One of the great parts of being an industry agnostic manufacturing transformation organization is the wide variety of companies and industries we work in. Our clients are from all over the world, from every continent except Africa and Antarctica, and an enormous number of industries from industrial gases and hydrologic lifts to laser hair removal to dog waste bags. There is always a new challenge and another company that can benefit from our expertise to achieve their goals.
While our clientele is diverse, all of them are gripped by similar uncertainties. The world order seems to be shifting with changing global rules for trade, geopolitical uncertainty, and the disruptive force of new technologies.
All of them ask us the same question: What should my company do?
Tariffs
I have written a lot about tariffs which you can read here, here, and here. Also, here, here, and here. As a manufacturing transformation company, it is not surprising that tariff rates are a major concern for all our clients. It is far and away the most common topic of conservation with our clients.
The conversation has shifted to focus less on the tariffs themselves than on the uncertainty they have created. The constant shift and rapid changes from the American government is very disruptive and has left companies uncertain how to proceed. One client shifted the focus of a new agreement three times in almost as many weeks as the spiking and then plummeting US-China tariff rate left them uncertain how to proceed.
Our team does not have special insight into the shifting trade policies of the US government. It is as surprising to us as it is to our clients. While we do not know what will happen, we do know how to hedge against what could happen. The best strategy for companies to deal with uncertainty in trade and tariff is to have a strong understanding of your costs and build from there.
Some companies have product types that can be relatively easily transferred to North American production. Those companies should have a plan to move production to the US if the need arrives. It will be expensive but it is necessary.
Other companies might realize that there is no way to produce its products outside of China or Asia. Those companies need to take a different approach: they should focus on improving manufacturing operations to give themselves more flexibility to react to price increases.
If you know your costs, then you don’t have to waste time and resources pursuing solutions that just aren’t feasible.
The Results
There is always some level of geopolitical uncertainty. That is simply part of the human experience. Yet now we have disruption in areas that were, for a long time, relatively stable. The both the war in Gaza and the Russo-Ukrainian War have the potential to spread further a field and create more widespread conflict.
It is a conflict that does not exist, rather than an active one, that is most worrisome to our clients. Many clients told us that fears of a Chinese invasion of Taiwan is a driver their move out of Asia just as much as tariffs. The other wars and conflicts around the world are not good for business but few have a direct impact on our clients than what happens in the straits of Taiwan.
There is certainly a chance that China could invade Taiwan and spark a major war. It would be foolish to discount that completely; however, we at MTG believe that is not a risk worth considering in most business decisions. There are two reasons for that:
- The odds are very low. The invasion of Taiwan would create a massive backlash around the world that would further isolate China. Invasion and occupation are a difficult and bloody endeavor even if there is not direct foreign support for Taiwan. The Chinese government has seen what has happened in Ukraine and would not like to repeat that.
- The results are too destructive to hedge for. China and the countries around it are far too big economically to avoid a massive economic disruption to the global economy. Even if you move all manufacturing to North America, a war in East Asia would have a powerful effect on your business.
The combination of these two factors means that it companies should not focus on mitigating the risk of war in East Asia.
AI Technologies
MTG sees real promise in AI technology. There are a lot of things that AI can do much better than humans provided it has the right structure and programing. It is a wonderful tool for the right circumstance. Writing blogs is not a good solution as AI results are usually generic. AI for basic art to go with the human written blog? Much better fit.
It is a tool though, and not a solution itself. We see companies very interested in the possibilities of the tool but not ready to decide to use it. This is particularly in AI inspection. A good AI inspection system is absolutely better than human inspection. It can move faster, is more accurate, and more reliable. The key is having a good set up and support with implementation. It is not, to use a military expression, a fire-and-forget tool.
To reduce uncertainty around AI, focus not on the grandiose promises of the technology, but rather on the practical problem that you need to solve. Don’t do AI for the sake of AI. If it seems expensive and unnecessary at this time, then it is expensive and unnecessary. The AI visual inspection tools are a good example of practical tools as they have a proven history of success, a clear use case, and are scalable as needed.
The world is an uncertain place right now. There is little even the largest companies and organizations cannot change that. They can make intelligent decisions and risks to keep themselves in business and thriving until the next disruption.
What can MTG do to help you improve your operations?
