Looks like most of the Linkedin discussion tended against government support for manufacturing. The rush to overseas manufacturing seems to have slowed in recent years for a number of reasons -- rising labor and shipping costs as well as production and supply difficulties. There's also a recent trend toward keeping manufacturing closer to the end consumer. High volume, low mix products, however, will probably continue to go to the cheap-labor markets. Not much would stop that.
Alex, I am really enjoying the free course in Game Theory currently being offered by Stanford. Their initial overview describes the optimization of behavior of both Predator and Prey in the standard Predator/Prey model. In all cases, both Predator and Prey benefit from being active -- moving around, looking for opportunities and avoiding pitfalls. In all cases being inactive and staying put gets a low score. Recall the advice given to wilderness trekkers in the event they get lost -- stay put and the rescuers will find you. When the search party is a Predator, that is precisely the wrong advice.
Government involvement in technology can benefit Exploration in the form of No-Strings-Attached Grants: Gifts to enable innovators to move around Steven Johnson's "adjacent possible" and explore. All other forms of Government involvement, such as loans, tax-credits, and especially regulations, have the effect of controlling behavior and restricting "movement" within the arena of ideas. Regulations are particularly onerous, as they force both Predator and Prey to stay put. In the model of free-market capitalism, that simply means both Predator and Prey are now susceptible to attack from more agile Predators -- a role presently filled by overseas competition.
Bill, a very cogent explanation of the process in play here. Games theory offers a great way to analyze these things. As you indicate, the predators are roaming free. The thing of which I dispair is that, regardless of your opinions on regulation, the "prey," as represented by our legislators, are unlikely to ever to anything to address the intrinsics of the problem. At times they will pass laws and regulations, but they'll be disconnected from other laws -- i.e., no coherent overall strategy -- and they'll often be introduced/passed more for show than for any effect.
Alex: I believe our country gets long-term benefits from, as you've described it here, funding of research, science, technology, engineering and mathematics. I get worried, though, when our government officials start picking winners in private industry. As Jon Titus points out, their track record with Solyndra and Ener1 would suggest that they're not particularly well-qualified to be doing that.
Right now, the prime predator is China. Flooding the U.S. with inferior goods. Especially in machine tools. Features are often so inferior, they cannot be considered "agile manufacturing". Deliberate attempt to cripple U.S. industry at all levels. From home workshop to the biggest corporations. Management of U.S. companies dealing with China do not seem to see the inferiority of the Chinese tools or just don't care. Not useful to those in business or those at home trying keep things running. Some protection from bad Chinese products and underselling of U.S. business is in order.
Yes, we have to keep options the open. Free or open market is a good for all sort of business, especially in an economic slowdown time. This may help the companies to make use of maximum benefits and hence in turn a superior quality product at an affordable price.
Patrick Dixon has it right. The government should protect our rights and property. In so doing this, the present government needs be a better watchdog by keeping the politcal and financial playing fields more level. The rest should work itself out.
I agree, ChasChas, but keeping the playing field level when we're competing with countries that receive heavy assistance from their governments. There is now way a democratic system like our would ever be able to match the government involvement of non-democratic countries such as China. So the playing field in many ways will never be level.
Rob, I respectfully disagree. The playing field can be leveled, or at least close to by having the non-technical goverrnment politicians get the heck out of the way of american manufacturing. I live in California where the effect of too much government is obvious. People and manufacturing simply move away. The federal government needs to get a clue from this. Interfere too much and ANY company will go off-shore. Monitor an industry but don't interfere and production will return. I have personally seen a repetitive job leave a manufacturer I was working at durring the 1970's. It went to Singapore. That same manufacturer brought the job back to the US to have a more responsive manufacturer and make less scrap! Now it is likely that the return would not happen because of stifling goverment regs. Bill J
BillFZ1, I wasn't thinking in terms of government regulation so mush as government support for business. But you have a good point. Certainly China does not face nearly the same level of regulation as we see in North America and Europe.
@Rob: Actually, there is tremendously more bureaucracy and regulation in China than there is in Europe or North America. In spite of the reforms of the past couple of decades, it's still a socialist country with a centrally planned economy. China ranks far lower on the World Bank's ease of doing business index than the United States, Canada, Mexico, or any European country except Greece. Companies don't move to China because of the ease of doing business; they move there because of low wages.
Good points, Dave. What I was talking about is the lack of restraints on manufacturing, particularly indigenous manufacturing. While there are environmental regulations on manufacturing, they are not enforced. There is also very little enforcement of IP regulations. Those two areas alone give China an advantage we can't match.
As someone who has both benefited and suffered from Chinese outsourcing, I have mixed feelings about the subject of government intervention.
First, I do agree that the playing field is not level between China and the US and overall these rule differences allow significant advantages for them. In addition to more relaxed EPA and IP regulations, they also have different safety, healthcare, etc. requirements for their workers. Some American factories have tried to respond to this challenge by using better Design for Manufacturing techniques into their products and by designing their products to be assembled using more robotic automation (to reduce costly direct labor times), but sometimes this disparity is still too great.
Second, I do agree that certain commodity products that are not strategic to our country's best interests need to go to China. However, the problem was how RAPIDLY this was done. When entire market segments moved to China too quickly, the sheer number of American workers that were displaced and unemployed was not healthy for our economy. In hindsight, I believe that our government should have slowed down this inevitable displacement so that the typical American manufacturing worker had more time to retrain and re-educate themselves for the new workplace.
