to make a food product that tastes good.” The particular quest here is carefully chosen to appeal to the company’s target market. It would be ineffective to say, “I had been slaving away on my food science dissertation for months. I had finally finished the last edit, when I had an epiphany…” It needs to be the same sort of activity that the target market dreams of doing.

After setting the stage, the story delivers the punch line. The trivial, obvious idea presented as novel, original, and ingenious. Make food that tastes good. If the idea was an epiphany for him, I’m just glad I never ate at his bakery. But the more trivial and obvious the idea is, the better the story sounds. Ideas like “make food that tastes good,” or “write software that’s powerful yet easy to use,” or “design clothes that make people look their best,” are powerful positive messages. And the implicit negative message about the competition stays in the reader’s mind too.

Presumably, Erickson has done clever things to make his product successful. The true big idea is something along the lines of, “make energy bars out of rice, soy and oats with cane juice flavoring instead of refined sugar, put pictures of athletes on them and sell them in sporting goods shops instead of supermarkets.” That was a winning combination and he deserves wealth for having made it work. But it sure doesn’t read well.

Fast Company writes about American Apparel's New Image — it went from emphasizing its “ethical” sweatshop-free production to “sexy T-shirts for young people” — but what interested me was its new internal emphasis on efficient operations:

The company’s — and Charney’s — image had gotten so much attention that nobody seemed to bother checking into how its actual business might have changed. So I met with Marty Bailey, the company’s vice president of operations. Quiet, serious, soft-spoken, and fully clothed, Bailey was an industry veteran who had begun his long education in manufacturing efficiency — and the hard realities of globalization — with Fruit of the Loom more than 20 years earlier. He had come to see offshore outsourcing as a mixed proposition. He believed that its promised labor savings had been diluted by the costs of moving materials to the cheap-labor haven and back, and by sacrificed quality. He believed that with the right plan, a U.S. manufacturer could still make money.

American Apparel’s factory was, he reckoned, the 41st manufacturing facility he had walked into with the mission of improving efficiency. The company was producing 32,000 pieces a day and struggling to keep up with orders. In months, Bailey’s system was churning out 90,000 pieces a day and would eventually reach 250,000. While the company was projecting an air of almost reckless decadence in its ads, it was quietly building a thriving made-in-America business model.

Bradford Plumer looks at The End Of Aviation, as envisioned by Anthony Perl and Richard Gilbert, two Canadian transportation experts, in their new book Transport Revolutions:

[They] envision a world in which rising oil prices have reduced domestic flying in the United States roughly 40 percent by 2025 — even assuming that airlines improve fuel efficiency by about 50 percent. In such a scenario, the United States could go from having nearly 400 primary airports down to 50 or so; instead of dozens of flights each day between New York and San Francisco carrying 200 people apiece, there might be only a handful carrying 800 or more in new extra-jumbo jets.

Joel Spolsky explains how he learned to love middle managers — but first, of course, he explains why he ever doubted their value, starting with his own first experience as a low-level manager at Juno:

I was proud to start getting those mass e-mails that were circulated among the managers.

Until I noticed about half the company was on that distribution list.

For a company of Juno’s size — it had about 150 employees at the time — there seemed to be a disproportional number of managers. I think most of them, like me, had only one or two people reporting to them. But it was hard to know for sure, because the org chart wasn’t circulated; apparently, Juno’s top brass were afraid it would fall into the hands of headhunters. So you knew your boss and your team, but unless you were a smoker, you didn’t know any of the people in the other parts of the company.

Unless you were a smoker. I love that bit.

Here’s what really bothered him though:

I noticed too many situations in which members of top management happily issued an executive fiat even though they were the least qualified to make a decision. I’m not saying that they were stupid, mind you. Most of the managers at Juno were quite smart. But they had hired even smarter people to work for them: people with advanced degrees, raw intellectual firepower, and years of experience. And these people would work on a problem for a long time, come up with a pretty good solution, and then watch in surprise as their bosses overruled them. Executives who did not have specific technical knowledge and who had not studied a problem in depth would swoop down and issue some random, uninformed decree, and it would be implemented — often with farcical results. I called it hit-and-run micromanagement, and I suspected that the managers at Juno acted this way only because many of them were young, and that’s how bosses seemed to behave on TV.

His experience at Microsoft was better:

A bit of Redmond lore: Two software designers got into a debate over how something should be implemented. The question was highly technical. They couldn’t reach agreement, so they went to their boss, a guy named Mike Maples, who was the vice president in charge of the applications division.

“What do I know about this?” he yelled at them. “Of the three people in this room, I’m the one who knows the least. You guys have been hashing this out for hours. I’m the last person who should be deciding. Work it out.”

And so they did.

Based on his personal experience, and based on an exciting article about a GE jet engine plant in North Carolina that had 170 employees and just one boss — an article I noted at the time too — he decided to have no middle managers at his new software company.

That worked for a while, but as the company grew the top managers (Joel and his partner) seemed more and more distant, even though they thought they were plugged in and very welcoming. Now everyone’s happy with a bit of middle management.

The lesson:

Don’t believe everything you read in a business magazine. Not even this one.