Bringing manufacturing jobs back is easier to say than done. Government policy can help steering the direction. Yet, more importantly, the willingness of investing into Americans by Big Corporation and of Americans to put their hand dirty are keys.
There are still quite a lot of engineers who have equipped themselves with pretty good skills and yet big corporations are reluctant to hire them for multiple reasons. The most heard is they don't have 100% of the skills needed. I heard they are demanding too much salary. Corporation wants to squeeze every penny from employees; they believe they can find similar skill level person in elsewhere if not in US. The reality is they may have hard time to find same skill level person elsewhere but they are willing to offer the job overseas because of 2 reasons. First of all, they are paid less and logically speaking, their skill level might be lower. Secondly, everybody is trainable one way or the other. The person would be shaped to the way fitting the work he/ she is doing after 6 months to a year training. It is unfortunate that both non-skilled and skilled work are going overseas. It seems unstoppable until engineers or going-to-be-engineers start doing something right. Most of all, corporation starts offering opportunity to young engineers and local candidates.
People do want to live and work in the US if positions (and visas) are available. I have worked in Korea, where a lot of semiconductors are manufactured. Lots of skilled scientists engineers here would take less pay to be able to work in the US. Some people leave their families in the US, and support them with their meager earnings, so their kids don't have to suffer through the exam mill that is the Korean school system. I would imagine it is the same in China. A lot of these people were educated in the US. You know what the problem is? The US spends all this mooney (DARPA grants, TA positions) training these people, then refuses to let them stay! They could have been productive Americans, but we wouldn't let them. So, they go home, and start up and work for companies that compete with companies in the US, all with expertise they got in US institutions. All the talent (if you've been to engineering grad schools in the US, you know what the proportion of Asians is) goes back to Asia, so Microsoft, Intel, and HP follow them over, too. How is it that we can't get a sensible visa program for engineers and scientists?
US professors hire foreign students as RA & TAs for the same reason US corporations hire H1b's -- so they can control them like indentured servants.
We need to force US grad schools to give preference to US students over foreigners.
There's no reason why our kids have to compete for research grants, paid for by US taxpayers, with foreign students.
Some very good points being made. Here is a related article about high tech jobs along with my reply to Junko Yoshida's urging that "American get it's manufacturing groove back"...
I applaude Junko's spirit and bravery for even proposing the US try to bring back high tech manufacturing jobs. Most Americans would agree it would be great in many ways if we could do this (i.e. reduce unemployement, trade gap with China, Japan, etc), rejuvinate national pride, and eventually lead to manuafacturing competitive advantage, etc.
As pointed out many various replies the challenges are hugh, most of all having the political will to do this. However all hope is not lost since "political will" generally follows economic opportunity...
As such I believe it's a matter of proving the best/most profitable option for US based high techs is to manufacture in the US again. This will take deep financial analysis by our best economists to calculate NPV of future returns under various scenarios. Only by showing that US based manufacturing will provide the best ROI for investors will we be able to escape the status quo and start the ball rolling to bringing manufacturing back.
Such financial analysis would surely be able to identify the critical factors for success that need to be addressed before manufacturing in the US would make the most financial sense.
In my view this should be one of the top issues for this year's presidential election.
What are we waiting for ???
David Fatlowitz, MBA
Another interesting fact is as the manufacturing job goes overseas. So does the engineering job because of inevitable reason - getting engineers and manufacturing facility closer together. If engineering job of a tech company go, would the management work go? Would the HQ be better off closer to the main facility of the company? There are seemingly unavoidable steps if what the video said is true.
chanj: it's an ominous picture specifically for hi-tech jobs where the food chain among design, fab and assembly is so tight and has been globalized for a long time. Incentives and trade policy need to be adjusted to reflect reality.
It's like I said last time around. It's hard to compete when the other guys are willing to live in company dorms.
The "natural" solution to this problem is that the Chinese will rebel in their own country, against those practices. As their standard of living goes up, their wages go up, maybe they'll go through the same cultural transformation that western countries went through, after the Industrial Revolution. I mean, company dorms is something straight of of Dickens, for heaven's sake.
Failing that, the government can become heavy handed about this. I'm not sure how successful that will be, overall. And I'm not sure how the "libertarian" attitude, you know, the one that makes even such an innocuous government policy as banning the wasteful incandescent bulb a "bad thing," would react to government meddling in the free market this way.
Bert22306's reference to Dickens reminds me of Scrooge's famous line: "Are their no prisons? Are there no work houses?"
I hear the presidential candidate Romney toured a Florida manufacturing plant today, so perhaps the GOP debate may shift away from personal attacks to a real discussion about economic recovery.
Chang appears to refer to the NYTimes article on How the U.S. lost the Apple manufacturing. http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?pagewanted=1&_r=2
Some making comments here appear to support that mid wage job earners (like Mr. Saragoza in the NYT article) are the norm in America and are unwilling to adjust their personal lives in order to keep a great mid wage job. I think I am in alignment with others in my opinion that unless the U.S. culture evolves with some sort of "adjustment revolution" in our priorities, the mid wage job class will practically disappear. Those willing to adjust will be the ones keeping those coveted mid wage jobs.
I don't know how "touring a manufacturing plant" will work out for Romney, but I see Newt has laid out blueprints for economic reform and adjustment to get America stepping back toward holding on to the mid wage jobs and manufacturing that is not gone already.
I am in agreement with George. America DOES HAVE dormitories of skilled laborers that have all the amenities of a community housing situation. However, the U.S. is not making these groups (or offering to them the option to) produce something, or learn something in order to ensure America continues to have skilled laborers in the mid-wage job class. Yes, we call them prisons and college dorms. But unemployment and welfare could just as well fall into these categories - utilize buildings nearby the offices where those groups get their support.
Bert, You are probably close to being right about the Dickensonian nature of dorm life. However "one man's ceiling is another man's floor" compared to the utter destitution of those who lived through the Cultural Revolution or those who were assigned to work inland on China's still primitive farms life in the Dickensonian dorms is a relative paradise for these people.
First the manufacturing jobs go overseas, then the engineering jobs, and then the executive jobs.
...as Apple found out when Samsung decided that since they are making all the parts to the iPhone and iPad, why not just make and sell the whole thing themselves.
It is not just greed, it is shortsighted greed that is the problem.
As long as I have been working for EE Times, outsourcing has been one of the biggest hot button issues for many of our readers. And it still is. The disturbing thing is that as Chanj noted, once manufacturing goes, so goes design engineering work. Then, the next thing you know, R&D jobs will also go. We've understood this -- intuitively -- but we have absolutely done NOTHING about it thus far. We have all hidden behind big slogans like "globalization," or "the world is flat," and just let things happen.
Isn't it time to actually do something about it now?
Big corporations like Apple say that it is not their responsibility to keep jobs in the United States. That may be so. Then, whose responsibility is that?
I believe the U.S. Government had taken ownership when they set up TARP and other trillions of funds to recovery the economy and create jobs in healthcare.
We had better elect a President this year that can actually put that allocated funds to work making a difference rather than lining pockets.
@Junko: you are raising some difficult questions for which there is no right answer!
I am compelled to quote one of my favourite authors, Oliver Wendell Holmes: "A mind that is stretched to a idea never returns to its original dimension."
The USA populace is used to low-priced cheap electronics and goods. The whole wide world for that matter. Going back to the pricier models is a no winner.
I realize something has to be done, I don't quite know what it is as policy and how to implement it.
As to your question as whose responsibiity it is, it is national governments and the WTO-like bodies. And that is a bureaucratic quagmire!
Hi, MP. I agree. There is no single silver bullet to this complex problem.
And yet, I do take a comfort knowing that some of us are beginning to think that "something has to be done."
The conventional wisdom was that the only way for corporations to survive was to move the job off shores so that they can create more profit. I get that.
But I think we may need to start the conversation on this topic: Can we even afford to keep losing the infrastructure (to "make" anything) in the United States?
Many of the things economic that politicians rant about are actually none of government's business. However, foreign trade issues are one thing that is most definitely the responsibility of government. Therefore, it is government's responsibility to prevent job loss to foreign competition. This is done through trade agreements and import tarriffs, tasks at which the US government has badly failed the American people.
