When the Going Gets Tough …

The leading industrial companies of the world have been showing once again that they stay tough through good times and bad — and they’re not going anywhere.

The “100 most successful manufacturing companies” in the world show an interesting mix of eternal verities and modern, very modern, flexibility, according to a study recently released by Deloitte & Touche’s manufacturing research division. Here’s

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how they rated the world’s manufacturers.

They all keep one principle upfront in terms of their priorities: “customer relationship management,” or the customer is still king (or queen). In other words, the leading companies in industry focus on their real function, which is to serve the market and, whenever possible, to anticipate the market. It’s part of what Deloitte & Touche calls “strategic flexibility principles.”

The study, titled “Performance Amid Uncertainty in Global Manufacturing,” cites leading producers like Oracle, Nokia, General Dynamics, Intel and General Electric, to name a few of the 100, for their adherence to several management principles and success measures.

Besides the No. 1 principle of “the market rules,” the study focused on innovation in terms of new and improved product strategy, supply chain management in terms of major competitive advantage and human resources management. As for that last principle, the study’s researchers looked for companies that have been able to reduce layoffs with “creative thinking.”

Researchers also looked for companies that were able to “leverage” existing technologies that were sensitive to market trends rather than merely spend more money on new research and development.

The basic evaluating premise for rating companies worldwide in the study was creativity in the face of uncertainty. “Flexible companies are well positioned to take advantage of the current upswing,” explained Craig Giffi, director of the firm’s Global Manufacturing Group.

Interestingly enough, two-thirds of the 100 are American companies. However, no particular industry dominates the 100. They range from precious metals to food processing to computer assembly. Most of the winners, however, are winners hands down with respect to their own sectors. Of special international note is the fact that tiny Taiwan has five of its companies on the list while its giant neighbor has none. Similarly in Europe the UK dominates with five.

If there’s one major conclusion about this study, it is that the manufacturing companies of the world seem to be leading the recovery. “Over the past 18 months, we have seen the manufacturing sector uniquely affected by this period of uncertainty. This is evidenced by the fact that it is one of the earliest industries to begin an upswing,” noted Doug Engel, one of the Deloitte & Touche study managers. Why this is so seems to have some analysts perplexed. Yet, it isn’t so mysterious if you’ve been studying the salient facts for a few years.

First, the investment in technology and training these companies and thousands of others have made in the past few years has been staggering. These billions of dollars translate into phenomenal increases in productivity, especially in the United States.

Second, techniques leading to sophisticated supply chain management have been the bread and butter of American manufacturing managers for decades.

Third, the phrase “The Customer Is King” was reinvented by American business many years ago. It’s still the main mantra of American industrial leadership. Indeed, that’s the real toughness of all business, at any time, anywhere. Companies that forget that might as well forget business altogether.

This study will be followed by another titled “Performance During Uncertainty: A Global Manufacturing Perspective,” which will offer insights into the “critical strategic questions” facing manufacturers, and will present “a new approach” to unpredictability.

George Weimer, contributing editor, weimerg@fleishman.com