How the U.S. Lost High Tech Manufacturing

Submitted by Sean Cassidy on Tue, 01/24/2012 - 10:53

Interesting look (http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-...) at some of the reasons why High Tech manufacturing and its supply chain have moved away from the U.S. over the past 15 years. The general gist from this piece is that time-to-market issues are more paramount than labor costs. It is also hard to compete with countries where public funding is available to build facilities on spec just to win bids.

Is it worth investing in or creating public/private partnerships to rebuild U.S. manufacturing capabilities to meet 21st century demands? Is there any advantage or is this type of manufacturing gone for good?

klee714
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Posted on: Wed, 01/25/2012 - 18:09
I would say that it depends on the objective of the PPP. Outsourcing strategies are tricky, especially in the realm of High Tech. Some would contend that another strategic payback for outsourcing is not just the cost benefit or time-to-market turnaround, but creating an environment for innovation to thrive because you’ve “dumped” the repeatable, non-core processes abroad to be done for cheaper and faster. Allowing for the US workforce to “upgrade” into better employment positions and focus on improving/growing more sophisticated processes and market offerings. However, most companies miss the mark on this – they see the immediate (short term) gains in outsourcing and forget that they need to supplement that strategy with continual innovative process and market offerings for the long-term in order to mitigate the risk of commoditization. PPPs are a viable option, depending on the type and objective of the PPP. Meaning, the objective can’t be to compete directly with countries where public funding is available to build facilities on spec just to win bids – or where factory workforces entail thousands of employees living in a dorm next to the facility - that would be a waste. Interesting article here from the NY Times yesterday as well on the state of the US workforce, “Average is Over” - http://nyti.ms/Aog7rA. I would contend that any investment in PPPs for the purpose of revitalizing the US manufacturing industry should be created to drive product and process innovation and create a “greater than average”, if not stellar, arsenal of corporate resources (human and tech) through investments in education and cyber infrastructure as well as facilities. The time-to-market challenge can be addressed with a highly specialized US manufacturing workforce that can just as efficiently accommodate more sophisticated manufacturing processes (i.e. motion sensors, customization, trouble-shooting design insights, etc.) off networks with higher safety and infrastructure standards. Just my two cents.