What made America # 1 is manufacturing?. Without manufacturing our times are marked. I came to this country and did high-school in 1979, worked all the way to Ph.D, and I could see we are losing our edge. We let anyone copy our innovation.
Example, if you think our innovation is JSSC and other preimeir journals, track the papers and countries associated with manufacturing slowing buildinf products that are innnovative.
I am not sure what our leaders are doing about this, but if we do not do anything and bring back manufacturing to US, then what are future generation of engineers going to do. Google, Apple, and ..... can only provide so much jobs.
Bring back manufacturing......
First Pittsburgh and parts of N. Carolina were shipped overseas, then Detroit, now it is Silicon Valley that is being packed-out one container at a time. High tech manufacturing in the US will likely be restored at some point once it becomes clear to the political class that being hollowed out is not a formula for success of the US economy and it becomes clear to overseas companies that US plants are an inoculation against protectionism. The pendulum will swing. It always does. The question though is once the plants come back who will own and control them.
No doubt manufacturing and the satellite operations can generate a lot of jobs. Hypothetically, if all the manufacturing moved back to US, with so much regulation in place, what would be the costs of these manufactured goods, and would the goods be affordable, perhaps not until the average income are raised? If average income is raised, how about 'inflation'? Also, which countries outside of US can afford the goods, unlikely many of those in Asia? Therefore, there is no simple cure from 'moving manufacturing back to US'. Perhaps a few questions to ask are: why is manufacturing so much more expensive in US? Are these the reasons: unreasonable lawsuits and the compensation to go with them, the unrelentless expectation for double-digit profit quarter after quarter for business establishement by the greedy bankers and wall-street analysts, insufficient long-term investments (nowadays not many companies dare to invest signficant portion of revenue to R&D or else their stocks are pounded by Wall Street), forever rising health care cost (the government or the citizens are so rich that the drive for equality has no bound and limit!), changing altitude of the younger generation to becoming more self-centered (being happy and in control are the most important of anyone's life), ... The root causes for the decline is more than skin-depth, I believe. Thanks for listening.
What can be done in bringing manufacturing back home is in analyzing the sink holes: How much of the costs go to the exaggerated pay to executives? Who all together work to satisfy Wall street's gambling sprees rather than a sound business plan for a wholesome community.
The financial elite and their well paid servants do not care about the societal aspects -- they will outsource because it works for them. The Harvard prof. should take into account that soon enough his student body will be outsourced too.
Our design team and Application team and Cad team were 'packed up' and their jobs went to
India. Inventory and fabs in South East Asia
to name a few countries. Now Apple can't come to my boss or I for design help with our parts, they have to call India... This College dream world is KILLING our country.
Environmental groups are killing or slowing down others. Some of it is correct. Some, a large part is out of control. If we don't design, prototype and manufacture goods - all we have left is buy and sell. We are now broke without jobs and can't see our bodies. [ yet ].
That person soldering a surface mount capacitor in Malaysia who gets $2 a day can be replaced by a robot. If we automate our manufacturing to the hilt, the wage disparity will evaporate. This will cause, of course, fewer jobs to be created in the USA. An easy solution to that is to reduce the work week to spread around the remaining jobs. Convincing the "ownership" class in this country to pay a living wage for 4 days of work will require some political clout.
Manufacturing is a base upon which the society builds. Base level workers have families that want work up the knowledge chain. It is a slow decline in the "dumbing down" of society without manufacturing.
We can see the rate of knowledge growth in China, not just as a result of government education, it comes as a result of the knowledge built in society from manufacturing. Accountant and those that fashion wall street, fail to account for the educational benefits to teh society that has a base with manufacturing. That, and the fact that we are complicit in supporting human exploitation through moving manufacturing and services to the lowest cost locations in the world. This is not truly a long term, viable solution and shows that offshoring of manufacturing and services is a short term profit maximization strategy. Vision and doing what is right is no longer seen as an investment in the future, but management for next quarters results is all that matters.
