Winning in Central Iowa

Published August 2008

As Mark Twain quipped 110 years ago, U.S. manufacturing companies today can proudly declare, “The report of my death was an exaggeration.” There’s no denying that manufacturing has changed dramatically over the past 50 years. For example, the portion of the workforce employed in manufacturing has fallen from one-third to roughly one-tenth over that time span.

Doomsdayers declared the end to be nigh as various manufacturing jobs headed for Europe in the 1950s and 1960s, then again as the Japanese manufacturing machine emerged in the 1970s and 1980s. The giant sucking sound from Mexico was a major concern for the 1990s. Today, China and India are primary outsourcing targets, the latter not only for manufacturing but for service industries as well.

So with all the global competition, who’s the leader in manufacturing output today? China? Japan? Here’s a hint: This country recently celebrated its 232nd birthday.

That’s right! Despite all the outsourcing, the United States still accounts for almost one-quarter of the total value of goods produced on the planet. And while it’s doubtful that we’ll soon see a labor-intensive, consumer product produced here, several companies – manufacturing and service – thrive today in Central Iowa.

It’s worthwhile to explore the attributes of successful Iowa companies today, both manufacturing and service. Understanding these factors gives everyone with a vested interest – employees, business and government leaders – the potential to positively influence these factors in an effort to give our area a leg up on the rest of the world.

For decades we Iowans have cited our work ethic and education system to potential employers. While these factors still work in our favor, the gap is closing. Technology allows information to flow freely into the rapidly improving education systems of developing nations. These countries have millions of decent, employable candidates, all eager to work hard in order to provide a better life for their families.

As I observe the business landscape in Central Iowa today, there appear to be recurring themes among successful companies. Typically, it’s a combination of these factors.

• Entrepreneurism – Many great companies are located here simply because we are lucky that an entrepreneurial founder wants to call this place home. These companies use continual innovation, typically in niche industries, to stay ahead of global competitors.
• Location – In addition to inheriting the richest soil on earth, Central Iowans are fortunate to be located almost smack dab in the middle of the country at the crossroads of two interstates. Several local companies make the most of this asset, producing and distributing product under the same roof.
• Productivity – Local businesses partially offset the relatively high cost of labor, as compared to low cost countries, when that labor is highly productive. Increased productivity comes not only from capital equipment, but also from creative employees that continually generate ideas for better ways of doing things.
• Speed and Flexibility – Several second tier businesses successfully operate here because they quickly and flexibly serve large customers also in the region. As we’ve recently experienced, conditions in an ag-based economy change as quickly as the weather. Companies in this field, or any other impacted by quickly-changing markets, are willing to pay a premium for an agile supply chain.
• Relationship – Technology continues to expand our tolerance for what’s acceptable in a business relationship. My children do business with mouse clicks that my parents wouldn’t dream of doing. Still, most of us are not ready to abandon face-to-face time with our personal physician for an outsourced alternative. Many Central Iowa service providers use their proximity to local customers to leverage relationship as a competitive advantage.

In coming months we’ll discuss things that the workforce, business leaders, and government leaders can do to optimize the factors above.

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