Coming to America: Is Outsourcing of the Past?

Over Thanksgiving, I read an article called "The Insourcing Boom" in The Atlantic. It was an interesting read, and I highly recommend it.

from thetruthaboutcars.com

 Outsourcing began as a way to reduce labor costs. However, that math doesn't always add up; outsourcing is not a sure-fire win. The point of the article is to highlight how several distinct differences between 1960 and today should change our perspective on manufacturing.

1)  By separating production from design with thousands of miles and a language barrier, efficiency is compromised. GE was able to reduce 35% of the labor required for their dishwasher assembly line through lean manufacturing principles.

"If the people who design dishwashers sit at their desks in one building, and the people who sell them to retailers and consumers sit at their desks in another building, and the people who make the dishwashers are in a different country and speak a different language—you never realize that the four screws should disappear, let alone come up with a way they can."- Fishman, discussing how internal collaboration can lead to the detection of inefficiencies

2) There is a growing trend for specialized products that continue evolving as new technology is developed. Not only do American companies want to protect their IP by keeping it within our borders but they also want the ability to deliver cutting-edge products quickly.

"In specific terms, the service that... a growing number of design firms can offer is a “quick iteration” way of deciding which ideas will be most practical for manufacturing. “Over the past couple of years, people have gotten used to the idea of rapid iteration in social-media firms,” Linus Chung told me. “You iterate and adapt quickly based on consumer demand. You learn to ‘fail fast.’ We’re bringing that to the hardware space.”" - Fallows, describing how local manufacturing gives companies the ability to tweak and roll out their products quickly and effectively ("Mr. China Comes to America")

3) Fuel costs are not what they used to be. Rising oil prices make long distance shipments increasingly expensive. Furthermore, energy costs in the US are decreasing due to the availability of cheap natural gas.

4) The weight of labor costs on total production cost is decreasing and the divide between Chinese and American labor wage is decreasing.

"Insourcing" has environmental implications as well. By bringing manufacturing closer to engineering expertise and it's target consumer market, transportation emissions are cut, production efficiency increases, and waste is reduced.

At my company, we put immense focus on integrating all parts of the design/manufacturing/sales process. By having open channels of communication, we are able to design systems upfront that promote efficiency and success in all parts of the supply chain, from design through operation and sales.

Open the Floodgates (for discussion, not oil)

The Exxon pipeline fiasco in Arkansas will surely lead to debate over the prudence of Keystone XL, especially if it traverses environmentally sensitive areas/communities.

Exxon Mobil was fined three years prior to this accident for failing to test the integrity of their pipeline frequently enough.

One question is: what are the federal safety requirements (i.e. excess flow devices, pressure monitoring, etc.) for pipelines that are hundreds of miles long? Did Exxon implement insufficient mitigation methods to prevent such a large spill or was this a lack of foresight by the government/NFPA to establish safety codes with adequate levels of protection? If Keystone XL moves forward, what will prevent this from happening again? TransCanada believes they have technology that could stop a leak in 15 minutes. Even if they do, that's a long time for a large, high pressure pipeline to be pouring out oil.

I wish we could spur debate on issues without bad things happening. #SandyHook #ExxonArkansas

A Wet Hot Icelandic Winter

I traveled to Iceland in late February this year, and I learned three important things:

1) Icelandic words are incredibly difficult to pronounce. --It took me an entire week to master "Eyjafjallajokull" -- (Ay-ya-fyeht-la-yo-kutl)

2) I don't mind the rain (no matter how INCONVENIENT), because it makes scenery vibrant.

3) If I lived in Iceland, I would have a very small carbon footprint.

Eyjafjallajokull, Iceland's famous volcano.
It was too foggy for a good shot.

The famous hot dog stand in downtown Reykjavik where former President Clinton insulted an entire country by eating a hot dog with "only ketchup"

On the surface, Iceland, covered in ice and rock, might seem like a cold and barren island with no hope for renewable energy. But, if you look deeper, you'll see that these are exactly the things that allow Iceland to be so self-sufficient.

Ice => Melting glaciers provide a steady stream of  freshwater and hydropower.
Lava rock => Lava rock is rich in nutrients and leads to fertile soil.
Volcanic activity => Geothermal hotspots are everywhere on the island.

Tomato hothouse outside Reykjavik

Iceland harvests 90% of its heat from geothermal energy and obtains ~75% of its electricity from hydropower. Less than .1% comes from fossil fuels.

If you're on an island where everything is imported and expensive, use geothermal energy to power and heat greenhouses! ------------------>

The only concern in Iceland's renewable energy future is climate change. Short term impacts look positive -- improved weather, growth in hydropower from glacial melt, increased travel via opened waterways, and widened geothermal sites. However, when the glaciers have melted away, freshwater and hydropower will be limited, and newly uncovered oil fields may lead to carbon dependency. Here's hoping for some genuine Icelandic creativity!

> 50 sq km of moss covered lava rock

Jokulsarlon - glacier lagoon

The Blue Lagoon - a geothermal spa