China Engineers Its Next Great Leap

Milwaukee Journal-Sentinel ^ | 12/31/03 | John Schmid

[ninenot]

China engineers its next great leap

By JOHN SCHMID
jschmid@journalsentinel.com

Posted: Dec. 30, 2003

Last of a four-part series: Made in China

Beijing - While the United States focuses on China's export prowess and cheap labor, Beijing is investing in a new generation of sophisticated "knowledge workers" to carry the nation to the next stage of its industrial revolution.

Made in China

Photo/Gary Porter

Office towers glow in the night in a view from atop the Di Wang Center, the tallest building in downtown Shenzhen, China. Many of the offices are occupied by China's new generation of "knowledge workers." The country wants to outgrow its reputation for copying things and move toward industrial self-sufficiency.

More photos

The New Industrial Revolution

Manufacturing,
one of the staples of Wisconsin's economy, is being reshaped by forces originating halfway around the world. As China races into a leading role in the global economy, the effect on families, companies and communities here is profound.

THE SERIES:

DEC. 28: More and more companies are turning to China to produce their goods as China becomes "the world's factory floor."

DEC. 29: When China Inc. targets a particular segment of business, its combination of cheap labor and entrepreneurial hustle can virtually dominate an industry overnight.

DEC. 30: We used to build factories to last 100 years. What happens when a huge one doesn't last five?

DEC. 31: China is taking big strides to build beyond its manufacturing base. And in some key areas, the United States already lags.

About the logo

Gary Porter's
Photo Essays

Journal Sentinel photojournalist Gary Porter narrates slide shows of photos taken for this project in China and Wisconsin.
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Notes: Fast facts and viewpoints
Graphic: Dam construction: Engineers in high places
Graphic: Education: In China, ranks of educated workers swell
Graphic: Auto sales: Growing market

Dam construction: Engineers in high places

Photo/Gary Porter

Bicycles are the most popular way to get around campus at Tsinghua University in Beijing. Tsinghua, founded in 1911, has a motto: "To act is better than to speak." At Tsinghua, considered by some the Chinese equivalent of the prestigious Massachusetts Institute of Technology, 100% of graduates are placed in jobs. Other top Chinese schools boast similar placement rates.

We're teaching our students to satisfy the needs of the global
economy.

- Zhang Yao Xue,
who runs the nation's university system as director general at the Ministry of Education.

Photo/Gary Porter

Freshman industrial engineering student Betty Cheng of Ecuador works on an experiment in a chemistry lab at the Milwaukee School of Engineering. MSOE reports placing 80% of its graduates in jobs six months after graduation - down from 98% just a few years ago. The University of Wisconsin-Madison also has seen a significant drop in job placement.

The nation's 1,300 schools of higher education are critical to China's grand social engineering plan to lift itself up by first becoming the world's manufacturing base, then its knowledge base.

Already, China has pulled way ahead of the U.S. and the rest of the world by one key measure.

China graduates in excess of three times more engineers - electrical, industrial, bio-chemical, semiconductor, mechanical, even power generation - with bachelor's degrees than the U.S. university system.

"We're not creating enough in math and science and engineering," said Don Davis, chairman and chief executive of Rockwell Automation Inc., a manufacturer that has remade itself into a multinational corporation based on knowledge work. "And in my mind, that's an enormous problem."

A wave of young software experts, industrial engineers and bio-technology graduates has flowed out of China's fast-growing, industrial-strength university system and assumed key posts in China's ascendant society.

The exponential increase in applied-science graduates mirrors the nation's overall export expansion. Around the time that engineering graduates peaked in the U.S. in 1983, China was just getting going on its "Four Modernizations" - a movement launched 25 years ago this month to promote four key sectors of the economy: science and technology; agriculture; industry; and the military.

Today, the result lives up to its original billing as "The Second Revolution."

China consistently has graduated more engineers than the U.S., Japan and Germany combined every year since 1997, according to figures collected by the National Science Foundation in Washington.

In the U.S., the number of engineering graduates has declined almost yearly from 77,572 at its mid-'80s peak to 59,536 in 2000.

If China has more than three times as many industrial-technology graduates, China theoretically also has more than three times as many folks to percolate ideas - or possibly even a three-times better chance of thinking up the next "killer application."

Intel Corp. Chairman Andy Grove marveled that the lopsided trend has caused remarkably little debate in the U.S.

"We haven't even articulated the problem," Grove said.

As China becomes a low-wage global manufacturing base, and other so-called "developing countries" compete for the same mass-production work, wealthy societies that prospered as industrial powers - the U.S. foremost among them - find themselves in the throes of a radical restructuring.

Just as the industrial society replaced the agricultural society of the 19th century, the knowledge-based society is edging out the industrial society.

As it evolves, the labor force changes. Creativity and inventiveness drive the economy. In the parlance of the times, "knowledge capital" becomes key.

"This used to take hundreds of years," said labor force expert Paul Strassmann. "Now it's instant and visible."

Planting 'seed corn'

U.S. business leaders call for new education initiative

China's labor force is changing, as well.

"China is catching up, not because of cheap labor, but because they are getting very smart," Strassmann said.

The only realistic public-policy solution is to emulate China and increase spending on education and retraining, Grove and other business leaders argue.

In a major speech in October beamed via satellite to software executives in Washington, Grove issued a strident plea for a new education initiative. Speaking from California, the high-tech pioneer proposed taking 1% to 2% of U.S. agricultural subsidies and spending them instead on university grants.