I have heard this cry for the past 25 years. The United States remains the single biggest manufacturer in the world, bar none: $1.7 trillion in manufacturing outputs. China is a distant second at $1.3 trillion. Open and free trade is required, and if sustained more manufacturing will return as the cost of logistics to move finished products around continues to increase. I have been in the high tech product industry for 30 years and have been in manufacturing sites in the US, Japan, Mexico, China, India, and Taiwan. No one, other then the Japanese are cost to the US from a process capability and efficiency perspective. Yes they can throw low cost labor at it, but they cannot produce to the consistent and traceable quality levels.
Innovation take a long time to bear fruit, typically in years. In my belief, until Wall Street rewards business establishment for dedicating sufficient amount of their revenue to R&D, innovation in US likely keeps declining. Of course, I am listening and is happy to correct my thought otherwise.
The US should not even consider a move to a Service Based Economy, services are not innovative but are followers of technology. The US should bolster its manufacturing here and make rules and agreements to ensure the survival of its manufacturing base here. China has been allowed to have some unprecedented economic advantages by not allowing its currency on the open market where it would be valued much higher, this changes the value of products they export to an unfairly low value, and given the cost of their labor as well - they have an extreme cost advantage in exports and manufacturing (call it dumping by mandated value). This also makes it very difficult to export into China as the cost disparity is both ways. Perhaps we should value the dollar at 1/10th the chinese currency and then see how many countries use the United States as a point of manufacture for their products. The problem is not whether the costs are higher but whether the trade is fair. Unfortunately we have tough talkers when they campaign but now the campaign is over it would be nice to see real progress.
Manufacturing jobs are good jobs and support good jobs, they are not just line workers, they are engineeers, managers, and product testers, they are marketing and sales.
Having worked for an international company and seeing how they ensure control for manufacturing , engineering and direction along with the top posts they all go to their own along with the profits and benefits
The United States is the largest market in the world, while China is catching up - (who cares as they will not be able to get their products into China except they make them there as if they should try otherwise they will not be affordable to the average Chinese person). I am sure that fair trade would swing the balance in favor of innovation, and productivity!
SHAME on the U.S. and its leaders for allowing this to occur.
Design, development, proto-type and high volume manufacturing should be regarded as a TOTAL PACKAGE. Right now, the US is at the mercy of the outsourcing countries. We are lucky these countries value these businesses. When these countries are rich economically, our companies will have to beg them to produce their brand new products. I believe this day will come in the future. US is still an ideal place for manufacturing, if we know how to get rid of the red tapes. Automation, inline systems and other new manufacturing technologies will enable us to be competitive. However, most companies choose to outsource. This is one big strategy for the US industry.
I wonder why it took whole 10 years for a professor in Harvard to raise this question, and the stupid guys in Wall Street to figure out a country with just an empty shell-no meat has no bargaining chips in business either. Let along the innovation, the whole livelihood of this country is in danger.
I have been talking like this for 8 years. Since the very beginning of outsource MOVEMENT. I am no economist, no policy makers. But I know that since the dawn of civilization, people have to hold on to their IP and know-how to get competition edge. My grandpa in China will die to keep his Chinese medicine recipe to the family and not to give away. If the manufacturing process will give up the protection, he will be a fool to outsource. As simple as this.
I knew how strong US was when I came here for engineering study 25 years ago. And we all know how bad it is today. The leading Si process is mostly in Asia. Design also begin to lose edge. The Wall Street is selling this country for 10 years. They used to dream they can do it forever. The current crisis is the end of this country selling. We are full of dummies who can make up funny stories of making big money, but there is no bases. Just use your common sense. Why it took Harvard to study this? Was it the "elite" of Harvard business school bunch who used to think they can control the world and boss the industry to outsource to save a penny of cost difference? Oh, now somebody in Harvard realize there might be something wrong with the ASSUMPTION of the theory?
Dummies, Dummies, Dummies!
