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.
While it is disturbing to see Asian manufacturing take what used to be American jobs, manufacturing is still strong in North America. It's only been a couple years since China pulled ahead of the United States in manufacturing volume, and China's manufacturing is primarily high-volume consumer products. North America is still the leader in complex, high-cost manufacturing -- medical, military, etc.
There's an idea that reducing corporate taxes will increase corporate profits, and that increased profits will result in job creation. The problem with this is that -- as the article points out -- companies are under no obligation to create jobs in the U.S. They can invest their profits anywhere they want. And their allegiance is to their shareholders, not to the U.S. public. Reducing taxes may result in job creation, but there is no guarantee that the jobs will be here.
In fact, as long as China has a massive population of internal migrants from the countryside who are willing to work under poor conditions for little money, there's a good chance that the jobs won't be here. Why should the U.S. forgo tax revenue -- which could be used to finance research and development, education, and infrastructure projects in our own country, not to mention to pay down our massive debt -- simply so that companies can create additional low-paying jobs in other countries? This may be in the interest of these companies' shareholders, but it is clearly not in the long-term interest of the U.S.
As to the idea that regulation is what's keeping companies from creating jobs in the U.S., there ought to be some congnitive dissonance here. If companies are supposedly staying out of the U.S. because of excessive regulation, what on earth are they doing in China -- which is, after all, a socialist country?
China has all kinds of laws and regulations affecting foreign investments. On the World Bank's list of 183 countries for ease of doing business, China ranks 91st. For comparison, the United States is number four (behind Singapore, Hong Kong, and New Zealand). Foreign companies don't go to China because of the business environment, but in spite of it. They are willing to put up with the many restrictions which the Chinese government places on them in exchange for access to cheap labor and a rapidly developing economy.
Companies are in business to make money, not to promote the general welfare. If you recall your U.S. history, that's what we formed a government for. Unquestionably, private enterprise excels at creating economic growth. Government has an important role to play in making sure that growth translates into prosperity.
Jon has identified the problem in spades. I live in Pennsylvania which is gifted with unnamed tons of iron oxide. --Not the iron oxide ore that you mine to create steel, but the iron oxide that was once steel and has now been reclaimed by the environment. Billy Joel laments Allentown, my wife recalls the teaming mills of Pittsburgh, and my family and I now enjoy bike rides as a benefit of our Rails to Trails program which permits us to pedal past scores of abandoned manufacturing campuses around Valley Forge -- the same railroad beds that previously transported the products of enterprising american workers.
Let us academics argue over how to get all of the toothpaste back in the tube. Manufacturing is gone. Corporate taxes, Environmental Regulations, Arbitration, Pension Obligations, Healthcare, Political Contributions, Multilingual Signage...these are the only structures that remain after manufacturing has departed. Pouring more money into STEM to produce more scientists and engineers would only serve to feed the structures I listed above. I'm all for raising domesticated livestock for food, but as an educator, I'm not for educating humans so they can be consumed by the Federal Behemoth.
Something very magic happened in 1776 after legions of free thinkers escaped the onerous regulations of old Europe for the New World. The Founders were mortally afraid of handing too much power over to an all-knowing Federal Government. And now, some 235 years later, we spend our energy arguing over where to focus the powers of the Federal Government to best solve the problem. In the present crisis, government is not the solution to our problem; government is the problem.
US manufacturing does benefit from cheap labor in that some European companies source product here in the US to avoid high labor costs and stiff organized labor rules in Europe. Granted the copanies are not US based, but the jobs are here.
Alexander, per my previous reply on battery power in respect to overland energy distribution and grid replenishment I should like to point out the sepecifics of public misconception and deliberate misinformation.
First as I previously stated the grid system itself is out dated and needs to be redisigned using new methods of modular fullment to reduce cost, improve relability and safety, eliminate high lines and reudce maintenance. Current build methodology will not hold up in bad iceing, floods, hurricanes, fires, or wars. In fact I question why the grid even exists other than thats how Mr. Westinghouse designed the first overland, overhead, distribution system out of Niagra Falls to distribut Mr. N. Tesla's multi-phase power. Markets exploaded and on going invention became suppressed or couldn't raise capital. Go see the orilional success it is still working.
Jumping to 2012, we are still using cross country distribution (thank God without Edison's and Wall Streets perfered DC telegraph method and designs) but, really havent moved forward. Why? We have stand-alone generation capability and know how to use it, or do we? Or are we reluctant to explore the true value of new technology fearing the selfish control methods applied by the J. P. Morgan's of the world and the fossil fuel community?