China is basically subsidizing manufacturing. This has resulted in lower pricing of imports into the US to the extent that US manufacturers were unable to compete. Therefore, US manufacturing wanted to move manufacturing to Asia in order to take advantage of cheaper labor themselves. So they lobbied government for low tarrifs. Of course, when there is a huge trade deficit, a government should raise tarriffs. Instead, the US government did the exact opposite. Naturally, it was disastrous for US jobs, though not necessarily for US businesses. Apple is doing just fine. The US government sided with big business, rather than the American people.
$17 a day is a comfortable salary for the china living standards.Those who are in that pay scale are trained or skilled hands with diploma or basic education. China's has made their population into power and creation.If US wants to get back their production back there is only one solution.10 Robots and 1 engineer 1:10 ratio and $170 per day and they will be doing equal to 20 * $ 17 work. If US can do a little more research and adopt this technique ...
It may be political rhetoric and president Obama's call at last night's State of the Union that "we will not go back to an economy weakened by outsourcing, bad debt and phony financial profits," sure sounds promising. But it will take the real political will and the economic imperative for a united nation to deliver a concerted answer to that call.
Exactly! and I didn't see a “blueprint for an American economy that’s built to last.” described.
Can someone articulate just specifically what that looks like under Obama now that we have heard Obama's state of the union address?
It's important to distinguish between good electronics manufacturing jobs and not-so-good manufacturing jobs. America can't compete now with the huge-volume manufacturers like Foxconn and I'm not sure we want to build the type of infrastructure that has company executives busy with suicide watches for their workers.
Small to mid-sized electronics manufacturing in this country, on the other hand, is alive and thriving. It's thriving because it requires innovation, creativity, flexibility and design know-how--all current strengths of our electronics engineering infrastructure.
We've visited more than two dozen contract manufacturers from Middleton, Wisc., to Tampa, Fla., in the past six months on the Drive for Innovation. Not a single one is laying off; most are adding staff and many have invested in leading-edge equipment in the downturn to become more competitive with Asian manufacturers at ever-higher volumes.
You don't see that in the New York Times or or MSNBC or CNN but it's happening.
I agree that we need to differentiate between manufacturing jobs. But I can't help but believe that when any small venture proves successful, which means whenever they are about to grow quickly, there will be a corporate urge to outsource. Just to get the production costs as low as possible.
To the majority of consumers, this means thay can more easily afford the new gadget.
If this new product is a niche item, not in huge demand, perhaps a luxury item, then outsourcing may be less desirable.
A single-minded policy to bring manufacturing back will result in reduced productivity, and therefore reduced standard of living here.
There are no easy answers. The best would be for China to get past its big wage disparity wrt the West, which can only happen if their economy grows quickly, and then things can level off naturally.
Brian, you make an excellent point. What we want is for companies to pay more for the manufacturing in the form of pay and benefits for jobs that people will hate. But manufacturing is far from dead in the US. (http://www.bloomberg.com/news/2011-12-01/manufacturing-in-u-s-grows-at-faster-pace-as-ism-index-increases-to-52-7.html), we just aren't the number one widget maker, just as we lost to Japan in the 60s. George does make an excellent point, that companies should not be given tax incentives to offshore any kind of work. As the president said, tax breaks need to go to companies that create jobs here, not overseas. Make the tax breaks significant enough and the cost advantage of offshoring disappears.
Radio documentary on Foxconn:
In the prologue, a reporter asks the iPhone 4S voice app Siri where the phone was manufactured. Siri replies: "I'm not allowed to say...."
@George: I listened to this one on NPR... sad. Particularly how Foxconn put all those nets around buildings so people can't kill them selves by jumping.
Another poignant moment in this report was that the journalist's Chinese guide advising him not to show his journalist business card -instead make an executive one with potential of ordering millions of parts from the factory!
There is a fundamental shift in the economy. What's good for GM (or Apple) isn't always good for the country. We need to stop thinking that giving blanket tax breaks to corporations will create jobs. We need directed tax policies to ensure this. But first RAISE taxes to level the playing field and give TAX CREDITS to those companies that increase hiring in R&D and manufacturing.
Maybe I've become too jaded but why are the nets at Foxconn a negative?? When you put 420000 or so humans together, you're gonna get some unstable ones. Why are there no nets at the Golden Gate bridge??
It would be good to know EETimes official stand on outsourcing. If it's lobbying against offshoring, which is what Junko Yoshida's note indicates, folks who don't believe in it can decide if this website should be patronized or not.
And, I see at the bottom of the page EETimes for China, India, Taiwan etc. So, what's real?
How about staying away from politics and concentrating on technology? There're tons of websites who love to discuss the merits & demerits of outsourcing, leave that job to them.
If you do not like political discussions, I would advise you not to read OPINION columns with politically oriented headlines. The opinion in that article may not be one you agree with. Engineers are people, and our work lives and careers are often shaped by public policy.
I've no problem with hearing individual opinions and like to read those perspectives. However, if a newspaper (Electronic or otherwise) editors take a stand, that I want to know. That helps me decide on how credible or believable that data is.
Manufacturing in the U.S. has sprouted new roots.
MTI Systems recently started a program to help colleges and other educational institutions utilize Costimator, cost estimating, quoting and process planning software as a training tool to be included as part of their manufacturing curriculum. While enabling instructors to focus on cost estimating topics, it also educates students on software used by manufacturers worldwide, effectively helping candidates be better qualified for hire upon graduation -- helping manufacturers be more competitive in their marketplace.
For more information visit: http://www.mtisystems.com/press_room/press_releases/press_dec_11.html
--Jay Snow, Marketing Manager, MTI Systems, Inc. -- developer of Costimator, cost estimating, quoting and process planning software for manufacturers. http://www.mtisystems.com
Incentives and tax breaks going forward will stimulate innovation. Manufacturing jobs will always follow the low-cost production path. These are two notions that will define our future no matter where we live and work. If the U.S. is to hold on to pre-eminence its policies need to be shaped by an inclusive thread. AND it becomes everybody's responsibility to make sure that we weave the same quilt.
This is certainly a better solution than the common practice among Wall Street analysts who praise companies who outsource manufacturing, effectively driving up company stock prices. The practice then becomes self-reinforcing.
All the trillion of bailouts spent on financial sector with billion in bonus, not much left for investment in R&D and education in U.S.
All the corporation shifting jobs oversea. Expensive living standard requires high salary and less competitive.
How many of you buy jeans that say "Made in America". I don't even though a quick google search will point you to websites that sell clothes made in the USA.
As an engineer, I realize that my days may be numbered. The question we have to ask Americans (starting with ourselves) is: Are we willing to pay more for a product made here. If the answer is no, the battle is lost.
Has anyone give any thought to the longer-term future?
What will happen when the likes of China, India etc reach the salary point where it's no longer cost-effective to manufacture there for the global market (perhaps for the respective domestic markets, yes, but globally, no)?
Will tech companies simply go to the next region - Africa, for example, and set up shop there?
Or will we see a network of regionalized manufacturing centers catering to specific regional markets? That's what we saw with the auto industry - Hyundai etc all have US plants.
Others in the thread have noted that some manufacturing has left China as labor costs there grow. A few years back, I toured some back-end plants in Indonesia, and the managers at the industrial park there were pitching these assembly plants as a cheaper alternative to China. It appeared that the plant managers were mostly ex-pats, including a lot of U.S. executives.
The auto industry example above is a good one since the supply chain requirements are similar to those in consumer electronics, just scaled up. There's little doubt that global manufacturing is going to continue to evolve as the Chinese middle class grows. The big question is how much manufacturing returns to the U.S. The president offered a few examples last night, as did our colleague Brian Fuller. When these examples start pushing down the stubborn U.S. unemployment rate, particularly for engineers, remains to be seen.
Here is some scary math to get you thinking.
At the end of WW II Japan had a population 80 % of the US and a std. of living only 30 %. It took them 40 years to catch up by exporting cars and consumer electronics to the US. But in the process half the jobs in the US Auto industry were lost.
