President Obama highlighted the connections among manufacturing, job creation, and innovation in his State of the Union address. Blogger George Leopold notes that the president wants to bring lost manufacturing jobs back to the US, but argues that both he and Congress have been timid on the issue and that it's time to play hardball in global markets. Read his piece and then tell us what you think in the comments section below.
The titans of Silicon Valley have made it perfectly clear that all those manufacturing jobs shipped to Asia aren’t coming back. That’s precisely what Apple’s Steve Jobs told President Obama during a dinner in California last year before his death, according to a sobering account published by The New York Times, "How the U.S. Lost Out on iPhone Work."
President Obama called for regulatory and tax-relief support for innovation and research in his Jan. 24 State of the Union Address. (Official White House photo by Pete Souza.)
The reason those jobs manufacturing consumer devices are gone for good, the NYT reports, is that the US manufacturing base has failed to evolve; the Asian supply chain for electronics is superior to ours; and American workers are unwilling to pull 12-hour shifts and live in company dorms.
That, of course, is a reference to China’s manufacturing behemoth, Foxconn, assembler of the iPhone and many other consumer electronic products. Foxconn is Exhibit A in the debate about the decline of US manufacturing. As the NYT reports, nothing like it exists in the US. (That’s a good thing, Apple’s critics say, since many regard the 230,000 Chinese workers at “Foxconn City” as nothing less than slave laborers working for less than $17 a day.)
“The scale [of Foxconn City] is unimaginable,” one Apple executive told the paper.
Apple and other consumer electronics companies argue that they simply have no choice but to outsource manufacturing of their products to companies like Foxconn. While the article buys Apple’s line that making the iPhone in China is not about the cheap labor, it is a fact that Foxconn can build a new plant (with the help of the Chinese state) and hire thousands of workers at the drop of a hat.
Hence, Apple’s central arguments for assembling the iPhone in China: Asian factories can scale up and down faster while the Asian supply chain -- for funneling all the components that go into an iPhone, like the fancy glass display -- has left the US distribution network in the dust. If Apple needs a glass-cutting factory for iPhone displays, Foxconn will build it. Thousands of rubber gaskets? The factory is next door. A million screws? That factory is a block away.
Yes, why did so many manufacturers move their production to China? I've talked with component distributors who helped their manufacturing customers shift to China. While it's hard to believe, they insist many of these manufacturers did not gain from the move. The distributor executives said it was a follow-the-crowd mentality that sent so much U.S. manufacturing overseas.
I hope that as companies move back American manufacturers understand what drove jobs overseas in the first place. The only thing that stinks more than making one mistake is not learning from it and making the mistake again.
In the case of manufacturing, it will be interesting to see if unions are part of the plan when jobs come back to the U.S. Or will manufacturers take such good care of their employees that unions won't really be necessary.
I hope that as companies move back American manufacturers understand what drove jobs overseas in the first place. The only thing that stinks more than making one mistake is not learning from it and making the mistake again.
In the case of manufacturing, it will be interesting to see if unions are part of the plan when jobs come back to the U.S. Or will manufacturers take such good care of their employees that unions won't really be necessary.
@Jmiller, The United States actually is becoming competitive again, due to a number of factors. Asian labor is becoming more expensive, U.S. plants are becoming efficient, and energy costs are increasing the price of shipping. Thus there is the beginning of a trend to manufacture goods close to their markets.
I disagree that the U.S cannot compete on the mass production platforms. The only thing worse than a low labor cost production line making one mistake is one that makes thousands of the same mistake a day because they do not have the knowledge to correct the issue. I really do believe American pride in workmanship can compete. Now what I don't know is if there is a CEO with the guts to try it.
Yes, George, I've been hearing from both manufacturers (TI for one) and component distributors (who know where their customers are moving) that there's a flow of manufacturers moving from Asia. There are a number of reasons -- for one, rising costs. The nascent trend is toward putting manufacturing near the market.
The US can't compete on a cheap mass production basis. I think we should instead be concentrating on high tech, unique products that can't be manufactured cheaper elsewhere. Also, we should be emphasising our attributes, precision manufacturing, instant feedback, short lead times and the creation of jobs in the US.
naperlouRE: These jobs can come back in an instant. Becuase they are contract jobs.....
The TV news in San Antonio yesterday reported that Caterpillar, who just recently built a plant in Seguine TX, is being investigated for UNDER minimun wage pay to (employees?). This problem continues to skew the numbers especially along our southern border with Mexico. One wonders if the "drug war" (sic) is not raelly the only thing in the comerce numbers we see that need to reassesed at this point in time.
That's the bottom line, George: Building out, in the U.S., a flexible manufacturing base. I believe that many mid- and high-level managers at major manufacturing companies want to do this and know it needs to be done to remain competitive. It's also the case that many of these companies are sitting on piles of cash. It's Wall Street's contraints which are keeping them from investing this money on planting infrastructure in the U.S.-- there's no return during the quarter in which the money is spent.
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