Truth-the fumes kill us but we need transportation and are willing to pay the up charge for exhaust converters, the fracing destroys our water supply but continues even as do the earth quakes it causes, yet we need to grow food. So grid loads continue to rise worldwide, but clean energy generation has been surpressed for??? shall I count the ways...
I believe a NEED prerequisit such as on a ship at sea is not there. Nor do we understand the alternates available to us. Thoes such as ZERO, COLD, FREE, FUSION or E-Cat technologies. And, why don't we undestand or use such technologies? Technologies that have been known and hidden away from the public for at least a century and are here NOW. These eneryg systems are safe, make NO polution, are very buildable, genrate limitless power, are afordable and provide the keys to safe tranmutation of spent fision fuel.
It is my contention that the R&D, Engineering, Scientific and ALL OTHER INTERESTED PARTIES should demand, world wide, patent restructuring and government coperation to make this happen! IF this happens we may truly look forward to a renaissance of new discovery and invention.
Should this happen it would require considerable reguatory changes but, the patent office MUST CHANGE FIRST. In reality, the U.S. Patent office at this time, in the history of the USA, to be seen by the public detramental to our common competive worldwide well being as a nation. Should this change; the virtues of free enterprise will again prosper and invigorate the populations of our planet.
I agree its probably unlikely that those jobs are coming back. Which is unfortunate because nearly every experience I have had with cheap labor, whether in Mexico or China has resulted in lower quality. Whether it be tools with the part numbers in backwords or having to nearly rebuild the entire tool when it gets back to the states. In the endm the cheap labor and quality that corresponds to it, is not worth it. There;'s something to be said for a worker that can read, think and alert you to a quality problem. And you can only find that in the United States. Too bad we won't build more stuff here.
I think you hit the nail on the head when you mention American innovation. That is something that I have just not seen from China, Mexico or India. They might be able to put the same screw in a machine a thousand times a day. But to come up with something out of the box just doesn't happen. But I still struggle with the idea that we have to train all of our children to obtain those skills. In some cases we have children that would make very good dirch diggers. And if ditch digging is what you're good at. I hope they will be able to find a job doing that so they can be happy. Rather than being forced to go into a profession that they will not be happy at because that's the job they can find here in America.
There is a funny thing with the Chinese mold shops. I have toured multiple tool shops in China. Not one of the shops had any metal working machinery from China. They have some of the world's best equipment,and all of it was made in either the US or in Europe. The operators running the equipment were all trained internally, so the skill was only as good as the best instructor available.
Lets trust our American instincts and evaluate our work ethics when thinking about why we don't want to work 12 hour shifts and live in a dormitory-style housing, ala, FOXCONN.Remember, FOXCONN was forced to put up jump-nets around the dormitory perimeters to catch all the suicidal jumpers off the rooftops.
Meanwhile, just about every design engineer I know DOES work 10-12 hours fairly regularly, and always to the unhappiness of their spouse. It s the nature of our development work coupled with the nature of the design engineer.We put in the long hours when we are fascinated with our work, as opposed to being driven by an oppressive force.Think of the carrot vs. the stick mentality.
This is a great essay but the Titile is a day late and a dollar short.
Obama, the only one speaking on this issue with any precision is speaking correctly and this underscores his efforts on our behalf.
Nixon opened the door to china and Boeing and containerships have brutalized us along with the penchant of buying imported cars, thinking that they are superior.
It's really Congress that has sought to undermine and destroy our country through all sorts of absurdities and ghastly statements.
That Mitt Romney would have said let GM and Chrysler go under is mind boggling. A friend commented yesterday that 30% of Ameica is actually either stupid, in denial, or insane.
We had better start taking care of ourselves or it's game over, we will become a 3rd World Country.
And the irony is that the basic research was done here. I believe that it was the University of Cincinatti where much of the research was done on LCD displays yet it was Samsung in Korea that became the major force in that technology as well as giving Whirlpool a huge jolt at Best Buy.
Steve said it in his Biography... it's the Product that counts.
Now Bob Lutz has come up with something new and we shall see how that pans out.
We must think of Home first and cut this crap about foreign entanglements.
UK-based Plastic Logic and French company ISORG have created what the pair tout as a first in flexible printed electronics: a large area, conformable, organic image sensor printed on plastic.
For 3D printing to make the jump from rapid prototyping to manufacturing, engineers will need to find easier ways to move products from their CAD screens to their printers.
Gigabit and PoE are two networking technologies moving ahead in tandem as industrial users power remote Ethernet devices such as IP security cameras at 1,000 Mbps over existing CAT5 cable.
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