In 1990 China had a population 4x that of the US and by Purchase Power Parity a std. of living only 1/8 th of the US.
Now can you figure even if outsourcing to China is allowed to continue at current level ( annual deficit $ 350 billion ) how long will it take for the Chinese to catch up with the US so they would lose the labor cost advantage ?
Next estimate how many US industries will get destroyed before such a race to the bottom ends.
At some point, it will likely have to be up to the American public if we continue to pay for foreign made goods. We should start a pilot industry (such as LED Light Bulbs) that we target to be competitive against Foreign manufacturing (I am seeing a number of these bulbs that say "Assembled in Mexico" as opposed to China). If we have works wanting to earn a realistic wage, then try (with some Government backing and cutting of Red Tape to make it happen quick). The current price point on those LED bulbs is inflated, but the need for them is going to be nearly forever (CFLs were a stop gap, but LED bulbs aren't). Use this plant as a model for how we get back in the game of making certain items in the U.S. and publicise it so that Americans will buy the U.S. manfactured product (even if at a slightly higher price) as opposed to the Foreign one. China may not like it, but we know they subsidize their industry so why doesn't our Government at least work to favor ours in certain cases.
BTW, I will NOT be buying an IPhone in the future. Samsung will get my business -- at least to teach Apple a lesson. I would buy Motorola if they still manufactured here. It's time we all voted with our pocketbooks. If the politicians won't listen, maybe their master's will.
Perhaps part of the problem is that the "playing field" is not very level. In the US, we have worker safety, environmental, and minimum wage laws (among others) that countries with emerging economies may not have. If we as citizens of the US truly believe these laws are helpful for peoples' general welfare, then perhaps our government should impose strategic tariffs against imports from countries that do not make efforts to conform. Otherwise, perhaps our government should relax some of these laws.
Bingo! Plus make them pay for US inspectors to certify that they do meet US laws and standards and TARIFF where they do not. This must be done at a factory not country level. After all we just want our fair share of work not a trade war.
Just wanted to share some data on Global Unemployment;
The ILO says there are nearly 200 million unemployed and that another 40 million jobs need to be created each year for the next decade.
"Hence, to generate sustainable growth while maintaining social cohesion, the world must rise to the urgent challenge of creating 600 million productive jobs over the next decade, which would still leave 900 million workers living with their families below the $2 a day poverty line, largely in developing countries," the report said.
Hopefully Chinese standard of living will rise; India has ways to go and will probably be able to uplift a percentage of population that should spur the demand for Capital/high value Goods;
From a Policy Standpoint, the Government can reduce the Corporate Tax Rate to a flat 15-18% for all Manufacturing Companies based in the US;
"A national manufacturing policy would be a far better strategy than a trade war with China. "
I fully agree! But for the ultra right wing dominated GOP any national "policy" or "strategy" is an anathema, it is against their religion (and they are extremely religious). They clearly prefer war to finally devise a long term strategic national industrial/manufacturing policy or a national energy policy. As long as they have the power to prevent us from having long term national policies on crucially important areas we will not be able to compete with the Chinese and others. And, for the record, only ignoramuses equate a national strategy or policy with "socialism/communism" as the ultra right has been doing. Most of our serious economic problems today are self-inflicted by our own ignorance and misguided policies.
China spends $100 billion per year subsidizing VAT taxes. Companies like Foxconn are repaid for their tarriff costs. In other words, the trade war is already raging. The counter to artifically low labor costs at Foxconn is import tarrifs. China counters by subsidizing exporters. A national manufacturing policy would basically be subsidizing manufacturing to counter China's maunfacturing subsidies, which would just be another counter in the same trade war.
I need to point out that the "ultra Right Wing" of the GOP is actually Against wars not for them. Most of the GOP is actually left of center not right. The extreme right wing are mostly Classical Liberals and Libertarians. All of the Social Conservatives are way left of center. But they could be to your right from where you stand :^)
With that said, I've Manage the Mfg of Capitol Equipment for several years and for the last 7 in the LCD market. Over this last year and on going this year, we are moving back Mfg to the silicon valley because it's actually cheaper here with all our higher wages than China or Korea.
What people always look at is the cost per hour but never consider the output and quality.
Our China adventure was a complete disaster. Couldn't keep talent and quality was very terrible. We lost market share and margin as a result.
Tariffs, Trade wars and targeted tax benefits are not the answer
Getting government out of the way as much a reason allows and getting people to understand that if you want to increase both Gov revenue and stimulate the economy lower and flatter taxes are the answer.
Allowing Students to stay here after they graduate goes a long way too.
I vaguely remember that wall street journal published something like “a $5 trade war”. I can’t find the link to the original article but I remember the article has a detailed break down to show where the profit goes for Apple’s product. The vendors and suppliers are all over the world: Taiwan, Korea, Japan, Singapore, and US. Apple of course takes the biggest share and has profit margin up to 40% to 50% (?), but surprisingly China only gets $5 for doing assembly. The number doesn’t seem real but some people commented that the estimate is not too far off from the actual number.
Jobs offered by Foxconn don’t really require engineer skills. These are low paid jobs. I actually don’t understand why it is such a big deal for US to bring these jobs back. Even China is losing these jobs eventually. Ever heard the story that Foxconn is planning to install 1 millions robots to replace Chinese workers due to increased labor cost?
I thought a better strategy for US is to find ways to create more companies like Apple, that could harness outsourcing instead of being harmed …
The world is increasingly flat, and the economy is global. National boundaries are less and less relevant.
As a rule, work goes where it can be done cheapest. In a competitive economy, price is an important competitive factor, so there will be constant pressure to reduce costs.
Consumer electronics exacerbate the problem, because the inevitable progression is that devices become commodities, with commodity pricing, and the lowest cost producer wins.
Apple has successfully positioned what it sells at the high end of the market, and can successfully charge a higher price and make a better margin. What about everyone *else?*
The rise of the Internet has meant that the work going elsewhere for lower costs isn't confined to low skilled assembly work in manufacturing plants. Software development and engineering can be done elsewhere, too, and increasingly are.
Things will gradually change in China, and we are seeing the beginnings of it: one of the big Chinese manufacturers announced an initiative to move to robotics for this sort of work. But it won't happen fast: China is still a largely agrarian economy trying to bootstrap itself into the industrialized world. They are seeing problems with urban congestion and inadequate transportation infrastructure because of the flight to cities to try to *get* those factory jobs. The pay and working conditions at Foxconn are a step *up* from being a peasant on a farm, which is why Foxconn can get the people.
The only place where US manufacturing has a hope of being competitive is in higher-value products where the buyer is willing to pay enough to cover the costs of making it here. That will *not* be the case for the majority of consumer electronics. Arguments for forcing the manufacturing to be done here mean forcing the consumers to pay more in consequence. I do not expect that to happen.
I work at a company where I'm in the minority in the sense I'm not an immigrant, yet my company was founded right in Silicon Valley in 1985.
It really bothers me when I go around this country and see young people 20+ standing on a street corner hanging out because I think why aren't they in college or a trade school. So it makes me think that talent is just a commodity, get it where you can for the least. Points to; a guy on the street corner in Kansas cost more to train then to provide a visa to a guy from Bangalore India. Ccompanies, bottom line don't care where they get talent as long as it cost less. Change that equation and companies will subsidize training for people from the US.
Training/skills cost money, so perhaps we send our untrained to say India or China where an education cost less. Then they come back to the states. Is it more accurate to say US companies are unwilling to invest in our own citizens and not that there is a shortage of talent?
Ironically on the same EET email there was a note that Intel was getting it's arm twisted over deciding to accept an Israeli government subsidy. Other governments (Arizona, Florida, Italy, Germany, etc) frequently do the same thing -- "buy" jobs with corporate welfare^h^h^h^h^h^h^hsubsidies. Is that what people here want for government policy? I think maybe not.
The Apple situation is an outlier; five years ago people would not have complained about Apple outsourcing; just because Apple is now 12% of the entire electronics industry they get targetted.
I think Brian F has it right: the correct strategy is to specialize just like Foxconn, but where your strengths lie, don't try to become Foxconn. That's already been done.