Harvard business school got us started on this road to ruin, with a flood of MBA's (mindless bottom-line analysts) who were convinced that you don't have to know anything about a business to run it - all they're concerned with is money, and short-term profits at that. America in the 50's was a land of innovators and lots of us aspired to be one. Now, the younger generation believes it's more important to be "cool" (and rich) than smart. Harvard, and corporate America in general, have sold us down the river. It will be difficult at best to get us back on track!
Blanket statements may stimulate debate but they provide little useful information. There are some jobs that are best done locally with local talent and locally available resources.
The successful new venture will be the one where the entrepreneur studies and understands the dynamics of our changing economy and uses that information to build a viable company. Whether this is in manufacturing or adding value to existing information. Innovation results from having the freedom to try something new and the US is still way out in front in providing that liberty.
Just think. All our semiconductor mfg. is in China. This means if we need any semiconductor parts for military (world's #1 military), we are at the mercy of China. China has to just shut down all fabs and we are done!!!
"Innovation results from having the freedom to try something new and the US is still way out in front in providing that liberty."
If we are already "crippled" by the greedy analyst, accountants, lawyers, congressmen/women, and last of all CEOs, where is the "freedom", and what is the probability for us to be "way out in front in providing that liberty"?
As far as cost of labour is concerned, the living standards in China is relatively lower than that in US. Besides, many of the social structures there are different than that in US. As such, their lower (than US & Europe) cost of manufacturing is by default.
I have thought about this for a long time. One possible solution: Why not tell the silicon foundries (TSMC, UMC, SMIC, etc.) that they must build fabs in the U.S.? Make it a government mandate. Foundries provide great manufacturing, but they have taken our jobs. IDMs have used the foundry model to rationalize and shut down their own fabs. In some cases, that makes sense. IDMs say it cuts costs. I say it's an excuse. What's done is done. Now that foundries have benefited from outsourcing, they must put some money back into the U.S.--and perhaps Europe--by putting up fabs in those regions. TSMC has one fab in the U.S., but is that enough? X-Fab has one. IBM has a U.S. fab. GlobalFoundries will put a fab up in 2012. That's not enough to save U.S. manufacturing. Make it attractive to set up foundries in the U.S. Try tax incentives, holidays, etc. Silly idea? Not really. Besides Intel, Samsung and a few others, who will build fabs in the U.S. Try the foundries. The rest is nothing but talk.
If the U.S. is better at engineering services compared to electronics manufacturing, and China is better at electronics manufacturing compared to engineering services, and the U.S. is better at services than China, and China is better at manufacturing than the U.S. then we have basis for trade and a good currency exchange rate. However, if China becomes better at both electronics manufacturing and engineering services compared to the U.S., then U.S. engineers will suffer. I believe that outsourcing electronics manufacturing to China with engineering design services proved by the U.S. reveals U.S. engineering design know-how to Chinese engineers. Design information can be stolen, masked, and reproduced much more cheaply than products. Therefore, I think the engineering design services model from the U.S. to China will not work over the long term.
For readers who missed it, here is today's EE Times newsletter commentary on the manufacturing debate:
The argument is advanced by a Harvard University professor of business administration that it costs too much to make stuff in the U.S. In a forum we are highlighting, Harvard's David Yoffie maintains that "the future of U.S. competitiveness in high tech industries such as computers, software, communications and electronics may depend more on the transition to services than trying to retain the country's manufacturing base." Yoffie was replying to critics who say excessive outsourcing of U.S. manufacturing jobs in undermining U.S. high-tech competitiveness. Yoffie's argument may hold some water in sectors like auto manufacturing where wages and benefits don't reflect the global nature of the business (nor does executive compensation at U.S. auto companies, for that matter). He also chooses to ignore the skills and high productivity of American workers and the reality that we have documented among electronics manufacturers: Manufacturing quality at overseas plants is uneven at best, prompting many to companies to shift some design and manufacturing work back to U.S. facilities.
