Why can't Americans make things? Two words: business school.

[mahatmakanejeeves]

Upper Mismanagement

Why can't Americans make things? Two words: business school.

Noam Scheiber | December 18, 2009

....
Up until World War I, the archetypal manufacturing CEO was production oriented—usually an engineer or inventor of some kind. Even as late as the 1930s, business school curriculums focused mostly on production. {Harvard business professor Rakesh Khurana} notes that many schools during this era had mini-factories on campus to train future managers.
....

By the late 1970s, top business schools began admitting much higher-caliber students than they had in previous decades. This might seem like a good thing. The problem is that these students tended to be overachiever types motivated primarily by salary rather than some lifelong ambition to run a steel mill. And there was a lot more money to be made in finance than manufacturing. A recent paper by economists Thomas Philippon and Ariell Reshef shows that compensation in the finance sector began a sharp, upward trajectory around 1980.

[FLAprogressive]

1. People with MBAs usually fuck things up (see: Bush administation)

[TornadoTN]

2. Uh oh, then I should be concerned that I hold one

Just kidding, because I completely agree. Oh the stories I could tell about my classmates in my program. The whole time I was thinking to myself, "This is what's wrong with this country."

[lolly]

3. My Father used to complain about that

Back when it first started--said that Business schools were teaching people that they didn't need to know anything about a product, because management was a separate (and superior) skill that could be transferred to any service or product.

Running a factory that makes widgets and running a chain of beauty salons require, according to this theory, the same knowledge and skills. And neither manager needs to know anything about widgets or hairdressing.

[no_hypocrisy]

5. LOL, so did MY father . . .

You got him going on that topic and you couldn't stop him.

[Cassandra]

4. I have an MBA from the late 70s...

and I'm a manufacturer but I have to say, I feel like a dinosaur.
BTW, it's not just MBAs going into finance. Companies used to be run by the founder or someone who came up through the company and knew the people in it and wanted the company to succeed. Now, companies are often run by bean counters who know nothing about the people who work for them and are in it only for themselves.

[Nicholas D Wolfwood]

6. I don't think it's the business schools that are the problem (though they are A problem).

Rather, I think it's the higher barrier to entrepreneurism that's the problem. Engineers and inventors were CEOs largely because they created the companies in the first place. Today, that engineer usually needs the resources of an existing company in order to incubate their ideas.

Let's face it - some guy sitting in a garage isn't going to invent the iPod or the next evolution of the solar panel. Unless they're independently wealthy, they don't have the access to the kind of technology to even consider doing that. Technology itself is pricing people out of the entrepreneur market.

[Cassandra]

7. That and individual heath insurance.

[FreakinDJ]

8. I think Bill Gates already Fucked Up your theory

[Cassandra]

9. Not really.

Gates was not so much about inventing as much as putting together other people's inventions into a system; a valuable skill but different.

[Nicholas D Wolfwood]

10. In that case, he fucks up the article's premise too.

But Gates got started in 1979, and the example also bolsters my point that those engineers and inventors were only CEOs because they started the company. Beyond that, he also came from a family with some means and started at a time when access to state of the art wasn't as prohibitive as it is today. And further, do you really think it's still possible for hundreds of Bill Gates to accomplish what he did?

[FreakinDJ]

13. Haas Machine Tool

[Nicholas D Wolfwood]

15. You can keep citing anecdotal examples all you want.

But you're discrediting the OP as much as me in doing so.

[FreakinDJ]

14. Biggest problem for start up manufacturing are Chinese Knock Offs

Why spend all the R&D money when it will be cheaply copied and mass marketed using $2 a day labor

[Smashcut]

11. There's a great article in Harper's this month about the decline of manufacturing

I get what this article is saying about MBAs but I think it's a larger problem of social psychology, i.e., an idea that came about in the 80s that the US was somehow "beyond" manufacturing, that we were now an "information economy" and didn't need to trouble ourselves with making anything tangible.

The article is available here if you're a subscriber...

http://www.harpers.org/archive/2010/01/0082768

[femrap]

12. I was in college in the early-mid

'70's and majored in business my freshman year....business was considered the 'jock major.' And jocks weren't known for a great amount of intelligence.

[DuckyCase]

16. Nearly everyone who goes to college aims at doing something in the "service sector"...

Not just business majors.

[Vidar]

17. K&R.

[Bonhomme Richard]

18. I am afraid that it is much more complicated than that.

Yes, bean counters in management are a problem and so is the greed factor but there were more pressing problems. Years ago companies were run by people that understood the product and were invested in their community. The product was not some commodity but part of their soul. What happened was Wall Street. Credit sources for businesses was drying up as small local investors/banks dried up and where replaced by conglomerates with zero ties to the manufacturer or community. It was all about money. They could tighten the purse on manufacturer's which put them in a bind. That bind put them in a position that made them ripe for takeovers. Stock funds had the ultimate control. Years ago the investors in a local manufacturing company also tended to be local. They were not anxious for the company to cut back operations or lay off employees because so many people they knew personally would be affected. Another thing about stock holders back then was that, for the most part, they were patient. Not so today. The management of a modern company today would have a very difficult time making market planning decisions based on 2 to 5 years down the road. Today's stockholders want an immediate return and if they don't see that then the fund manager sells the stock (massive amounts of it) and puts it someplace else. When that happens the company loses the money it depends on to operate making them susceptible to being taken over by some equity/Kravis type of firm. At this point it all goes downhill because the new management has zero invested in the actual product and only cares about short term returns on their investment. Get in, get out. If we make more selling off some divisions then so be it. If it's cheaper to make elsewhere...so be it. And the cycle began which brings us to out current state of affairs.
By the way, I started my own small manufacturing business in 2000 so it can still be done and I am not sure if it would have been any easier 80 years ago.

[FreakinDJ]

19. Chinese Knock prevent Up-start manufactures from getting off the ground

Gates and Haas merely were exceptions to the rule

No I am not trying to attack you personally, just trying to exemplify the fact this article down plays the stifling effect Chinese knock offs have on up-start manufacturing businesses.