“Sourcing makes sense in some circumstances,” he says, “but you can’t source everything. Few things put him in a worse mood than a decision to close a plant. By now he’d been named head of advanced manufacturing for refrigerators, MABG’s biggest product. Tom Blunt didn’t appreciate that kind of talk. People began talking about a new strategy-sourcing. Now many in Louisville began to wonder if Japan could be their deliverance. MABG manufactured at home-in the United States. Even to whisper the word “sourcing” would have been sacrilege. No one would have thought of buying from the competition.
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Had that happened ten years earlier, there would have been one response: fight back. In the fall of 1981, both Matsushita and Necchi, an Italian manufacturer, approached MABG itself, offering lower priced compressors that were indeed fine machines. Then, the threat got even closer to home. While Louisville had been focusing on bells and whistles, Whirlpool had looked overseas, glimpsed the future, and acted. Most disturbing, Whirlpool, GE’s chief competitor, was moving its compressor manufacturing to Brazil. Mitsubishi was experimenting with rotary compressors-a technology that GE had invented but used only in its air conditioners.
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Matsushita was manufacturing better, cheaper compressors in Singapore-and selling them to GE’s Canadian subsidiary. Competitors were pushing hard on several fronts.
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A series of warning signals started to wake Louisville up. Over the next 18 months, however, others at GE also began to worry about Building 4. In Louisville, the money was all on the marketing side. He’d come to realize that MABG preferred cosmetics-bells and whistles-to engineering. Besides, he thought management would never pour huge dollars into redoing a whole factory. He was too new to start pushing for major projects-especially projects in someone else’s department. He had only recently joined GE’s Major Appliance Business Group (MABG) as chief manufacturing engineer for ranges. He liked the thought of beating it-changing it, rebuilding it. There was only one thing Blunt liked about Building 4. The scrap rate was ten times higher than it should have been 30 % of everything the plant made was thrown out. Workers loaded machines, unloaded machines, carried parts from one machine to the next. Even the simplest functions had to be done by hand. Finishing a single piston took 220 steps. The plant was a loud, dirty operation built with 1950s technology: old grinders, old furnaces, too many people. You’d have never guessed that by looking at Building 4. It is also the refrigerator’s heart, as important as an engine in a car. The compressor-the pump that creates cold air-is by far the most expensive part of the product. Tom Blunt still remembers the day in 1979 that he first stepped into Building 4, the plant in Louisville, Kentucky where compressors for GE’s refrigerators were made.
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The going has not been easy, but GE’s struggle shows the challenges the United States must and can meet if it is to regain world manufacturing leadership. households might soon have had yet another product-the refrigerator-stamped “Made in Japan.” Instead, here in the heartland, General Electric found a way to build products better and cheaper than those made by foreign workers paid one-tenth American wages. There, nestled amid the pine and hardwood of rural Tennessee, is one of the world’s most automated factories. Fifty miles south of Nashville, outside the city of Columbia, where the restaurants offer Bar-B-Q and catfish, is an unlikely piece of smokestack America.