How about gov't subsidies to encourage semiconductor manufacturing? I believe Germany, Japan, Singapore, China, Taiwan, Korea all provide subsidies for semiconductor manufacturing. Not a fair playing ground for the USA to compete. I guess spending 1 trillion on a useless war is a better use of money...
The US remains quite competitive in many sectors of its manufacturing base.
The proportion of our GDP going to China imports is less than 3% and not growing much at all considering that China-India represents 30% of the world's population.
Dismissing American manufacturing entirely requires some serious fact checking.
Maturing industries, having decaying return on assets and on equity will naturally migrate towards low cost countries. We do not want them anywhere.
It is perfectly Ok for a high tech mature industry to migrate, as long as we had pioneered it and retained the surpluses it generated while rapidly growing.
The human factor is an issue, particularly when most technical professionals did not take their economics courses very seriously, thinking that high tech = leading edge = high growth.
You can have high tech and stagnation (i.e. airplanes).
Good wages are always around rapidly growing industries.
Manufacturing is simply a cost factor in the processes and should be outsourced if that makes you more competitive.
Outsourcing engineering, design and marketing will also happen as the center of gravity moves towards APEC members (the Pacific Rim).
Can we sustain high standards of living in the US ? I believe so, focus on innovation, on IP and on business models evolution; these requires freedom, a flexible economy, free flow, minimal regulation and transparency.
The more subsidies we provide for manufacturing, the harder it gets to compete since those condemned funds should be used instead to educate, upgrade infrastructure, subsidize unemployment spikes and establish social programs.
The future of manufacturing in the US is great, except it won't look at all like the past!
The US is not killing its innovation machines. By outsourcing its manufacturing and more recently its design and development capabilities, the US is enabling other nations to catch up and take over its role as the leader in innovation - and in living standard. In the end, the US could still have leading edge technologies but with fewer researchers, engineers and financiers doing the jobs. Prof. Yoffie was right on saying the US is not killing its innovation machine. The US only send more and more of its citizens to the Mc's kitchens to flip burgers.
The billboard reads "Recession- 101. The economy will recover"
Today at lunch, I heard somebody say " I am applying for a job today. I am getting tired of doing nothing". The second guy said "Yes, the great American Dream"
It hurts to watch people struggle with the economy. I am not working full-time myself. I would like to say that the service sector is where the money is at currently and you can't expect people to go elsewhere. Everybody wants to sell Levis; After all, it is easier to sell them than it is to make them. However, after the pendulum swings to the service sector side, it should start to make its way back toward the new place for making money, and that is likely MANUFACTURING THINGS.
The auto manufacturers need to take their cars outside the country for a while so that the people that got used to working for them will reset their economy and help us to reset our national economy. It is not neccessarily bad that there are unions of people that demand their right to make a wage and other perks, but without a little shrinkage in our economy, the little businessman, who can play a role in the future of our economy cannot exist! It is also not just the car manufacturers, there are a lot of industries that will be making these shifts in the future...
Do you remember the corner butcher? How about the barber shop where you got your hair cut? Can you remember the little bakery where you used to get treats?
I know that these things will start to show up as the big guys leave the country to make their inferior goods overseas. All the discussions point that way.
Count on yourself, not the country anymore.
Are most people that afraid of competition?
Say, you are among top 10 smart and hardworking people in U.S., do you dare to compete against the top 2 smart guy in China (considering China's population is about 5 times of US). That is the battle you have to fight when the world is flat in both trading, communication, and information flow.
What's the living standard in China, for a guy like you with similar ambition, knowledge, and spirit of adventure? Much lower. Then it's your bottom line to bear. In order to advance from that bottom line, you have to continue to fight.
Common US people are so spoiled by the shield provided by this country. Our competition level for workers/engineers (especially the blue collar ones) were not rising with the technology that enables much much easier flow of money/technology/information across this man made shield/barrier. Common people only now take their first peek at the cruel world outside like toddlers under the wings of their parents.
Are you that weak and chicken?
