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.
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.
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.
And I think final product manufacturers drove companies overseas because of all of their initiatives to purchase companents from "low cost" countries. I wish they would have included the "low qualiy" part in that country's label. But the didn't and so many companies have gone overseas getting components that do not meet the quality requirements that we have grown accustomed to. Rather frustrating.
You know the odd thing, Jmiller, is that many of the manufacturers were still buying their components from the same suppliers they used when their manufacturing was done in North America. The major component suppliers shipped product to Asia and managed inventory on site. There wasn't much of a shift to local components. That had to eat into profits, shipping components to Asia, then shipping finished product back, just for the cheap labor.
A great deal of the problem is a blind rush to the bottom by the greedy who are only chasing short-term profits. This does not mean we should only build unique luxury devces, it means we should put quality into our product and its sales will support the manufacturing effort. Look at Bic lighters, for example. Best almost-free product around, #1 lighter worldwide. I can buy one for a buck anywhere, and they are made in factories in France and the USA.
Another flaw in short-sighted rushing to the lowest common denominator is in tech investment. If you are ever around Dr. James Truchard of NI, ask him how much pressure he had to overcome from money people when he was devloping LabView, an industry-leading product that would have never existed had money people made the decisions about its development. That product is also made in the USA, BTW. There are many other examples, but I think you get my point.
You make a good point about the eye on short-term profits and the pressure NI felt while working on a long-term project. For public companies, the pressure is on quarterly performance. And if a CEO and CFO do not focus on the short term, they get threatened with removal.
Gorski, what do you call the iPhone? Is it not high tech, unique?? The real money in any endeavour is volume. That's why sports stars, movie personalities and large manufacturers make lots of money.
One of my uncles has a factory in New England. He had a product he had designed himself. When that whole category went out of favor he went to contract machining with a couple of CNC machines. It kept him afloat. I will bet, though, that I made more working for large company selling software. When he found an overseas market for his orignal product tough, he started that back up. What we need to do is to recapture the market for high capacity manufacturing.
Yes, similar products are available and cheaper from off-shore. But, when a customer is 'educated' about the differences between import quality and domestic, we are able to make a nice profit while operating a safe, environmentally responsible manufacturing plant. AND, our workers enjoy good wages, including retirement and health-care benefits. As the old adage goes, sell on price, and the customer is yours only until the next low price; sell on quality, and you have a customer for life!
It is the lack of quality that is bringing at least some production back to the U.S. But the biggest opportunity for U.S. manufacturers seems to be in ramping up to higher volume production where they can compete in terms of flexibility and higher quality. Still, the cost of pulling up stakes in Asia may be prohibitively high or simply impractical for many.
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