Countries (and not just the U.S. but us other nationalities) would like to have thriving competitive industries, not single-points-of-failure like Foxconn, or Nortel, or Lehman Bros. When Apple/Foxconn/Samsung bite it, as inevitably they will, there will be complaints about dependency on single companies. It's the way economies work: be successful and competitors will come out of the woods to take your market away. Sometimes it's polite, but mostly it's not.
The answer is automation. Machines have been taking jobs aways from people in the US for a long time. Even if these low paying jobs were not shipped to China, some of them will be lost to machines inevitably. All cooperations maximize profit, if they can not outsource jobs, they will automate them. Cheap labor in China offerred an easy way out. As the income level in China rises and China's population start to decline, automation will become a more attractive alternative. Well, of course, there is still India. We just have to be patient. :)
We too manufacture high tech items in China. But today's manufacturing flow in China is not even close to what many of you here think it is. Of course, you are well aware that the actual human contact with today's high tech products must be limited - automation is everywhere and has to be to maintain quality levels - one sneeze at the wrong place and you have a dead iPhone. As a result the amount of "traditional" labor in an iPhone of iPad is nearly zero. China is and has been for the past decade the world's largest buyer of high precision production machines and robotics. Sure, the manufacturing engineers running the pick and place machines are still paid a lot less than in the west. However, consider that the world’s largest assembler, Foxconn in Zhengzhou, will have 95 SMT lines when finished later this year. We're not talking about tens of thousands of skilled jobs here - each line employs 12-16 engineers usually working 4 to a shift - so 1,500 manufacturing engineers? And what about those hundreds of thousands of other Foxconn employees? They're machine minders, parts loaders, cleaning people, recycling - all low skill jobs. Same with pack and test - a few skill positions monitoring automated testing and packaging with a crew of helpers move material from one station to the next. In the mid-90s I did some business with Bendix. The product was a flight computer for an Italian helicopter. After we replaced a suspect module we were going to retest it in the Tenny oven in the next room. Being a consultant, I wasn't aware of the rules - Bendix was a union shop and a union porter had to be called to transport this 10 pound assembly about 50 feet. While the tests were going on my host quipped "that union porter that brought the computer here makes about the same money as I do". Can you imagine the price of an iPad made in the US if the person that puts the shrink wrap on a palette costs the company $45K plus benefits?
I am kind of lost in the latter part of your argument; but here's the thing. You provide very important reality checks here. You note that "China is not even close to what many of you here think it is." That's what I am also hearing from those who have been to Foxxcon and worked with them.
What they've got is an unimaginable size of automated infrastructure to support so many products based on high precision components.
China built that infrastructure in less than 10 years.
Why can't we build that infrastructure here in the United States?
Hi Junko, Two comments regarding your post: China didn't build its infrastructure in less than 10 years - the west, primarily the US built the infrastructure in China in less than 10 years (actually more 20, but who is counting). That folds into the next response "why can't we build it here" - two answers 1) the investments were/are already made in China 2) Regulation: My company considered to build in an older industrial park in Chicago. Imagine our surprise when the first of thousands of regulations was "asbestos mitigation". Mind you, the lot had been empty since 1951 - BUT explained the city, there could be asbestos left over from the 19th century! We immediately terminated the project.
I hear you, John. There is always that complex "regulation" issue and more red tapes. I appreciate your putting things into the real-world context.
That said, my question still stands. By giving up the production here in the United States, we are losing a number of jobs related to the whole "eco-system" of the electronics industry.
Shouldn't that be a concern for those who work in the electronics industry?
John, I understand your point, but the cause of a $45K/yr packaging clerk is a management problem. Detroit's union pay problem stemmed from management that did not do its job and stand up to the unions. That is their job - not to antagonize the unions, but convince them that higher compensation was not sustainable. The auto makers had many other problems, but out-sized pay was a management created problem.
Oh pleeeze. My dad was a UAW member for his entire working life. The GM strike of 1970 demanded "30 and out" fully paid health and dental for life...AND THEY GOT IT. Union goons fired shots at manager's houses and threatened bodily harm to anyone even considering crossing the picket line. Read: The Company and the Union, by William Serrin published in 1973, criticized the union for not asking for more! Just how do you "convince" people who are taking shots at your house that their demands are unsustainable???
They wouldn't have had the Unions in the first place if they treated their workers like fellow human beings. Instead they used them like chattel and forced them to work in inhuman conditions for minimal pay -- like many Chinese factories do now.
Unions created the middle class. Now we're seeing the result of decades of attacks on Unions and labor laws.
There was a debate ten or fifteen years ago in EETimes whether engineers should join unions. Guess who won (lost)...
As John_Galt says, the problem is not finding jobs for engineers. The problem is the dead weight of people who are challenged to cut a 2x4 squarely and pound nails into it. Those people make a large percentage of the unemployed, and no amount of 'retraining' will make them capable of doing a job that adds value in high-tech.
As for the President, no amount of Democrat finger-pointing can change the fact that this administration has done more to sabotage American business than any in recent memory. Anyone who talks about advocating 'market-based health care' after ramming through the monstrosity he and his tame Dem Congress foisted on us is a lying snake and we should remember also his blatant disregard for the Constitution and deliberate attempt to sabotage Boeing in payback for his forced-union campaign contributors.
As for the commenter above who said that some people have a problem with the law about light bulbs, please remember that the law mandated the use of poisonous and dangerous flourescents and did not allow for safe LED bulbs, it did not merely force incandescents offf the market. In short, it was asinine, short-sighted, and stupid, like most government policies.
We don't need more 'policies', we need less overhead. Less dead weight. Less politicking. And most of all, less people who cannot read the writing that has been on the wall for more than forty years that all of this was going to happen. The fact that someone can vote should not absolve him/her of the basic responsibility to learn to keep himself from being eaten. Unfortunately, Mr. Obama panders to those types.
"As for the commenter above who said that some people have a problem with the law about light bulbs, please remember that the law mandated the use of poisonous and dangerous flourescents and did not allow for safe LED bulbs, it did not merely force incandescents offf the market."
Please provide proof to the effect that CFLs are mandated. I think this is not true, even after I re-checked.
LEDs and ESLs are other alternatives to incadescents. No one is mandating use of CFLs. If US companies can't figure out how to manufacture efficient lighting, but would rather invest nothing, and just keep on with the 1889 Edison technology, you can't blame the current administration for that. And what could be a more lame excuse to stick with hopelessly wasteful lighting?
I'm no fan of many of the current administration's policies, but this doesn't mean that we need to manufacure complaints just for the fun of it.
Another thing is, according to Wikipedia, the amount of mercury eventually released into the ecosystem by spent CFLs, even if they are NOT recycled, is still less that mercury released by coal fired electric plants to create the extra power required for incandescents. So, incandescents have to go, and US companies have to get on with the program.
Bert is correct, there is no specific technology requirement, only an efficiency requirement with so many loopholes that incandescent bulbs will be available for a long time.
I don't understand the need of Galt worshippers to make stuff up to rage against. The real world if full of challenges to meet without fabricating conflict.
Again same old story, same old controversy. I think that may be 10% of the people get it why this is so and remaining don't and this ratio seems to hold good every year.
Why can't the US understand the simple rule of economics 101- The jobs go to the lowest bidder, everything else is sugar coating.
Galt, DWilde1, and others make very good points which both highlight why China mfg is so efficient and why stupid UA policies (Gov't and otherwise) can screw entire industries. The 'screw' list is seemingly endless.
The last major GE factory making incandescent bulbs closed in 2010. The decision to ban such bulbs did not set off a boom in the U.S. to manufacture replacement lights, but caused the leading replacement lights(CFLs) to be made almost entirely overseas, mostly in China. The spiral CFL shape was invented by GE engineer Ed Hammer and others at GE's famed Nela Park research laboratories after the 1973 energy crisis. It was too labor intensive (blowing the glass tubes) at the time to commercialize and no one would invest in automating the process.
Ellis Yan, a Chinese immigrant to the US, started his lighting business in China and in the '90s turned his attention to the making CFLs. His workers sat beside furnaces and bent the glass by hand, ultimately employing as many as 14,000 glass blowers. In 2010 his firm supplied almost half of all CFL's sold in the US. With wages rising he chooses to automate where possible.
