Apart from the conflict in the Middle East and the war on terrorism, I think the biggest story in the country today is General Motors. GM's saga says a great deal about the state of U.S. manufacturing, globalization, the issue of innovation, and, perhaps most interestingly, about the cost burden U.S. manufacturers face in relation to foreign competitors.

The cost issue was on the top of the discussion list at the recent National Manufacturing Week conference in Rosemont, IL. A well-publicized study by the National Association of Manufacturers in 2003 showed that U.S. companies are at a 22% cost disadvantage compared with manufacturers outside the U.S. Two knowledgeable speakers at NMW, Deloitte & Touche vice chairman Doug Engel and former Health and Human Services Secretary Tommy Thompson, hammered home the idea that the cost issue is far more embedded structurally in society than most of us have realized.

Thompson drew a stark parallel between what is spent on healthcare in the U.S. and what is spent in Japan. "The U.S. spends 16% of GDP on healthcare," Thompson said. "And this will rise to 20% by 2014. Japan, in contrast, spends 7% of its GDP."

"In the automotive sector," he noted, "GM spends $1,525 per car to subsidize employees. This is more than they spend on the steel in a car. In Japan, it's $225."

Engel said that healthcare costs as well as energy, regulatory, legal, and other costs just aren't being managed effectively by U.S. manufacturers. Most companies, he said, continue to address these cost areas separately, which precludes managing them in a systematic way. He called for "a programmatic approach" to dealing with the problem. "The cost issue isn't a sourcing issue," he said.

Indeed. The cost problem is pervasive. It cuts across many sectors of society and demands some pretty basic philosophical decisions. As a nation, how are we going to deal with healthcare for all Americans in the future? One could argue that GM's healthcare program has been a company-specific form of national healthcare. But with GM on its knees and its healthcare and other programs facing major cutbacks, who or what will pick up the slack for auto workers in the future? And what of other industries? The healthcare cost burden doesn't merely affect the auto sector. Just about every manufacturing sector faces similar problems.

But there's an elephant in the room. Let's say that manufacturers did everything that Engel suggests and that a better national approach to healthcare reduces the burden on industry. Would these reforms make GM, or Ford, or any other manufacturer more competitive?

Or is the GM story really about inexorable global market forces causing a shift in where manufacturing is conducted, how important innovative product ideas are, how crucial quality really is, and how the marriage between business philosophy and technology can create better business models?

The GM story is a mirror reflection of U.S. manufacturing and it presents an opportunity for a national discussion about manufacturing, its future competitive posture, and everything associated with it, including education. MA is taking a step in this direction with our Progressive Manufacturing conference next month in Las Vegas. Check it out at www.managingautomation.com/summit.

What do you think the GM story means? Write to me at Dbrousell@thomaspublishing.com.