When, in 1978, Richard Harshman started his career in manufacturing, Sony was still working on the prototype of its Walkman, Leonid Brezhnev ruled the Soviet Union and the Bee Gees were dominating global pop charts. The world has changed since then, and so has manufacturing, a fact not lost upon Mr Harshman, now head of Allegheny Technologies Inc (ATI), one of the largest specialty metals producers in the world.
“We look for different skills than we did 10 or 15 years ago. Manufacturing today is a hi-tech business. The equipment that we have invested in is very sophisticated and there is no tremendous need for heavy manual labour anymore,” he says.
This increasing sophistication in manufacturing is meaning that, after years of losing jobs to markets with cheaper labour, executives such as Mr Harshman are becoming more and more interested in producing in the US and other developed countries. “The cost of labour becomes less of a factor and I think the productivity of the workforce in the US is still very high when compared with other markets,” he says.
“Operating from a US base is more globally competitive today than probably at any point of my 36-year-long career.”
While one-third of ATI's workforce of 9500 people operate from the company's home state of Pennsylvania, ATI has facilities in 17 other states, as well as plants in Poland and the UK. ATI also has a presence in Asia, the Middle East and Latin America, albeit only by keeping sales offices in these regions.
“People might look at our products and say 'well, that's just a piece of metal', but our alloy systems are applied in aerospace and biomedics, so they are very technologically advanced and there is no room for error here,” says Mr Harshman, who adds that for this reason his company needs to keep a tight control over intellectual property and quality, both of which are at times challenging when operating in emerging markets. “When we look for a new investment does it necessarily has to be in the US? No. It all depends on the market for our products, the regulatory environment, the tax structure, energy costs, as well as labour skills and benefits structure,” he says.
Does that mean that the US has what it takes to reap the benefits from a manufacturing renaissance? “The challenge we have before us [in the US] is from a policy and regulatory standpoint. Can we get that right and utilise the workforce that exists in the US and the lowest energy costs that exist anywhere in the world and use that to our advantage?” he asks.
“Do I think we can pull that off? Yes, absolutely, I think for the first time in my career that politicians, be it Democrats or Republicans, believe that for us to have a vibrant economy we need to be a global leader in manufacturing.”