Friday, 29 November 2013

Why are developed societies rich - and wasteful?

I was in Brazil lately, and noticed that apartment blocks were built out of cinderblocks. I visit a couple of construction sites per month in France, and buildings have concrete walls poured into metal workforms. As I thought it through, I figured that labour cost in western Europe is high, so it makes sense to seek higher productivity through investing in equipment - the work forms are large and expensive, but require far less labor per unit. On the other hand, using them cost-effectively requires a methods department, and then some scheduling software and so on. On the plus side the thermal and sound insulation of a poured concrete wall is better than one built of cinderblocks.

Any one who has visited a German factory will know what I mean - a high value, high cost, high productivity equilibrium of high quality goods made on expensive machines sustained by large engineering departments but little direct labor. When Germans build a leveling board, they construct it out of shiny aluminum rather than plywood. As productivity is wealth, this high cost equilibrium creates overall largely white-collar wealthy societies.

The flip side is that the division of labor between various department encourages each department to do the best they can in their light, and in the end create vastly over-engineered solutions and strikingly wasteful systems. For instance, ISO certification requires staff to write procedures which will then be audited, and the cost of all of this is added onto the product. It's waste.

Cost control doesn't work because there is no real way back to cheap labor. If cost cutting is too severe, some activities fail altogether and the system no longer produces quality goods, which is the beginning of a death downward spiral - something we're unfortunately familiar with in French industry. Is waste therefore unavoidably part of any highly developed society?

Not necessarily. Each specialist, indeed each person, can be taught to see for themselves the waste they generate on the overall system and learn to work in wiser ways to reduce this waste, and in kinder ways to better cooperate with others across functional barriers to reduce the overall waste. The trick here is to learn to identify specific types of waste, such as badly mixing concrete and having to rework the concrete walls out of the form by direct labor, and progressively taking the wasteful element out of the high-value equilibrium. To reduce waste, we first need to see waste, and understand how our own behavior causes it to happen.

1 comment:

  1. Normal is what people accept. To Germans raised among engineered precision, the perfect whiteboard is normal. To Brazilians raised on getting by with what is on hand, something more basic will suffice. It's interesting that 50 years ago when Japan began to industrialize and its economy began to grow rapidly, one set of companies felt thrift and scarcity was normal while another got used to abundance and highly-engineered solutions. Kaizen was born from the needs of the first group who accepted scarcity as normal. This was almost purely historical accident, that Toyota was bankrupt in 1951. Without that environment, kaizen would have died out long ago and lean manufacturing would look a lot more like traditional mass production.