Spiraling out of control

December 8, 2010
By: Eric Lundin

Last week I took a trip to Genoa City, Wis., and felt like I had spent a couple hours in 1955 or so. I paid a visit to Ralph Wells, owner of Wells-Osborn Spiral Stairs, a company that specializes in spiral staircases. Founded in 1949 as a welding and repair shop, it expanded its repertoire to include spiral staircases when its founder, Bill Osborn, was asked by a customer if he could build such an item. Never one to shy away from a challenge, Osborn got to work on it. The shop had windows near a street, and curiosity from several passers-by turned into orders from several passers-by. Spiral staircases caught on, and to this day they make up about half the company’s revenue.

Fabricator Ed Adams showed me around the shop. The highlights of the tour were the machines that Osborn built. He scrounged hydraulic cylinders, speed reducers, appliance motors, and even a transmission from a Model A Ford to power machines he built for bending ornamental scrolls, twisting square rod, and fabricating other ornamental components. Adams and the other fabricator, Ray Jones, use this equipment to this day.

The first lesson I learned from the shop visit is obvious: Osborn was brilliant. According to Wells, other fabricators in the area tried making spirals, but eventually just gave up and sent the business to Osborn. His ingenuity allowed him to carve out a little niche. Others were welcome to enter the market, but the barrier to entry was high: They would have to duplicate Osborn’s abilities to compete.

A second lesson is lurking there, but it’s not as obvious. My colleague Vicki Bell wrote about it in a recent blog, “Are jobs coming or going?” In it she tackles reshoring, the return of manufacturing to the U.S. from other countries. She quotes David R. Butcher, who cites “higher costs for labor, fuel, and transportation, theft of intellectual property, and higher rejection rates for foreign-made goods in developing countries.”

That’s quite a list. It doesn’t take a genius to deduce that these far-flung, low-wage countries have just one advantage (low wages), and every other factor is a disadvantage. Despite all this, a large number of OEMs figured that the single benefit would make up for all the other drawbacks and sent work overseas in a big way over the past decade or two. Meanwhile the rest of us watched and waited to see if the trend would ever end.

I wonder if the OEMs really gave much thought to why the wages were so low? You can find the answer in any first-semester economics textbook: Low-wage workers aren’t as productive as higher-paid workers. I realize that this is a simplification, but I stand by my point. You can find the answer also at Wells-Osborn. Knowledgeable, dedicated workers running the right equipment keep the competitors at bay. Likewise, the U.S. rose to become a manufacturing powerhouse for similar reasons—a skilled work force and a vast amount of state-of-the-art equipment. And judging by the reshoring movement, the U.S. hasn’t lost its edge. Our manufacturing sector is still among the most productive in the world.

Of course, it’s not just about good workers running good equipment. A little Osborn-style ingenuity never hurt.
Eric Lundin

Eric Lundin

FMA Communications Inc.
2135 Point Blvd
Elgin, IL 60123
Phone: 815-227-8262