SAN JOSE, Calif. – There is broad agreement that technological innovation must continue in order for the U.S. to regain global competitiveness in strategic sectors like manufacturing. But a formula for fostering innovation remains elusive for companies across electronics industry sectors ranging from product designers, contract manufacturers and distributors as well as among startups and established players.
Representatives from each of these sectors tackled the innovation question here on Tuesday (March 27) at the opening of the Design West
conference and exhibition. Among the issues they debated is what role if any the government should play in fostering innovation.
“Innovation isn’t dead, it’s just moved around a bit, so you have to understand where it is and how it works,” said James Truchard, founder and CEO o National Instruments (Austin, Texas). Where it can be found, Truchard argued, is in emerging ecosystems like the Apple iOS mobile platform, where an estimated 1 billion apps have so far been built. “Ecosystems play a big role, and understanding those ecosystems and what role they’re playing is very important to see that innovation stays alive and well,” he added.
In the case of an established company like National Instrument, Truchard said technology innovation has shifted from instrumentation based on vacuum tubes 35 years ago to pervasive software today. The test, measurement and embedded systems company has been focusing on delivering “off-the-shelf ecosystems,” Truchard said.
Domestic contract manufacturers of electronics that survived the exodus of U.S. manufacturing to Asia have tended to be smaller, nimble companies able to adjust to varying manufacturing volumes. Some of those companies are starting to retool in hopes of offering higher-volume manufacturing. Richard Szczepkowski, president of contract manufacturer Swemco (Moorestown, N.J.), said his company installed new manufacturing equipment nine months ago in an attempt to move from low- to mid-volume production. The goal was “to see if we can’t bring [electronics manufacturing] back from overseas,” he explained.
While it remains difficult to persuade companies with overseas manufacturing operations to pull up stakes and bring work back to the U.S., Szczepkowski said he is betting that U.S. contact manufacturers can grab a larger share of future medium- and high-volume production once they manage to upgrade their facilities and implement “lean” manufacturing approaches that will help them compete against Asian rivals.
Indeed, economists like John Zysman, co-director of the Berkeley Roundtable on the International Economy
and co-author of the 1987 book, “Manufacturing Matters: The Myth of the Post-Industrial Economy,”
argue that the focus of global competition has shifted to specific phases of high-tech production rather than on particular market sectors. As production clusters around key points in the production process, Zysman said the intellection property that adds value to products remains with western manufacturers.