I have commented previously on the prospects for manufacturing jobs in the U.S. in the face of increasing productivity here and low wages elsewhere. The topic got some attention at the presidential debate Tuesday evening, with respect to China, at least, with the candidates proposing that we can compete with China in attracting manufacturing jobs by leveling the playing field and investing in education. You can refer to the transcript to see which candidate said what.
But what caught the attention of Slate writer Matthew Yglesias was the way debate moderator Candy Crowley phrased the question: “iPad, the Macs, the iPhones, they are all manufactured in China. One of the major reasons is labor is so much cheaper [there]. How do you convince a great American company to bring that manufacturing back here?”
As Yglesias puts it, “There's no doubt that some U.S. manufacturing jobs have been lost to China. But you can't bring iPad and iPhone manufacturing 'back here' for the very good reason that it was never here in the first place. Ten years ago, approximately zero Americans were employed in manufacturing tablet computers and smartphones and that's still the case today.”
He goes on to say, “But there's been enormous net growth in the number of Americans whose jobs relate, in whole or in part, to the tablet and smartphone industry.” Those people, he says, include app developers, industrial designers, marketers, retail sales clerks, and delivery personnel. He even adds that people are employed as journalists covering the smartphone industry.
That's all true, but it ignores the importance to any nation of manufacturing competence. I reported earlier on a speech last spring by Gene Sperling, director of the National Economic Council, who said, “…when we lost consumer electronics manufacturing, we gave up a claim on future innovation. We lost in follow-on products like advanced batteries, flat-panel display technology, and LED lighting. When we lost consumer electronics manufacturing, we also lost the capability to make and design the batteries, including lithium-ion batteries, used in computers, cell phones, and other consumer devices. As demand for batteries began to grow in the auto industry for hybrids and in utilities for grid storage, the technological leadership to design these products had migrated along with consumer electronics manufacturing. We lost the ability to create these products at scale.”
Scaling is the key. As Intel founder Andy Grove wrote in a July 1, 2010, Bloomberg Businessweek article, equally important to “that mythical moment of creation in the garage” is the transformation that occurs “as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter.”
Perhaps the candidates can elaborate at their final debate next week.