This is my last post on my trip to the Middle East. It's going to be a while before I see any return on my investment, but the cost has not been outrageous. The trip cost about $4,100, including the two Gold Key fees. I'll be reimbursed for about half of that by the State of Pennsylvania. We are in the process of putting together printed materials, and I'm mulling another trip in the fall to present them.
For me, the most interesting part of the trip was getting to see the factory I wrote about in my previous post - a factory that may well compete with us for a project. It gave me a fresh perspective on the global competition among manufacturers.
I know nothing about the financial performance of the factory, but I do know its manager intends to charge about $33,000 for the very large boardroom table that we are both bidding on. Based on the size and features that I had seen, we could make something the same size for about $45,000 - but it would be a very different product. Ours would go together much better because all of the parts would be cut precisely. And we would be able to cut the openings for the audio-visual equipment perfectly, so that the installation would be faster. His shop will have trouble matching the same level of precision.
But he could throw a whole lot of workers at the project, as many as needed to do the fussy final fitting. The last time we made a big table like that without the use of our computerized cutting machine, we spent more time fitting the top pieces together than we spent on the rest of the project combined. With the cutting machine, our time for making complex table tops dropped by more than 40 percent. The addition of a sophisticated sanding machine dropped the time another 20 percent.
If I were running the factory in Dubai, I would identify the most productive workers, triple their wages, fire the rest, and spend two-thirds of the money saved on better machinery. That sounds brutal, but it is what has happened in every factory in America - the ones still operating, that is. In many cases, that happened over a long time, and in other cases it happened abruptly. The alternative path for American managers was to take production overseas, where labor is so inexpensive that low productivity doesn't matter. And many of them did just that.
Is our model actually better for us as a country? It has worked fairly well so far - so long as the displaced factory workers could find work in other parts of the economy. But the endpoint of our path is pretty much the elimination of people in factories.
My biggest marketing struggle is convincing people that our product, which incorporates a lot of hand labor, is worth the extra money I need to pay that workforce. I could come up with a different table, one that requires less labor, and sell it for less money. But it would be crummy and che ap. And because a lot of companies took that route before me, I'd be entering a mature market where my product would be a commodity.
Without deep pockets, which I do not have, I can't compete that way. I'll keep my current model operating as long as I can.
Paul Downs founded Paul Downs Cabinetmakers in 1986. It is based outside of Philadelphia.
