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Is Finance-Based Planning Bad for Manufacturing?

Michael Sekora, director of the Reagan administration's Socrates Project is calling for a return to technology-based planning, which focuses on "the effective acquisition and utilization of technology," and away from financial-based planning, based on the "effective acquisition and utilization of funds."

The idea that financial decisions can have (and have had) a negative impact on a manufacturing business isn't new, but it hasn't garnered the attention it deserves. Now -- and maybe it's just because I've started paying closer attention -- I'm starting to hear and read more about the role of finance in manufacturing strategy. And it's not positive.

Most recently, Suzanne Berger, an MIT professor and co-chair of the MIT Production in the Innovation Economy project, penned a no-holds-barred indictment, "How Finance Gutted Manufacturing." Published in the March/April issue of the Boston Review and online, she cites shareholders' forced break-up of Timken Co. into two separate companies as an example in which short-term financial concerns trumped long-term technology and product development considerations.

A little earlier, in February, Michael Sekora, director of the Reagan administration's Socrates Project and head of Operation U.S. Forward, published a commentary in Forbes.com with a similar message: "The disease killing America's economic health is financial-based planning, and one of the symptoms of this ongoing disease is the loss of the U.S. manufacturing base." He calls for a return to technology-based planning, which focuses on "the effective acquisition and utilization of technology," and away from financial-based planning, based on the "effective acquisition and utilization of funds."

More on finance’s role in manufacturing on IndustryWeek.

IndustryWeek is an NED companion site within Penton's Manufacturing & Supply Chain Group.

 

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