In the 1980s, the West prepared for a manufacturing revolution. Japanese innovations of smoothly integrated production processes and advances in automation led U.S. and European companies to believe that a new dawn beckoned. In factories, it was predicted that manual labor would be widely replaced by machines to create “lights-out” facilities; and “lean production” systems would yield double-digit productivity improvements, allowing Western manufacturers to fend off low-cost competition from places like Japan and Taiwan.

In the United States, these predictions were accompanied by a flurry of activity. Many large companies started in-house programs to develop optimum production approaches. By the 1990s, university programs like the Leaders for Manufacturing (LFM) program at the Massachusetts Institute of Technology and the Master of Management and Manufacturing (MMM) at Northwestern University were established to train the best and brightest in emulating Japanese manufacturing principles. Business publications featured more articles about manufacturing than ever before. The factories of the future, they confidently proclaimed, would hum with best practices.

The predictions came true — but only in a very few plants, and typically those built on greenfield sites. Almost all the top-performing plants in the West today were established after 1985; lean manufacturing capabilities were embedded in them from the start. For example, Nissan and Toyota opened numerous greenfield plants in the U.S. and England in the last couple of decades and set new records for productivity. Yet in the industrial heartlands of North America and Western Europe, manufacturing plants commissioned before that year — the so-called brownfield sites — have proved largely resistant to change.

Now, the pressure on Western manufacturing is intensifying once more. Companies are increasingly tempted to move manufacturing operations to new plants in low-cost countries — or buy from suppliers that have already done so — in order to take advantage of greenfield operational capabilities and cheaper labor. Moreover, a more open regulatory environment in China has put that nation’s vast consumer base within reach for Western manufacturers, who cannot afford to ignore the potential markets there or in other newly emerging regions like India and Eastern Europe.

The effects are already being felt in the West. In 2005, 10 times as many manufacturing jobs disappeared to the East each month as did in 1985. These job losses have shaken trade unions in North America and Western Europe. Once fiercely opposed to anything but full employment, unions are slowly facing up to the need for more flexible working practices to forestall more pain among their membership.

Clearly, the imperative to transform established manufacturing plants in North America and Western Europe has never been more pressing. Our research suggests that a 15 to 30 percent cost improvement is achievable and, at least in the short term, would be enough for most languishing plants to fend off Asian competitors. However, this optimistic assessment is more than offset by the stubbornly large gap in operational performance between excellent and average factories in the West.

So, if the potential efficiency gains exist and management has the will — and the need — to make it happen, what will it take to transform the brownfield plants?

There has been no shortage of initiatives intended to revive established manufacturing locations in North America and Western Europe. But the failure rates for plant turnaround in these areas are striking. Few manufacturing professionals today have any difficulty describing their vision of how excellent factories should operate. They are highly knowledgeable about the leading manufacturing techniques. Knowing the theory is one thing, of course; making it work in practice is quite another. Despite the fact that practically all of the relevant elements have been public knowledge for nearly 20 years, few brownfield plants have successfully made the transition to lean manufacturing.

The primary problem for brownfield plants is that executing a manufacturing vision is a lot easier said than done. Toyota Production System emulators often give the ingredients but no recipe — the sails but not the rudder. As one experienced manufacturing executive told us: “Lean manufacturing may not be rocket science, but implementing it is like advanced rocket science.”

In particular, four fundamental sets of questions often remain unanswered in attempts to transform plants:

Mission. In which operations can enhanced production systems truly make a competitive difference — and hence, where should a manufacturing excellence effort be focused? To succeed, a brownfield transformation must have a fighting chance in the first place. The hard fact is that some manufacturing environments will just not be able to fend off competition by instituting manufacturing excellence. Failure may be due to the culture of the plant, the profile of its employees, or gridlocked industrial relations.

But most often, failure occurs because some manufacturing technologies in the West, no matter how innovative or how service- and response-focused they are, cannot compete against factories in low-cost countries — and that would be true even if productivity were improved by double-digit numbers. This is frequently the case in manufacturing operations involving a significant labor component.

In those cases in high-cost regions, very little can be done to counter the labor rates available in the East. Some Western manufacturers believe that the extra expense of shipping from the East to markets in Western Europe and North America will protect their manufacturing assets; others feel the higher quality of their Western goods favors them over any manufacturer based in the East. However, neither of these factors is likely to provide a sustainable competitive weapon. Eastern European manufacturers are increasingly competitive, even in such quality-oriented, regulation-driven environments as aerospace components manufacturing.