Outsourcing Bridges Is a Crazy Idea

Outsourcing makes sense in a global economy. Make products where they can be made the most efficiently, and everyone benefits from low costs. Making toys in China makes sense. Making small products that require manual labor in China makes sense. But huge bridges? Absolutely not.

But that's exactly what's happening in a California project. The Oakland Bay Bridge that was severely damaged in the famous earthquake in 1989 is being rebuilt. California officials decided to outsource construction of the 2.2-mile eastern span to a Chinese company.

The bridge is being built in huge sections, placed on ships, and then shipped 6,500 miles to San Francisco. Public officials say they are saving taxpayers $400 million on the $7.2 billion project by building the bridge in China. According to the New York Times, California did not apply for federal funding for the project because of "Buy America" requirements.

Outsourcing to China has been an important strategy by American companies to remain competitive in world markets for 20 years. Those points were made loud and clear in two books I co-wrote on supply chain management with leading American supply executives.

But bridges are where I draw the line. Here's why:

1)We need basic industries in the United States. My posts on the early problems with the Boeing 787 Dreamliner supply chain are Exhibit A. Companies that make basic aircraft fasteners had cut back so far a few years ago that they couldn't meet very basic requirements for the early ramp-up of Dreamliner production. We're talking about a bridge, but the potential implications of projects like this are important to design engineers developing everything from cars to medical implants.

2)States like California are in financial trouble because of a decline in tax revenue from companies and individuals. If states outsource fundamental infrastructure such as bridges, there are significantly fewer taxpayers. According to Vikram Dalal, professor of electrical and computer engineering at Iowa State University, the US has lost at least four million factory jobs to China.

3)Dr. Dalal also points out that China is siphoning away R&D and technology development from the United States, not just commodity manufacturing.