With the deadly compounds in CFL's and the admonition that you should have a hazmat team remove a broken CFL, this is a perfect illustration of the saying that the road to hell is paved with good intentions.
One thing is very clear: A country that loses, or chooses to lose, it's domestic manufacturing capabilities for the goods and services it needs becomes highly dependent upon others, severely compromising its own economic health and ability to survive as a sovereign nation. No country can survive on a knowledge based economy. Knowledge circulates rapidly around the world and knowing or owning a factdoesn't prevent someone from seeing entirely different possibilities based on it and you lose again to those willing to transform the knowledge into actual products and services people want or are willing to pay for.
Sorry folks, Chinese manufacturing is not "efficient" it's subsidized by their govt thru their banks. The govt controls everything and everyone. Labor costs are low, because there are no strikes-- the army will shoot anyone that threatens the system. It's a planned scheme in order to lure in high tech manufacturing that can be usurped to their purposes later. If you don't believe it, then try moving a factory OUT of China -- can't do it, because the Chinese govt owns your factory equipment (foreigners are required to transfer their equipment to a Chinese 'partner'). I know of at least one company that tried to get their equipment back 10 years ago...their case is still in Chinese court.
All you China lovers can move there if you like, I'll stick to our environmental and labor laws here.
Playing "hard ball" on tech manufacturing creates a great number of other issues, many of which have been expounded on above. However, if we are going to get manufacturing jobs back in the US, then the attitudes of congress, state and local governments, corporations, workers and consumers must all be changed. Simply legislating it will not work because of the financial issues that would ultimately be imposed on the consumer (who would not be ready to pay that price). Corporations are normally going to attempt to get the most for their investment, so they are going to do what makes the most sense at the time. Ultimately that is what is driving the consumer, who rails at the "money hungry" corporations but then buys the cheapest product they can find without regard to how well it will hold up over time. In addition, the consumer shops at well known chain stores that carry few, if any, products made in the US because their customers will not buy them, thus adding to the "catch-22" situation.
The current situation has been a long time being created, and changing it will also take a long time as well as a concerted effort, coupled with a lot of re-education of government politicians, consumers, and corporations. No amount of political rhetoric is going to change it. It will take a lot of people working together and people on the right and on the left will need to learn to work together, actually listen (rather than provide lip service), and make compromises or we will continue to see more of the same deadlocks and little/no result legislative sessions.
It is true that U.S. consumers seeking the lowest price are culpable in all this. But remember, Steve Jobs said it was not the customer’s responsibility to know what they want. That was Apple's job, and the result was sleek design that consumers can't seem to resist. In the aftermath of Apple's historic quarterly earnings, it's been reported that Apple could have sold even more iPhone 4s during the holidays if they’d had the additional manufacturing capacity in China.
You are correct, Dave, that that solving our manufacturing jobs problem will require a herculean effort. Our intention was to highlight the issues, get engineers engaged and keep the issue at the forefront of the current presidential campaign. We need a substantive debate about how to revive U.S. manufacturing, we need to develop the necessary legislative and tax strategies, then implement them. Instead, we have a toxic presidential campaign characterized by personal attacks and "political reporting" better suited to ESPN. I would argue that the debate we are having here is far more substantive than anything I’ve seen on Fox or CNN.
There is some irony in having Steve Jobs' widow sit in on the president's state of the union address winessing Obama saying that "We will not go back to an economy weakened by outsourcing, bad debt, and phony financial profits." In its latest iEconomy series the NYT has another quote: "You can either manufacture in comfortable, worker-friendly factories, or you can reinvent the product every year, and make it better and faster and cheaper, which requires factories that seem harsh by American standards,” said a current Apple executive. “And right now, customers care more about a new iPhone than working conditions in China.”
We live in a world full of iconic ironies.
A few years ago, I had a chance to hire foreign labor(as a caregiver) to care for my ailing parent in Taiwan. I, not only had to pay the wage to the young lady from Indonesia, but also had to pay the the Labor Board of the Taiwan government a surcharge or fee for not hiring Taiwanese, every month. The fee goes to a special fund that promotes domestic employment, labor welfare, and foreign guest worker management,etc..
For those corporations outsource their production abroad, if they are required to pay surcharge on every headcount that is substituted, the slop of China-bound modern Exodus might not be that slippery.
I had also considered why the US does not go the auto-maker route of using robotics to bring back the REALLY high volume manufacturing, like mobile devices? I also got thinking that maybe it suites the rest of the world, at least for the moment, that China polutes itself rather than having to build those EPA unfriendly processes on home soil. Even when handled safely, there are some pretty nasty chemicals in electronics that need disposing of.
Exactly my thinking too. We've been reading about how China is considering increased of robotics, to replace the ever more expensive human labor. So as you say, it must be more cost-effective for US companies to use the still-cheap human labor in China, rather than keep manufacturing here with much greater use of automation.
To me, this is the typically short term thinking that corporate bean counters engage in. But in any event, even if US companies kept manufacturing at home with greater use of automation, we ain't going back to the huge number of manufacting jobs that the politicians like to trumpet.
People interested in manufacturing jobs of the future need to get educated and trained in the new skills that are needed for that (IT, computer techs, software, systems, algorithms), and not expect to make a life out of standing in a production line turning screws.
There are those Americans who say "so what?" if we don't bring manufacturing back to the U.S. I just had a debate with a non-engineer friend about this yesterday after the president's speech at Intel. My friend works in a service industry and he was quick to point out that 90% of Americans now work in service industries.
I questioned what kind of economy do we have if we don't actually MAKE things anymore, but his response was basically who cares, people in places like China already make almost everything we want or need, and maybe we are better off with an information-based and services-based economy. I think that's a dangerous dependency, but as so many here have said, there are no easy solutions.
I think the focus of this article is probably misplaced. It is not the low value jobs of Foxconn we need to be striving for. We shouldn't be asking how to create jobs for people snapping iPhone cases together for 10 hours a day.
Perhaps we should have an article that looks at this engineering/jobs issue in the perspective of Germany's continued manufacturing/export success.
I just watched a lively debate about the future of U.S. manufacturing on the "PBS Newshour". PJames's point was repeated several times during the debate: low-level assembly work isn't the answer, and robots can probably do this work almost as well with the help of plant managers. The question is how we can leverage the unmatched productivity of American workers to create new products and flexible manufacturing processes to compete and win in the global market. We encourage readers to watch for more coverage in the coming days on this and other issues like how we can fix the policy tools such as the R&D tax credit to spur innovation and risk taking along with tax credits for companies who invest in new manufacturing plants in the U.S. -- large, small and in between.
We are heartened by all the great comments and ideas readers have posted over the last several days. Many thanks.
Sorry to disagree George, but low level assembly jobs are how the poor get from the lower classes to the middle class. Without these menial jobs, what do we do with the masses of low skilled workers -- teach them robotics?
We need jobs at all skill levels and a way for people to earn their way out of poverty.
Finally, U.S & Washington D.C. are (somewhat) seriously having this discussion. As with Wall Street 2007 & 2008 ... someone's got to be The Adult here. GAME PLAN ??? To put this is the American Prespective ... The U.S. "game plan", "Trade Plan has been" - open market - No Game Plan !!! Other Countries (like an American Football team) HAVE A GAME PLAN !!! (Hello!!) ... LEVEL THE PLAYING FIELD unlike these crappy - one-way Trade U.S. Trade Policies that have been Given Away for 30years, etc. Make U.S. Trade Policies same as Individual Countries we are dealing with (or is that Unfair ???) GERMANY ... ever hear of the word - Apprentice ?? ... U.S. Companies - No Training for U.S. Applicants but The U.S. Individual is suppose to know 100% of how the company & JOB they are applying to - Works !!(with NO / ZERO Training) Of Course. But, if H1B's are invited over, guess who gets to Train ("help") them (out) ???
In a way, the problem is self correcting. If unemployment and lower wages persist in the US, fewer people will be able to afford the latest consumer electronics. Even members of the 1% don't need more than 1 or 2 iPhones.
