Kevin O'MarahI was reading an investors newsletter this week which opened with the following synopsis:
“On Wednesday, September 1, the latest report on manufacturing showed strength, but another report on company hiring showed weakness. While the Institute for Supply Management (ISM) announced that U.S. manufacturing rose in August for the 13th consecutive month, the ADP National Employment Report posted an unnerving drop in private-sector employment. Steve Blitz, senior economist with New York-based Majestic Research, said that taken together, the ISM and ADP numbers reflect a flat economy.”
Yes, the economy is flat, sort of, but that’s not the way it feels to most people. Rather, these numbers reflect an economy in transition. Manufacturing is up, but manufacturing employment is down. Paradox? No. More like a productivity miracle that has a dark side. All you supply chain folks are accustomed to thinking in terms of improving efficiency every single year no matter what. Certainly this applies to production line jobs as well as materials handling jobs, and of course, courtesy of the now mature ERP backbones we all have, middle management jobs too. Businesses are hoarding cash, and although Challenger, Gray and Christmas report that planned layoffs are lower than they’ve been for a long time, the net effect is 10% unemployment holding in the U.S. for another several years – at least if we measure it the traditional way.
Meanwhile, another Jobs report broke yesterday that points clearly to the way out of this mess. This report was all about Steve Jobs and the new iPod. Oh, and the $99 Apple TV; News so meaningful to the common man that it snagged a mention on the local Boston area oldies radio station between Led Zeppelin songs. Apple continues to amaze with products we think are cool and a stock that has made at least some investors rich, and of course a supply chain ranked #1 for three years running in our annual Supply Chain Top 25. For all the moaning about lost American competitiveness Silicon Valley remains the most important crucible of innovation and economic value creation in the world. Apple, Google, Cisco, eBay, not to mention Oracle, HP, and Intel all within about 30 minutes of each other by car.
When I dig into the source of Apple’s magic I see a combination of things we like to think of as true value chain. Among these are the obvious, including brilliant industrial design and Beatles-caliber image building. Less obvious, but just as important is an approach to product innovation that encompasses supply chain strategy in ways that essentially cut off any kind of meaningful premium niche competition. Their use of application specific standard products (tweaked catalog components) in the iPad, for instance draws huge intellectual energy from suppliers’ engineers dedicated to winning and holding Apple’s business. This approach first delivers on a stack of hardware and software so holistically targeted at the consumer’s experience that Apple literally has a fan club. It also so absorbs the best brains upstream in the electronics value chain that no one, not even a Ferrari-style high end niche product, can offer anything better (at least for that first, high-margin surge of consumer excitement).
For the Ready this means plenty of job opportunity ahead. Apple itself has something like 1000 corporate job openings listed on its website right now – mostly in engineering and other brain intensive functions. Outside of its own corporate hiring, Apple is also creating employment with its AppStore, a marketplace for the otherwise unemployed who are able to write and sell apps for the iPhone without ever leaving their homes. This, strange as it may sound, is where the real job creation will occur – at home, in front of your computer, pounding away at your network looking for something people will pay you to do with your brain. It may be copywriting, or tax preparation, or data analysis. It may even be graphic design, or fantasy baseball, or fortune telling. It is unlikely to involve decent pay for unskilled labor in a factory.
Challenger, Gray and Christmas’ August report also included data on 14,000+ jobs planned by companies for immediate hiring. The number #1 sector: Entertainment/Leisure with 4,612 planned hires. Time to start dancing for your dinner.
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