Building to Maintaining

Please note that I am in no way an expert in, well, anything. These are just my observations from watching the news and talking with friends in the engineering field. Also, these items do not reflect the opinions of any company I do currently work or have worked for in the past. Also, I am not an economist or an accountant, just an engineer.

When I graduated from college, the economy was already starting to slip. One of the first things to get cut from a lot of bloated corporate budgets was capital (project) spending. A lot of companies changed their policy on project paybacks down to fractions of a year for full payback. This cut down the engineering workload for these companies to where, in some cases, layoffs were necessary. This has resulted in an unrecoverable loss of industry knowledge for many companies.

In the past, engineering has been so tightly bound to project work that this loss of jobs and, as a result, knowledge would always be tied to a decrease in project funding. I don’t know what the experts would say, but to me it seems like the tough times are the WORSE times to lose your experts. A lot of company structures however, are not flexible enough to reallocate this knowledge in times of minimal capital spending.

The reason, in my opinion, that a lot of corporations cannot reallocate their knowledge is simple: for the past half century they have been in a “building” life cycle. When things are good and you are building capacity there is a certain momentum that can carry a company through small dips in revenue. What is different now? A lot…

Customers are smarter now. They are also bigger. The days of selling to small distributors or direct are dead for a lot of companies. If you make widgets, ten other companies do too and they are all trying to get Boxmart’s business, just like you. Oh yeah, and Boxmart has one person, Dr. Widget, dedicated to buying widgets. This person, as a result, is a widget nerd. He will compare your product to everything on the market and pick it apart with an expert eye. This is not the same person who came into the local hardware store and picked the cheapest widget off the shelf. Now you have to convince Dr. Widget that you deserve to even be on his shelf. So, when things are slow, what does this mean for Dr. Widget? It means he has even more time to shop around. In slow times, you need your experts there to refine your widget so Boxmart decides you are the widget that sits on their shelf.

This is not a matter of building capacity (maybe it leads to that) but rather maintaining your product line. A company must look at all its processes and control its quality. It must get better at what it “does” and not dedicate all its time looking at what it “could do”. This is, believe it or not, a new thing for a lot of companies. Bean counters call this type of spending overhead, operating costs, probably a lot other things. I call it “Maintenance”. It is fundamentally different from capital costs, or “Building”. A lot of engineering firms/divisions within these companies are literally set up to be paid out of capital funding only, meaning they are handcuffed when the company might need them the most! A lot of companies are willing to fork over plenty of operating costs even in a tough time like right now. It makes sense to me to roll some of the expertise into this cost group to save a company’s knowledge base!

I am thankful to have been employed by two great companies since graduating. Many of the engineers I know, all quite bright, have not been so lucky. A lot of America’s best are sidelined right now due to an old-school, inflexible engineering/accounting approach. They can get by for a while that way, but pretty soon I fear a company who has embraced a company “maintenance” mentality will have all of Boxmarts shelf space. Hopefully for the sake of our economy and well-being, that company has a “Made in USA” sticker on the bottom of its widgets.