Little of this is news, but placed in context, it helps to explain the collapse of US manufacturing of high-margin consumer electronics products. The president wants to bring at least some of those manufacturing jobs back to the US. Aside from a few thousand jobs in Austin, Tex., where Samsung makes the A5 processor, at the heart of the iPhone 4S and iPad 2, that isn’t going to happen.
So where do we go from here? The outlook for US manufacturing and the high-paying jobs it once provided is, frankly, grim. There is no new engine of economic growth on the horizon. Globalization has provided US corporations with ample political cover to lay off engineers and other skilled workers, pull up stakes, and move their operations to Asia.
Few would argue that Apple or any other US company has a responsibility to hire American workers if they can assemble products for less overseas. But these same technology companies continue to plead for “reform” of the US visa programs so they can hire more foreign engineers, and “tax holidays” so they can bring back profits from overseas operations. Would those profits be invested in US manufacturing facilities? It’s unlikely, given the fact that many of these same technology companies are already sitting on piles of cash and have shown no interest in hiring more engineers.
There is one government incentive that does make sense: a revised version of the US R&D tax credit. A recent National Science Foundation survey warns that US multinational corporations that have steadily outsourced manufacturing and design jobs are now outsourcing R&D. According to the annual NSF survey of science and engineering employment, US companies nearly doubled overseas R&D employment between 2004 and 2009.
If that trend holds, and US R&D is outsourced, the game is over.
In return for a long-sought permanent extension of the US R&D tax credit, a standard tech industry demand, those highly profitable companies should then be required to invest in US manufacturing, design, and R&D facilities.