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.
Virtually every great advancement in history has had some sort of governmental backing.
If the banks can't see their way to help and are more interested in distributing the monies as bonuses to their top echelon then the government has to step in as the bank of last resort.
And it's awfully obvious that the great successes at Chrysler and GM have quickly benefitted from "gonvernment interference".
Jefferson used governmental power to secure some great advances.
The firking accountant president (beancounter) of Chrysler the first time around did not know what he was doing and ran it into the ground. So in came Iacocca who turned it around with Governmental assistance.
Lutz is right about Iacocca establishing confidence in the public domain. Sergio is doing it where the German's from Mercedes couldn't.
It's crap that we are being regulated to death. And it is true that foreign kids do get preferential treatment and then turn against us in a most condescending and demeaning way.
The great American Standards that technological groups have come up with are distributing themselves world wide and I am not talking about toilets.
Ever ride a Mitsubishi elevator? Nice acceleration curve. They took it farther.
How about the Washers and Dryers at Best Buy? LG and Samsung, stuff developed here but vastly improved over there because the top execs here were fat and sassy and remain so.
Lots of places to take potshots at, not just the government.
And excellence here means work here. Anybody want work here?
Tim, I have seen the same exported factory machinery in China and other parts of Asia. In Indonesia, which touts itself as a lower cost alternative to China (imagine that!), nearly all the managers were ex-pats, mostly Americans.
We have spoken with U.S.-based companies like pc-board makers who say they have brought work back from Asia for the reasons jmiller has cited. Lower manufacturing costs in Asia were outweighed by low quality, logistics issues and communications problems. I'm guessing more of this type of mid-level, -volume manufacturing will come back from Asia.
I would take issue with the assertion that elimination of the tax on overseas profits would result in greater investment in the U.S. Many multinational companies are sitting on piles of cash now and have shown no inclination to invest in workers, infrastructure or innovative products. Moreover, many benefit from the U.S. R&D tax credit, but you'd be hard pressed to find a single innovation since this "tax incentive" was created in 1981.
Thanks to all who weighed in on this thread about the vital issue of reviving U.S. manufacturing.
On the issue of what we do to compete with the likes of Foxconn, we certainly can't replicate its model, nor would we want. We can fix our manufacturing problems while at the same time preserving the dignity of work. I believe we need to rebuild a flexible manufacturing base that can be quickly scaled up in order to compete with Asian manufacturers. The we leverage our unmatched worker productivity.
I'll next puruse other reader comments and respond where I can.
I agree with a lot of what everyone here has to say. It is important that we do reverse unemployment and get jobs back for many Americans. The task though is no longer bringing back jobs to America, the way we have structured the global marketplace today could simply not support it. Instead we must create new jobs to support and give structure to the jobs we have moved oversees. Yes, bringing back jobs would result in a few more Americans getting back jobs, but if we can build a stronger support network for the future, we will have created a strong enough infrastruture if or when jobs are to come back to America.
By the way, it is amazing the way everyone discusses things here unlike yahoo and other ridiculous sites that simply post racist, religious, and outrageous things that are most likely due to a lack of education.
@Dave, Yeah, I agree with your accessment of doing business in China although I bet the Chinese pave the way for companies like Foxcon. It's no doubt a nightmare for little startups.
My point was that it's also harder for small startups here. And unlike very large companies, small startups in the US would not even THINK of locating in China. So which should we be doing more to encourage?
If you've weighed in here, please take our Quick Poll on "Should the government support the return of manufacturing jobs to the US?" It's on the lower right side of the Design News home page. Results so far are here. The answer options are:
a) Yes, by funding research, education, and tax credits
b) Yes, in principle, but without spending taxpayer money
c) No, the government shouldn't pick winners and losers
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