Finally, in many cases that I have been involved with, the hidden and unintended costs and risks of going to China were not properly and accurately factored into the cost-decision model by the CFO's and Accountants and in actuality, going to China was not that cost-effective to begin with. In other words, by the time you factor in cost of higher defect rates, higher freight costs to overnight parts to keep the line going, hiring an additional Q/A inspector both state-side and abroad, and losing 30% of customer base due to perceived quality issues, the real cost savings (or losses) are not the same as the original calculations. I have seen products go out and then come back because of this. I think the company decision-makers need to carefully calculate ALL costs before deciding to go off-shore.
On the other hand, I've been involved with outsourcing programs which were a great fit and became a win for everyone, so under the right circumstances it works well. In closing, make sure all factors - different rules, unintended consequences, etc. - are considered when making decisions in this area.
You know, on your second point, Greg, it is surprising there wasn't more of a shock to the economy during those years. We had our dot com crash and we have the financial meltdown, but the rush to China manufacturing did not have a noticiable affect on our economy.
As for an unlevel playing field, while it doesn't feel right, it's something we're accustomed to. We experienced the same thing with many, many trading partners before China. There are not many trading partner we have that don't receive government supports for business that are far greater than anything we're willing to do to support our own industry.
I have no mixed feelings about government getting involved in manufacturing. What's next? Perhaps a Department of Manufactuting with billions and billions of dollars in their budget increasing each year, with thousands and thousands of bureaucrats who have never manufactured telling companies what to do, what to produce, how to do it their way, and myriads of other hassles we can't even dream of.
No, keep the government out of my business, my home and my life as much as possible. I know how to run my life and my business and I don't need the feds to help me out. Name one thing the federal government is good at besides killing people?
It's possible Rob meant something different by regulation--Rob?--but I have to agree with Dave on this one. China has what is probably the most massive bureaucracy in history. From the social systems standpoint, I find it amazing that it works at all. Why? Because as bureaucracies become larger they become more complex for a given size than for the previous given size of the social system they oversee, and therefore require a higher density of bureaucrats to population (I notice that the link Dave gives demonstrates this principle with actual numbers over China's history). But with that increased complexity, as in any system, comes less efficiency. So the bureaucracy itself becomes harder top administer, it takes longer to communicate among its elements, it takes longer to get things done. That may be one main reason why so many political systems become dictatorships or oligarchies at some point, just to stay funcytiooning. In addition, China has massively more regulation to help that bureaucracy keep everyone in check.
There is a lot of bureaucracy in China, but in China there are a lot of ways to get around the bureaucracy. This is where the eneven playing field comes into play. On my last trip to Asia, several people were arrested for running an illegal mining operation that had collapsed. The mine was running for several years and employed over 100 employees. Basically, it was running on "incentives" that were given to local and national officials to look the other way for major safey violations and poor working conditions. If a mine could operate for this long, I can only imagine the amount of companies manufacturing goods bound for the US operate totally outside of the existing Chinese bureaucracy.
So when the playing field is not level, our companies climb to the top of the other side and roll crap down on their own people and country. Freedoms (like free trade) cannot exist without some code of ethics. So we trade with the unethical nations and unethical companies from our own country.
Now we want to bribe our own companies to stay here. This may help "free trade", but fair trade is long dead. What happened? Free trade by definition implies fair trade or it would not happen.
Did you roll over and fall asleep in 1920? In current US manufacturing the problem we have is the tail wagging the dog much too often. Is it ok for the government to screw all of Chryslers bond holders to make it "fair?" While there are occasional corporate transgressions in the United States potential penaltys make those things bad for business. The things I'm talking about are EPA regulations that change so often that manufacturers are involved in a game with loaded dice. In California doing business exactly thart same way you did before January first could land an honest small businessman in jail. Planning for the future is the key to progress, and if you can't plan you will fail. The question I always ask is how many employees do you have to have before you become an "evil corporation" worthy of being screwed? 20? 100? 1000? Many of the largest and best corporations treat their employees BETTER than average, only to be labled enemy by the US government because they won't spend themselves into oblivion. I still say, "get out of the way." Bill J
Accept My appologies. I misconstrued your comment about dealing with foreign governments to mean that our own wasn't involved enough. I agree about many govenments being overly involved in day-to-day work. In my defense I am a working engineer dealing with the problem of government regulation changes, and their unintended concequences every day. The frustration level "out there" is getting to near a breaking point for my taste. My own frustration included. My company does business with firms in China and I agree that there everyone is looking over their shoulder to see what the government rep has to say. In my experience that can work both ways. At times the goverment official wants an extra fee, (read bribe), before you can proceed. Other times they will uproot an entire village because that is the location they desire for their new factory. In the past American firms could expect some intrusion, but could still plan 4-5 years ahead. Lately knowing what will happen 4-5 days ahead can require a prescience. Bill J
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For industrial control applications, or even a simple assembly line, that machine can go almost 24/7 without a break. But what happens when the task is a little more complex? That’s where the “smart” machine would come in. The smart machine is one that has some simple (or complex in some cases) processing capability to be able to adapt to changing conditions. Such machines are suited for a host of applications, including automotive, aerospace, defense, medical, computers and electronics, telecommunications, consumer goods, and so on. This discussion will examine what’s possible with smart machines, and what tradeoffs need to be made to implement such a solution.