An Invitation to Know-How

“We must resolve the skills gap in order to reshore supply chains that are crucial to U.S. national and economic security.” Harry Moser, November 15, 2022, Workforce Skills Gap Threatens Reshoring of Supply Chains Critical to U.S. Economic and National Security | Casting Source

“…if you are a displaced tech worker from among the largest companies in the world, I invite you to consider working for a small or mid-sized manufacturer. You will be surprised at the good you can do!” Joel Lorentzen, later in this essay.

I love factories. Since 1976 I have worked in manufacturing at every level, from laborer to engineer to executive to owner, in industries as diverse as cement manufacturing, aluminum fabricating, robotic integration, and steel casting. I estimate that I have worked in or toured over 1,000 factories throughout the world, making everything from micro-chips to grain barges. I served on the US Department of Commerce Manufacturing Council from 2012-2015.

For decades we’ve read about the skills gap in manufacturing. For that entire period multi-national manufacturers in league with governments at every level attempted to socialize the training of workers. At their behest, community colleges and trade schools have tooled up to train legions of workers in fields such as welding, machining, robotics, numerical controls, 3D printing, and whatever other hot-button technology tripped the trigger of some human resources influencer. After doing so, either the jobs weren’t immediately available, or the workers thought better of that career.

We are fighting the wrong battle.

Midway through my career, I recognized that manufacturers in the United States’ have an advantage unrelated to technology or capital investment. That advantage is the eco-system of privately held, often family held, small and mid-sized suppliers, and their proprietary means of delivering value. These suppliers are often manufacturers themselves, efficiently providing sub-assemblies, capital equipment, tooling, and technical services. The flexibility and capability of that supply base is still unmatched in the world. These companies lean on the “know-how” of their motivated workers.

From outside, it’s easy to miss the distinction of “skill” from the nuance of “know-how.” “Skill” is expertise in tradecraft and the dexterity to deliver it. “Know-how” describes specific, granular, closely guarded capabilities that distinguish a company’s performance within an industry. Intellectual property isn’t just about patents. It’s largely about know-how. Patents are about technology. Know-how is about workers. Acquiring and transferring know-how is very hard.

To make this tangible, “skill” may include the training to apply welds to a print specification. “Know-how” includes an understanding that if a specific weld is applied at the edges of tolerance on a certain assembly, it may interfere with a gasket that is added several operations later. That may result in a leak that may then cause a device to mis-operate outside of a certain temperature range. That device may perform some critical function on a furnace, or a paper mill, or a hydrogen storage tank, and its failure may have serious consequences. The awareness of the critical nature of that specific weld, as opposed to any of the other welds, on that specific assembly, as opposed to other assemblies, and how much resource should be applied to control each without over-spending on all of them is “know-how.”

This is manufacturing, and it’s way more complex than that. In this example, without the context of know-how, the broad skill of welding is of little discriminating value. But with the know-how, the specific skill of applying that specific weld is of high value. Engineers and quality managers spend their careers designing systems and automation to assure mistakes don’t get made. Pragmatically, all of them understand that the process of learning, improving, and sustaining those systems requires know-how at an even more advanced level. Workers acquire this know-how over time, and it is advanced tribally inside of small and mid-sized companies.

A generation ago, skilled tradecraft was the domain of the United States, Western Europe, and Japan. Emerging economies such as Mexico, Eastern Europe, and China first absorbed the unskilled work. Quickly thereafter, they stepped over the skills gap, and over the last several decades skilled labor in the generations-old understanding is no longer a competitive advantage. Emerging countries are making larger investments than us. They have natural advantages as their under-served public demands more manufactured products. Multi-national enterprises have made good use of this flexibility, moving operations between continents seeking the highest incentives and lowest priced skilled labor. To this writer, the idea that the US re-investing in those skills will encourage re-shoring seems innocent. Those companies will move back if they can save money. Otherwise, they won’t.

Yet that is the aim of the current public discourse, which is described in Moser’s article. The article envisions three ways to support large manufacturers in selected industries: inclusiveness, perception, and skill improvement. I acknowledge that skills are critical to a thriving manufacturing sector. But I observe that these solutions are decades old and already haven’t worked. The US’ natural competitors, specifically China but others as well, already socialize that training and are moving in the direction to socially control what would otherwise be proprietary know-how. That’s a rabbit hole. Let’s not follow them down it.

I am not a policy wonk, but as a manufacturer, I know my space. Contrary to public perception, tenure and tribal knowledge in small and mid-sized manufacturers offers irreplaceable value. Let’s accept the advantage of our competitive, profit-seeking culture that drives inventiveness and is sustained by proprietary know-how. The current incentives double down on “upskilling” workers for frictionless mobility between favored industries. This competes with the idea for enterprises to invest in individuals and build value with tenure and know-how. Proprietary processes are definitionally not in the purview of the public, so policy must both encourage the development and concede the value to those manufacturers. Tricky. But then, as the world competes for skills, the US domestic supply system can be re-powered by our natural advantages. I’m not a fan of incentives, but if they are the means, let’s develop some.

In closing, if you are a displaced tech worker from among the largest companies in the world, I invite you to consider working for a small or mid-sized manufacturer. You will be surprised at the good you can do! We need you. We will invest in you. We want you to make us your home. You will be more satisfied with the cultural and economic diversity than you think. You will be surprised by the inventiveness of your co-workers and gratified by the low-hanging fruit that your skills can reap for them. Wouldn’t it be great to be on the “things” side of the “internet of things?” Please come.