"Weak and chicken" :-)
I think your characterization of typical American Engineer is as bad as an American Engineer saying foreign engineers are not as creative so we have nothing to fear about the future of innovation. In my couple of decades of experience, I have found neither true on average. My personal perspective (and not sure how reflective this is of average US Engineer) is that it's quite daunting to see the sheer number of engineering graduates coming out of, not only China but also India. Combine that with the growing economic divide (rich getting richer, poor getting poorer, shrinking middle class) here in this country, and possibly unfair trading relationship at a global level and, well, call me self centered if you will, but I feel I'm getting screwed. The current economic recession brought on by greed and the ever present "make a quick buck" at any cost mentality has exacerbated all this. (hey, if all those so supposedly smart Wall Street wizards F'ed up this bad, am I to believe the same type of push to "make a quick buck" by outsourcing R&D down to manufacturing will not have similar negative repercussions just because it's in the high tech sector - I think not).
I have more engineering buddies out of work now by easily more then and order of magnitude then I have ever known, how many of them would be out of a job now if US didn't have such a propensity to make a very few very rich at the expense of others.
These are hard working, smart individuals, not weak or chicken or expecting a handout. I myself come from a homeless environment, as a teenager I slept where I could find shelter, worked to literally eat, etc. But I got a GED, continue working full time, put myself through college and grad school. Gradated in top 5% of my class, Tau Beta Pi, etc., etc., etc. Have always excelled at work, etc. and I know many, many other engineers here in the US who have even more compelling stories. Weak, chicken, no, I don't think so.
I think Semiconductor gave a good example by telling his own path. You just can not stop climbing up the hill, as what you are getting is far more than what those Indian and Chinese graduates can ever dream to get. A lot of American workers I saw are comfortable with their pays and retirement plans, and more than that they are settled with their life style of working 8 hours during the day and brainwashing with TV at night. I didn't see them going to a graduate school or taking any systematic approach to study anything new.
But the elite work force in China is working nearly 6 days a week, 11-12 hours a day. You can call that sweat shop or whatever you want, but the smart new graduates are willing to do just that to get a decent life. As far as I know, they have copy versions of nearly all English textbooks covering from computer architecture to software to circuit design. And the best guys I know from China are studying those by themselves using after hours and practicing those in real work.
All in all, if we are willing to accept the same pay level with same amount of work done, or more pay justified by more work done (since we "think" that we are more "innovative" and "efficient"), I just don't see why we should panic about outsourcing or fear the competition.
By the way, when I say "weak and chicken", I don't mean just working very hard in labor, but the whole mindset. Creativity comes from learning, not repetitive work. You have to always think deeper and try to view things from higher grounds. You need to learn new ideas and fields of knowledge by yourself with both discipline and passion.
If we truly are confident, we should embrace this new era of easy flow of information/knowledge/money to see who can search and learn faster and think more critically, and shout "Bring it ON" rather than "mommy government, I am afraid".
Are you kidding? Nobody here is afraid of outsourcing! Because everyone here has the best personality and creativity and everything required to be successful. The problem is - not everybody outside this EETIMES forum is like that. A lot of people have mid-range IQ, mid-range capability, and can only work on mid-range stuff, which happens to match most of the manufacturing related jobs, including the manufacturing itself as well as the supporting industry, such as the restaurant, the dry cleaner, the Fedex, the builder, the plumber (you get the picture). If manufacturing is gone, I can imagine the impact is more on the indirect side than the direct side. And it's going to be bad.... Maybe people in the auto industry in Michigan are feeling the pain of closing manufacturing plants already?
Manufacturing has always been a driver for prosperity. There has never been a service economy that has prospered for more than a few decades. I challenge anyone to find an example.
Having studied the costs of on-shore vs off-shore electronics/semiconductor manufacturing the issue is less about labor costs than it is about the costs of capatilization and taxation and lack of incentives. In fact in many areas the lower labor costs off-shore are offset to a great degree by infrastructure and logistic costs. Until this country realizes manufacturing is key to prosperity and fully understands the real issues that push manufacturing odff-shore, the US economy will be in for a rocky future.