It probably wouldn't take too much of an improvement of the economy to generate a workers shortage. At that time, on the job training will become the norm.
The short and simple story is what ever the amount you are dependent on others you will have to pay for it, what ever is the case. The world has become completely dependent on China for the manufacturing their devices/systems/machines. So they will have to pay China. The situation has raised upto a level if someone from the developed country wants to become self dependent in terms of assembling and manufacturing completely it will become out of competition.
Except for the pending, serious repercussions of lending huge sums of money to grossly inefficient EU members, Germany is doing very well on the high tech export front, thank you. That small country exports more annually than the US. Why? Because they have a coherent national trade policy.
Allowing corporations to play the (effectively) slave labor wage, zero environmental law arbitrage by exporting jobs to countries with 3rd world policies in those areas is a losing game for developed nations in the long run. A nation cannot forever import manufactured goods and export mostly paper money because it laid its labor bare to competition with countries that dump highly toxic substances into the air and rivers and treat their labor force as totalitarian governments are inclined to.
Reader Jeff Lawton writes:
Regarding the iPhone and its brethren, it's kind of interesting how all the investment
community wants to invest in high tech companies that make ASICs...so long as you redefine that acronym to mean "Apple-specific integrated circuits"! Maybe the new definition will kind of stick, what do you think?
“You could say, as many do, that shipping jobs overseas is no big deal because the high-value work—and much of the profits—remain in the US That may well be so. But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work—and masses of unemployed?”
... Andy Grove
In case "China Blue" has not already been mentioned here, it's a great PBS documentary on low cost labor in China focused on the clothing industry, but echoing the issues in electronics.
For the last quarter century Opinion makers, Academics & Lawmakers in the US have shilled for outsourcing to China because they were fed the scraps off the mega-billions that the Banks and MNCs made by shifting manufacturing to China. The consumers here too are at fault, because just like the Financiers and Management in Anglo - Zionist dominated economies, they too do not mind enjoying the fruits of Slave Labor. One hundred and fifty years after the Civil War, the US economy, when you scratch beneath the surface, still prefers Slave Labor. The debacle of WW II forced W. Europe and Japan to reform their evil ways. But since the English-speaking world apparently won the Cold War, there has been a recidivism of the same old Piracy in the name of Free market. Except that this time the "Lords of the Universe" have overplayed their hands by cosying up to Communist / neo-Imperialist China with its limitless supply of cheap and regimented labor.
What the "sages" of Cambridge (MA) and the buccaneers of Wall St. had failed to factor in was that China was almost the same size of the US and unlike much smaller Japan, it is armed with Nukes pointed across the Pacific and uses them to commit its own piracies ( IP theft being just a part of that ). Though finally the penny seems to have dropped, these worthies are still pushing their pro-outsourcing pabulum and sparing no effort to pull the wool over the public and get one of their "man" into the WH.
The now almost canonized Steve Jobs was no "saint" either. Underneath all his Zen Master pretensions, he too had the same slave-driving compulsions and authorized Cook ( who is from Alabama / Texas ) to shut down Apple’s factories in CA instead of automating them. Perhaps it is this hypocrisy that ultimately killed Jobs at 55 while his 80 year old biological Dad thrives in Sacramento.
And the $100 billion that Jobs made for near bankrupt Apple by rampant outsourcing, exploitation of slave labor and mass manipulation of consumers here could not ultimately save him.
Now it remains to be seen if the US itself can recover from the cancer of outsourcing to China or stop gorging on cheap consumer electronics. If we cannot purge the vestiges of Anglo - Zionist Capitalism ( or the more fundamental values that breed them ), and learn from Germany and even Canada the chances are bleak.
Hate picking on someone who can't defend themselves,but...Steve Jobs was my idol growing up for his early work (as he was for many around the world). Since his ouster from Apple, he turned into a greedy pig like the rest. He completely ripped off the Pixar founders and employees and took credit for their work. He should be recognized as a shrewd businessman, but a miserable human being and nothing more.
Without Jobs' mystique, Apple's true nature is revealed -- a greedy corporation that exploits slave labor and tries to unfairly crush any competition with it's ecosystem.
They could lead the resurgence of US manufacturing by bringing the plants back to America, but will they do it? I don't think so.
No American should buy an Apple product -- they are traitors.
That train left the station a long time ago for many reasons, most of them already articulated by previous commenters. We don't want to compete with low cost labor elsewhere. We need to continue to pursue the things that are difficult. That's our discriminator.
Unfortunately, we need screw turners in this economy if we are going to restore the middle class. There are menial entry level manufacturing jobs but they provide the base for the economy. They allow minimally skilled labor to be able to afford the goods and services that supports the rest of the economy. Not everyone can be an engineer -- nor should they try.
I'm not sure I would call those jobs middle class, though. Not anymore. Simply put, the consumer is not willing to pay "middle class" wages to humans working on production lines anymore. Barely making more than poverty level can't be considered "middle class."
Cheap labor is only one leg of a chair, the real essence of the problem is the Chinese government’s subsidizing of the entire process. Manufacturers in China get cheap power, cheap materials, and then sell finished goods for less than we can buy the raw materials here, until they have run everyone else out of the market. The iPhone is actually a poor example because so many of the components are made in other countries, where you see the real demon is in the solar panel and LED sectors where they have virtually and completely taken over.
I agree completely with the government subsidy conclusion.
My burning question is: how do we as a united community of high tech professionals (electrical/electronic/computer engineers) have our voice heard in Washington? Jobs may have said it once to the President at dinner, how do we as a community continue to beat the drum in an effective way?
We need to articulate a simple message: "We want American Manufacturing a National Priority".
We need to push for a tax policy that punishes the outsourcing of Manuacturing and Engineering by RAISING taxes across the board on all importers, and providing CREDIT to US manufacturers.
We can also start a campaign to boycott one company at a time that uses offshore manufacturing and sells the goods back to us. Start with APPLE and watch the rest fall in line when APPLE's sales plummet along with their share price. We need to make the source of goods a factor in purchasing along with price/quality etc.
The Chinese are still using cheap labor, though. So the question is, should we be pushing for more automated manufacturing here, as opposed to less automated manufacturing there? Is a highly automated factory here going to cost more for manufactiring products, than a factory in China that depends more heavily on cheap labor?
Having worked in industry for a long time, I'm wary of near-sighted management. Building modern factories is not cheap. It might be cheaper, in the near term these guys usually think in, to outsource manufacturing to China.
And yes, next you outsource design, then R&D.
The "cheap labor" is just the first step. Once the R&D and product development is outsourced, the guys you think are building your product for you cheaper will be coming into your markets with products that used to be yours and putting you out of business. I could care less about acres of folks screwing in a part or some other mindless function that could be done by a robot -- its the design functions that let the whole thing get away -- and our economic rivals know it.
They also know that we talk "support manufacturing", but will never follow through. Our present agenda will have zero real assistance for business, including manufacturing. Training by community colleges fine, assistance to a "low income" person to give them an advantage OK, Latino immigration for manufacturing, sure. But no real incentives to a manufacturing business that will give them an advantage over other businesses or government agencies in money.
The head of the President's Jobs Council just sent one of his oldest divisions to China -- yeah, we're serious about it.
Last Tuesday talk about manufacturing was just campaign rhetoric -- I hope I am proved wrong. (I develop, manufacture, and ship all over the world from the US, so I'll be the first to know.)
America has been seriously hurt by uncontrolled outsourcing to China. The people who advocated it, profited from it at the expense of the rest of the country need to be identified, isolated from any further decion making & the most eggregious among them need to be punished to set an example.
Good point. Germany's corporate law and taxation system are completely different from Anglo-Saxon countries. To start with, most German businesses are owned largely by German entities (German banks, German Government, and/or German private citizens). Second, labour law in Germany is based on co-determination which gives employees a greater say in the management of companies. Third, the tax system in Germany is more egalitarian. If you add all of the above, you can see how hard it is for German businesses to take decisions which will see the loss of thousands of German jobs to foreign labour. Instead, they look for ways to keep jobs locally, taking some short term financial losses at times, in return for longer term welfare and stability. Compare and contrast with Anglo-Saxon countries where a tiny minority of shareholders (institutional or otherwise) control the whole economy. Why should these folk care about the average American or British worker if they can double their profits by moving jobs abroad??
