If you haven't read this opinion piece by Andy Grove, co-founder of Intel, you should probably check it out.
In the editorial, Grove makes the point that the U.S. has outsourced not only tons of jobs to Asia, but also the ability to innovate. He thinks that manufacturing companies that grew and scaled up their operations in the U.S. over the years also fostered innovative thinking among their own employees and contractors. When recent start-up companies launched business plans and went to Asia to fulfill their manufacturing destiny, their absence removed a key dynamic for sparking innovation stateside. And, yes, the reduction of jobs was another byproduct, according to Grove.
Grove believes that the idea of shipping "commoditized" manufacturing to Asia is a short-term benefit that hurts the U.S. in the long run:
"There’s more at stake than exported jobs. With some technologies, both scaling and innovation take place overseas. Such is the case with advanced batteries. It has taken years and many false starts, but finally we are about to witness mass-produced electric cars and trucks. They all rely on lithium-ion batteries. What microprocessors are to computing, batteries are to electric vehicles. Unlike with microprocessors, the U.S. share of lithium-ion battery production is tiny.
"That’s a problem. A new industry needs an effective ecosystem in which technology know-how accumulates, experience builds on experience, and close relationships develop between supplier and customer. The U.S. lost its lead in batteries 30 years ago when it stopped making consumer-electronics devices. Whoever made batteries then gained the exposure and relationships needed to learn to supply batteries for the more demanding laptop PC market, and after that, for the even more demanding automobile market. U.S. companies didn’t participate in the first phase and consequently weren’t in the running for all that followed. I doubt they will ever catch up."
Grove's opinion piece has sparked some debate with some big thinkers. Some think he has a valid point. Some don't. At the very least, it should give the decision-makers in this country something to think about.
Of course, some people will label Grove a "protectionist" when they read his editorial. For the free traders, the U.S. is supposed to be the beacon of free market capitalism and all else be damned.
That thinking simply doesn't cut it in today's world. Check out the job creation numbers from the previous decade, 10 years marked by the signing of many free trade agreements with other countries. That's not an impressive resume-building statistic.
Grove isn't talking about chucking the free market system. He just wants to see if it can be tweaked. I totally agree.
Why can't the U.S. government dedicate itself to being a leader in solar technology, or some other cutting-edge industry, and deliver permanent incentives—not ones subject to congressional approval every two years or so—to foster the industry? Other countries support key industry sectors. Why can't multinational companies make the case for a "making it in the U.S." tax break, instead of simply calling for less taxes and making no commitment to the U.S. economy?
Manufacturing is a vital part of a successful free market economy, and steps need to be taken to ensure a vibrant base remains in the U.S. This is not an argument simply to create more U.S. jobs; it's a plea to keep innovative thinking alive and well in American society.
Let's hope Grove's opinions resonate with those in the executive suites of major U.S. companies. I fear that if they don't act on his advice, or at the very least start engaging in a healthy debate, that Congress may take up the argument for them.