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Milliken, a family-owned manufacturer of products ranging from computer tape to carpets and tennis-ball covers (estimated sales: $1.5 billion), launched a quality campaign that required a top-to-bottom restructuring of the company's operations. Milliken set strict new production standards and formed teams of employees, customers and suppliers to tailor its manufacturing process more closely to buyers' needs. As a result, the company reports, it has cut manufacturing errors by two-thirds since 1981. Says Roger Milliken, the company's chairman: "It was startling to find that we could do so much better."
Thousands of American companies have learned that if their products are second rate, customers will quickly turn to those that are first rate. Brand loyalty still has its allure, which is why RJR Nabisco fetched $26.4 billion and Philip Morris paid $12.9 billion for Kraft. But it no longer counts for everything in an increasingly crowded global marketplace in which armies of manufacturers are jostling for the customer's eye and American products are being pushed off store shelves by rival goods from every part of the world.
In this harshly competitive new environment, manufacturing excellence is not an obscure technical issue but a matter of corporate survival. For many American companies that made goods ranging from TV sets to motorcycles, the ! lesson was learned too late. While price still plays an important role in buying decisions, more and more consumers demand high quality at any price level. Says Armand Feigenbaum, chairman of General Systems, a leading quality- consulting firm in Pittsfield, Mass.: "More than 80% of the consumers we surveyed last year said that quality was more important than price. In 1978 only 30% said so."
Despite the growing role of service industries in the U.S. economy, manufacturing is still vital to American prosperity and national security. Manufacturers contributed 31% of the U.S. gross national product last year, and nearly all of them face strong competition from abroad. While exports of U.S. goods increased handsomely last year, from $254 billion to $322 billion, imports kept on rising, from $406 billion to $422 billion. Says U.S. Commerce Secretary Robert Mosbacher: "It has been an Achilles' heel for us -- getting production done at a high quality and competitive cost."
Until recently, U.S. companies often seemed merely to be sloganeering about quality while Japanese companies were quietly providing it. At first American business leaders cried foul when they lost market share, and pleaded for protectionist shelter. Says T.J. Rodgers, founder and chairman of Cypress Semiconductors, a Silicon Valley producer of specialized memory chips: "For a decade the whiners have been running to Washington asking for restrictions on imports, when the real problem was bad management on our side, poor quality control."
But now American business is doing more than just talk. An estimated 87% of the largest U.S. industrial corporations have expanded their quality- enhancement programs during the past two years, and plan to boost their spending on such initiatives next year, according to executive-opinion surveys conducted by Organizational Dynamics, a Massachusetts consulting firm. Another measure of the corporate interest in quality: 40 colleges and universities now offer degrees in quality technology, up from nine in 1986.