It's worth noting that the electronics industry has been offshoring relatively low skill level assembly work since at least the 1970's when Intel pioneered sending chip assembly and test to places such as Manila and Penang. More recently, Intel was one of the first to build a big A&T plant in Vietnam
Early in his career, Jobs tried to pioneer the concept of highly automated factories--Macs making Macs, with plants in the US and Singapore.
With its move to China dn Foxconn, Apple basically decided not to follow that path and go the way the rest of the electronics industry--led by Intel--had been moving for many years.
I am afraid it's the whole shareholder-driven corporate system and the skewed taxation system that is to blame here. No one can do anything about the loss of jobs and decline of Western living standards (not even the mighty US president!) unless radical changes to corporate law and taxation are made. The problem here is the vested interests! Are these global oligarchs going to accept such change that will see their influence and wealth wane? I doubt it.
This thread has seemed to have veered a little off course from high tech manufacturing offshore to unemployment in the US - a natural progression I supposed. But I posit that the US' biggest hurdle will soon be a historic labor shortage. I use as my exhibit current day Germany that enjoys an unemployment rate 2% less than the US even though its GDP lags. How can this be? One word - demographics. Unlike the allied powers, the axis powers did not experience a post war fertility surge but instead grew more or less linearly after WWII. The US has 23% (so called "baby boomers") of it's labor force speeding towards their "golden years" with the mean age of the 'boomers being 59.5 years. So even if 3/4 of the boomers cannot or choose not to retire at 65, that still leaves an employment deficit about 6% which theoretically means - barring a financial calamity - an unemployment rate below 3% (economists generally agree "full employment" is 4%). By the time we'd build-up facilities in the US, we couldn't find enough people to work in them!
Germany has its own Demographics problem, James. Its population is due to decline considerably in the next 20-30 years if they do not do anything about it (encouraging immigration is a quick way of doing it but difficult to sell politically). I think the US is in a better place, albeit not ideal, on that front ;-)
Germany and Japan both are seeing shrinking populations - I think Japan is actually worse off in this regard. But at least solving this problem can be fun - so in the parlance of current day slang you guys should "be gettin' biz-aay!"
Product for product, value for value trade is the norm. However, normal trade on the surface was transformed in the early 70s when the US went to a purely fiat based currency. This change allowed the US to globally trade manufactured Dollars and Dollar-based credit for the real manufactured products of other nations; instead of actual manufactured product for actual manufactured product as would normally be the case. On the surface the US had a new trade advantage. In reality, a destructive process was set in motion. Our trading partners began trading real manufactured product for our real manufacturing capability and jobs. Now, the trade is about complete.
Restoration of our manufacturing capability will only come about by restoration of an honest non-fiat based currency and non-fiat based credit system. This will restore honest trade and the honest trade requirement of having actual product in order to trade for actual product. This is the manufacturing initiative we really need. If we as a nation do not pursue this path on our own, our trading partners will eventually bring this change about. Our ability to provide jobs for trade will eventually run out.
As I mentioned several times in the past, the exodus starts with low-value manufacturing, then medium value manufacturing, then high-value manufacturing, then some designs, then, high-value designs, then some simple product development (basicallally adding simple changes to existing products, then next-gen product development, then to cutting-edge R&D. We are now in the last stages of this 'globalization'. This was the story with black&white tvs, now lcd/led tVs, and smart-phones..
There is no way to stop this under current "free market globalization". The only short term solution is government intervention and stimulus such as next-generation products such as smart energy, space programs, and the like,and even some heavy-handedness on managing R&D tax credit, giving it only to those that truly commit to to R&D in the US.
holy shit, all this nonsense conversation back again.
let me repeat it 1 more time.
the chinese way is efficiency, not cheap labor.
efficiency of energy, land etc.
chinese workers live in high rise apt, commute with bus/e bike.
the chinese apt made with concrete have better insulation, use less energy compared with a american wood one,
these are the foundation of chinese competency.
If you all over look this fact you will never grow.
..and Chinese govt gives $2M to any Chinese ex-pat who steals western technology and wants to start a business there. This is true -- ask your Chinese colleagues.
This not meant to offend our Chinese friends but to merely point out the extent to which the Chinese govt is involved in rigging "free trade"
I think the definition of "cheap" in relation to Chinese labor has fundamentally changed over the years. It used to be associated with "low quality" but I don't think many feel that way anymore. The current reference to "cheap labor" is in relation to the costs of the labor. And yes, efficiency is one method of decreasing costs, so I have to agree with you there. I think the largest differences are the costs of living (to the local standard) and the political, regulation, and economic systems, of which the differences are very great. And which contribute greatly to the costs of producing a product.
Germany and China have intelligent National industrial / trade policies, the US does not and keeps pretending it is still so big and powerful that the so - called free market private enterprise will be able to take care of it.
Those who make huge profit by outsourcing ( which generates China's trade surplus that they invest against US interests ) make sure that they keep this myth going within the US and they incite the gullible here by pushing various buttons even if those same folks have been hurt by such one - sided trade ( the so called Kansas effect ).
The outlines of a national manufacturing policy -- as contrasted with an "industrial policy" -- are beginning to emerge. The U.S. needs to make manufacturing a priority, and that means changes in tax policies and other incentives designed to encourage investment in the types of flexible manufacturing needed for small and medium-sized plants. Others in this thread have weighed in on whether the U.S. should seek to again build up its capacity to manufacture consumer electronics. Perhaps those days are gone. But the auto industry model remains relevant, and can serve as a template for a new manufacturing base with a "multiplier effect" that creates other supply chain and service jobs.
The US has never tangled with a country of the size of China. If anything, the xfer of US technology ( developed within the US at US public ( Govt. ) expense ) to China has only accelerated recently, championed by CEOs like GEs Immelt, who Obama picked for his job czar (??????? ).
All past assumptions as to who will come out ahead are invalid.
I'm all upside-down on this Kansas term. I thought that is was a negative on what happened to Kansas, but after researching the economic statistics Kansas has done markedly better than the US as a whole since 2004 with lower unemployment percentage, fewer foreclosures per capita and more stable housing values. I don't how the Kansas voter therefore voted against their own best interests, however.
What helped sell hybrids? What helped the German auto industry get kick started (in Germany). What helped GM turn thing around? Tax credits for the purchasers. This indirectly helps that manufacturer by making the product less expensive. No matter what we call it, ultimately it's a form of taxing foreign companies. The question is, is this the best (or some would argue, the only) way to get Americans to buy American. It worked for the German car industry very nicely.
Just as in physics, the laws of economics are not malleable - although with sufficient legerdemain they may appear that way to the population at large. Historically governments have poor track records in micromanaging the economy - but they are amazingly good at creating bubbles. Think the Community Reinvestment Act and the current housing market bust. In the final analysis a tax incentive to buy a car is just a stealth way of having your friends an neighbors pay for part of your new car purchase - and should the incentive be so irresistible that a significant portion of the public buys a car in a short period of time this guarantees layoffs in the future when the current and future demand for new cars is satiated.
Observations about economics are considerably less believable when they are postulated using political talking points off Fox News.
What about the micromanagement of the Japanese government pushing to become a leader in robotics, the South Korean government orchestrating taking over the flat panel industry, the Taiwanese supporting the growth of semiconductors, or the Chinese targeting labor intensive manufacturing? It certainly seems like government planning and active subsidies have worked in a lot of cases. Yes, I'm leaving out counter examples, in the fashion you did.
We largely live in a mercantile world. From military spending, to farm subsidies, to energy policy to domestic demand stimulation... governments around the world intervene to try to improve the competitiveness of their industry and strengthen their economic base.
The effectiveness and possible unintended consequences of those policies are certainly worth discussion, but not with political sound bites that ignore the huge complexities of our global marketplace.
