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ICEBERGS AHEAD CAPTAIN!    By bseitz on 9/15/2007 9:26 PM It was not much more than twenty-five years ago I started a career in the CAD/CAM Industry at Rockwell International’s North American Aircraft Division. During my initial days, one of my first assignments was training a group of Manufacturing Engineers in the use of a Computer Aided Process Planning (CAPP) system. Most of these M.E.s were around during World War II and some I was half wondering if they had been with the Wright Brothers. As such these gentlemen had seen the industry change several times as new methods of manufacture and assembly had come on-line. Additionally, there was a group of newly minted M.E.s straight out of college ready to burn up the road. They’d learned all the theory, how to use a computer in general and were not intimidated with technology. During lunches I was surprised to find that the two groups hardly ever mixed. The oldsters stayed to themselves, as did the youngster. I seemed to be the only one that freely moved between the groups. Maybe it was because early in life I’d gone with my father to his work and had learned to respect the hard earned knowledge that my seniors had attained. In either event, as I sat in with each of these groups it was interesting to hear the youngsters discuss how they were going to show up all these “old guys” that use scissors and paste once the new system was turned on and how these seniors worried about becoming obsolete once they had entered in what they thought was there gems of knowledge. As training progressed I found the seniors hesitant to use the system. At first I thought it was a case of hording knowledge, but, as I watched one of my seniors hunt and peck at the keyboard I was surprised. This was a man I had previously watched type at a speed that would make a Kelly Girl envious. What was going on here? He’d switch back to his typewriter and zoom, back again to the keyboard and crawl. I looked around and almost all the seniors were at a snail’s pace. At lunch, I was nervy enough to ask why. To my surprise all of these men with years of experience were being ever so careful so as not to damage this multi-million dollar computer the corporation had purchased. Apparently the I.T. department had prior to installing the system come down to the CAPP office, saw the office with coffee, cigarettes, glue and scissors and read them the riot act telling them they could be held responsible for destroying millions of dollars of equipment if they did anything wrong. Most of these guys were close to retirement, the last thing they wanted was to have to pay for some computer system out of their pension. The following day I gather my seniors for a special session of training to get them over their inhibitions. The session worked fairly well, we had a discussion and demonstration on what could go wrong, how to fix it and straighten them out on the I.T. department’s overstatements. Then we got to discussing becoming obsolete “once we entered all our brains into this thing”. Despite all the knowledge and know-how these people processed there was still this fear of losing their jobs once they create an information base of process plans. I had a difficult time convincing most of them that wouldn’t be the case. The math I took them though, even with productivity increases the system enabled had them working beyond the program’s forecast date. The company was still going to have to hire more people not lay them off. This forecast was proven out during the project. The shortly after the program most of my seniors at the company retired and so too in other companies. As time passed an interesting problem has occurred, despite the productivity increases new technology has enabled, time to market for these products has increased. I know many people will tell you that the products are more complex now. However, more of the products are modular so that should reduce times not increase them. As a result many projects these corporations had undertaken either failed due to lost knowledge discovered way to late, cancelled due to a lack of resources, or overshot the budget and lost margins because of poor inexperienced decisions or having to rehire the expertise at double, triple or sometimes quadruple the cost. Payback is tough After a few years of careful study, what I’ve found and is only now being talked about in industry is that a great block of knowledge is leaving US Industries again. While the headlines talk about executive compensation excesses, sox, and outsourcing, corporations are in an effort to supposedly streamline become more efficient and cost effective are laying off, encouraging early retirement or in other programs putting seniors out to pasture. While this may look on the books like a cost savings, short term, in actuality it is costing corporations significant amounts of dollars in lost productivity and opportunities. Much of the corporate knowledge is going out the doors with these people. If Intellectual Capital were a line item on the balance sheets of corporations today as is “good will” “brand image” and other intangibles how many CEOs would be left in place after a downsizing? All it takes today is to look at the projected workforce needs to see that Executives are sowing the seeds of the own company’s destruction or take-over by overseas interests as their workforce shrinks. However, in this day and age of get mine while I can, you worry about yourself Executive compensation; it is not likely that things will change soon. However as resource shortages increase, corporations are going to have to pay significantly more than had they kept them on the books being productive. Additionally, in this day and age of SOX, Executives are going to be exposed to more liability and have this liability exposure long term. A scenario where stockholders come back two, three maybe even ten years later to go after an Executive’s for a quick fix layoff to boost stock price to get his/her bonus maybe seen as gross negligence and the nice million dollar check previously received will be eaten up in legal fees, having to pay back the shareholders if the case goes badly as well as even more cash in penalties, possibly that fat pension that was negotiated in deference to the lowering of pensions of the employees that contributed to the corporations real success and a new address with bars on it. Not exactly what an Executive thought he/she was signing on for, nor thought about when they trimmed 5,000 people’s worth of Intellectual Capital. While it may seem a bit harsh to say these things and many may disagree on the outcomes I foresee; my intent is not to criticize but to yell down from the crow’s nest on this ship of industry “ICEBERGS AHEAD!” What you do as captains of your corporate ship are up to you. I just hope you don’t end up being known as the Captain of this industry’s version of the Titanic or Exxon Valdez.

Brian Seitz' Comment: "Icebergs Ahead Captain!"    By Russ Henke on 9/16/2007 6:25 AM I couldn't have said it better myself!

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