BTW, when I think of the housing bust I think of a lot of things in addition to the CRA. Certainly there were a lot of other factors. The original CDOs that soured and started the spiral were not ones backed by government agencies. There were certainly tons of subprime which had nothing to do with the government agencies or the CRA. In fact the worst type of subprime, which were already in full swing, were not allowed under the CRA until after the rules were changed under the Bush administration. Before then much of the subprime lending business which had boomed used lending terms which were disallowed as being predatory under the CRA.
"What about the micromanagement of the Japanese government pushing to become a leader in robotics" Thanks for making my point. Who would have thought that the once mighty economic powerhouse of Japan is now near bankruptcy - in fact they are the 2nd MOST INDEBTED NATION IN THE WORLD (behind Zimbabwe) at 208% of GDP - they make the Greeks look like a bunch of feta eating Warren Buffetts. And not just according to FNC but https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html
Debt which is denominated in their own currency and owed largely to their own people... far less problematic than Greek debt or the debts of many countries throughout history that have created currency crises. This is born out by the fact that their borrowing costs are still low and that they often fight to keep their currency from rising rather than falling.
I'm sure if you look in the fact books, you'll also notice that Japan has a very high standard of living and one of the longest life spans of any country.
One of the biggest problems facing Japan is from a shrinking work force due to aging population and overly restrictive immigration.
If in your true assessment, Japan's economic policies have resulted in an outcome that is overall comparable to Zimbabwe, then you and I certainly have different views of economic success.
Seems to me that the "free marketers" in Silicon Valley who rail against government intrusion (unless they are arguing for reform of the H-1B visa program) forget that there would be no electronics industry without massive government support beginning in at least the 1950s and ramping up significantly during the space race in the 1960s. The same is true for chemicals and pharmaceuticals.
There's this part of the Constitution (Art 1. Sec 8) that scholars refer to as "enumerated powers". The cause of national defense is an enumerated power and therefore it is fitting that the Federal government fulfill its Constitutional mandate. As far as the space program both in the US and USSR were thin disguised military programs. The Mercury-Redstone and Titan II rockets were nothing but ICBMs with astronauts on top - a great analog for large MRVs being developed then. The genius of space program was that unlike the USSR, the American tax payer would sooner or later tire of footing the bill to keep up with the heavy lift platforms of the USSR's nuke program. The "man-in-space" concept thrilled the public and provided very much needed technology to our military. If it was all about "going where no man has gone before" don'
t you think we'd at least have a moonbase or manned Mars landing by now?
Debt is debt is debt regardless who owns it. In 2012 Japan is projected to pay 60.3% of its tax receipts just to service the debt. This is one reason for Japan's so-called "lost generation". By 2025 the debt service is projected to exceed 80% of tax receipts. With Japan running its first trade deficit in over three decades and an anemic global economy - Japan will be left with the Keynesian recourse of trying to hyper-inflate its way "out of debt" or go into default. My reference to Zimbabwe was factual in nature and I did not compare the two nations other than the ordinal ranking provided in my citation - your straw-man argument holds no sway here.
Well, I tend to believe in free markets more than cliche. The markets certainly are treating Japan's debt differently due in large part to the two factors I mentioned.
Lots of things can be factual and still absurd within the context in which they stated.
Well, if by "treating differently" you mean "trashing", why then yes, I agree with you. In the case of Japan being treated differently has meant losing 20% of its currency value in 24 months. citation: http://finance.yahoo.com/echarts?s=USDEUR=X#chart1:symbol=usdeur=x;range=2y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
That chart has more to do with investors flocking away from the Euro into Yen and then Japanese govt intervention to stop the Yen from climbing.
Forex markets don't always make sense in pure GDP/debt comparisons.
The fundamental problem is that manufacturing is being automated the way farming was. In 1900, perhaps 50% of the jobs were in agriculture. Today it is less than 4%, and less than 2% that actually deal with the crops in the ground. Why? Automation in the form of farm machinery, such as the tractor and the combine.
In 1950, 39% of the jobs were in manufacturing. Today, less than 9% are in manufacturing, and the percentage is falling. Why? Automation in the form of automated manufacturing, robotics and the computer. The computer alone eliminated most of the jobs in the center of the management pyramid.
Outsourcing is a temporary solution. Automation will continue, and eventually all traditional, high volume manufacturing jobs will be done by machine, everywhere.
Solution? There are still jobs associated with agriculture: packaging, selling and distributing food. A "service" industry. Likewise, there are still jobs associated with product creation, packaging and distribution of manufactured goods. Both of these are centered on locality of customers. Because it takes customers who want something to make a business. Machines want nothing.
Another approach is to view manufacturing from the point of view of customer service. Locality and local desires will drive things. It is hard to outsource a McDonalds to China. Nobody will wait that long to get a Big Mac for lunch. And think about it: Big Macs are manufactured. They go through a modification process (cooking) and an assembly process in the McDonalds "plant".
If your customers want product performance and/or quality and/or product support service and/or local features that are impractical to outsource to another time zone, you need to set up an McDonalds-like manufacturing plant. Some parts of it will be sub-contracted (Oops, outsourced), such as making the buns, but the final product will be finished and assembled at the local plant.
This was published in Thursday's NY Times:
It contains the following assertion:
"...few economists now consider manufacturing a potent engine for job growth in the United States."
Hey George, why would this be surprising? A LOT of people have been saying this, including on this very thread, including Dave Wyland in the post immediately above yours here.
Politicians function on hype and slogans. Their motivation is to get votes in the next election. And people are concerned about jobs. So it stands to reason that politicians will come up with whatever gimmick they can to get those votes. It doesn't have to be right. It just has to work for the next few months, that's all.
China is moving to increased automation in their manufacturing sites too. The manual labor involved in manufacturing will decrease everywhere. That's the only way to keep on with steady productivity growth.
All interesting and relevant comments BUT:
Engineers alone can't solve the problem - or even, it seems, agree on the causes and cures. And as long as western law makes it the single duty of corporations to maximise returns to their stockholders, all of their decisions must in the end be based on that purpose - even if their boards consist entirely of public spirited citizens. I don't want to start an argument abut what other forms of business organisation might be created; I simply point out that this law and its inevitable consequences have been created and sustained by governments of all persuasions in all western countries over an extended period. I want to say a bit more, so I'll add a second comment.
The people of all classes and abilities who make up a society are interdependent. We cannot address our problems in isolation. But the sort of people who get elected to government want to RULE, not govern, whatever their party. So they spend all of their energy in passing restrictive laws on every conceivable subject - and some unconceivable ones too. And they love to create ever more agencies on which to squander ever more taxes. Being held responsible for creating a society in which providing useful, fairly paid employment opportunities for people of all abilities is the outstanding priority of government AND management (and I don't mean government service non-jobs) is way beyond their imagination or wishes. If the law made companies primarily responsible for keeping their employees in employment and government kept its spending, and therefore taxes, at a bare minimum, we would see a far better world. As long as we keep on electing the same useless characters, the party politicians, we will continue the slide into obscurity. Party politicians will tell you that voting for independents will lead to disagreement and failure to continually pass laws. Well provided we have a sunset clause on all of the ones we have and any that they create maybe they'd have to stop ruling and begin to learn to govern. And we could have our lives back.
Flush With Cash, Apple Plans Buyback and Dividend
Buying back stock, paying a dividend, but nothing about investing in U.S. manufacturing.
Is anyone surprised?
Surprised, no. Pleased, yes. As a partial owner of the company I am glad they are not wasting the money.
Also, I really don't think Apple products are the type of manufacturing we should be going after. Screwing and snapping an iPhone together is not high value add sort of work. It is unskilled labor. We have plenty of unskilled jobs that attract immigrant workers precisely because they are not jobs Americans want.
The focus here needs to be on education and having a highly skilled workforce. That will attract high value jobs.
For those of you following this thread, I highly recommend this analysis of U.S. manufacturing productivity statistics. It is an article of faith among most economists that manufacturing efficiencies over the last two decades have contributed to steadily growing U.S. manufacturing output. But now some experts are challenging that view, saying computer and electronics manufacturing inflated that overall numbers and that U.S. manufacturing statistics fail to take globalization, e.g., the offshoring of manufacturing, into account.
The link below will take you to this excellent analysis:
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