If anything, statehouse lawmakers are going in the other direction as the pressure of high deficits forces them to cut education budgets. In the last 10 years, Wisconsin has devoted a shrinking share of its tax revenue to university education, said John Stott of the state Legislative Fiscal Bureau.

Stanley V. Jaskolski, dean of Marquette University's College of Engineering, said the U.S. is producing fewer innovators and new ideas - what Jaskolski calls "seed corn."

"We have gotten somewhat complacent," Jaskolski said.

But the "weightless" digital economy leaves little room for complacency.

"We're dealing here with some very powerful forces," said Strassmann, an engineer, consultant, author and former adviser to the U.S. Department of Defense and NASA.

"We're living in the most revolutionary period in human history, ever, in terms of magnitude and speed. Nothing in human history is comparable to the present."

'Symbol manipulators'

As labor force evolves, split in society feared

One of the most colorful descriptions of the modern knowledge worker comes from Robert B. Reich, an economics professor at Brandeis University and former U.S. labor secretary. He calls them "symbol manipulators."

These are educated people who work with speech, numbers and icons, often in abstract ways. They invent markets, niches, products, designs and services. Their ranks include investment bankers, marketers, hedge-fund managers, consultants, merger-and-acquisition lawyers, industrial engineers and software programmers. These people often train themselves to stay ahead of the knowledge curve.

According to Reich, they are the elite who constitute about 20% of the U.S. population. In the last 15 years, they have seen their inflation-adjusted incomes increase 9%.

The other 80% of the work force includes people with more conventional jobs, along with lower-skilled workers who gravitate toward more modest or even minimum wages.

Reich reckons that that 80% has seen its inflation-adjusted income decrease 11% in the past 15 years.

The former U.S. labor secretary, who is finishing a book on post-industrial economies, sees a long-term risk if the split between the top 20% and the bottom 80% widens. The nation could cease to be a single cohesive society, he warns.

Alan Greenspan, who is chairman of the Federal Reserve Board, wants America to move decisively toward "an economy of ideas."

"The economy is becoming increasingly conceptual," Greenspan testified in a July Senate hearing. "I think that's good, not bad, for the economy as a whole. But if you're a maker of stuff, it isn't." The comment triggered a barrage of criticism from congressmen and business groups in states that make "stuff."

But the Chinese, while concentrating for now on making "stuff," likely would have embraced Greenspan's comment.

Western experts note that China for centuries has valued education and culture. The country prides itself on inventing the printing press, paper and rocketry.

China aims to outgrow its reputation for copying things, as it moves toward industrial self-sufficiency and then shows the world that its engineers can innovate with the U.S., Japan and Germany.

Investing in education

China triples college enrollment in five years

Beijing hews to a market-driven education policy, one that unabashedly aligns the curriculum with supply-and-demand economics. It compels its professors regularly to step outside the halls of academia and work directly inside factories, improving the plants' quality and productivity.

"We're teaching our students to satisfy the needs of the global economy," said Zhang Yao Xue, who runs the nation's university system as director general at the Ministry of Education.

Some 60% of all students are enrolled in science and engineering disciplines, he said.

"This mandate is done by the market," said Zhang, smiling.

Zhang sipped flower tea in a conference room at the ministry while going through a roster of government grants, science foundations, science parks and industry zones.

The goal is "to transfer the research into the market," he explained. "We established 36 schools or institutes for the life sciences, for bio-tech, medicine and agriculture."

The momentum reflects considerable spending on education. China has 17 million students enrolled in its colleges and universities - including graduate and undergraduate, full-time and part-time - up from 5 million students five years ago.

"That's more than the U.S.," Zhang said.

The United States has 15.3 million students enrolled in colleges and universities, both public and private, according to the latest figures from the U.S. Department of Education.

"We also need the knowledge workers," said Zhang, who keeps a post as computer-science professor at Beijing's elite Tsinghua University.

China nearly has caught up with the U.S. on the number of master's and doctoral degrees awarded annually in engineering, according to figures from both governments. China also is making huge strides in other science and technology disciplines. And at U.S. universities, there are more Chinese students earning doctorates than students from any other foreign country, according to the National Science Foundation.

University programs, Zhang explains, routinely are judged by their ability to place graduates into jobs.

Tsinghua, considered by some the Chinese equivalent of the prestigious Massachusetts Institute of Technology, boasts a 100% placement rate for its graduates, school officials said.

It's the same story at the respected Shanghai Jiao Tong University, which places 97% of its students: The other 3% don't get jobs because they go on to earn additional degrees, according to the school's placement center.

At the Milwaukee School of Engineering, about 80% of May's MSOE engineering graduates had landed jobs six months later, said Kenneth McAteer, vice president of operations and a placement associate. A few years ago the placement rate was at 98%, he said. Corporate downsizing has left "a lot of experienced engineers out there who are competing with the college graduates," McAteer said.

The Milwaukee School of Engineering briefly considered a partnership arrangement with Shanghai Jiao Tong University in the mid-'90s. It passed on the chance, however, in order to manage its other sister-university partnerships abroad.

At the University of Wisconsin-Madison, which has the state's largest engineering school, only about half of the December 2002 and May 2003 engineering graduates had job offers by early May. "That's a huge decline," said Sandra Arnn, assistant dean of the university's College of Engineering and director of engineering career services.

Nationally, the placement average in China lies below 100%, but not due to a weak economy. The Ministry of Education said the system grew so quickly that it hiccuped in absorbing all its graduates. Beijing, however, says the numbers are part of its plan: The government is creating incentives to send its newly minted engineers into the poor western provinces to help invigorate industry there - a sort of reverse labor migration.

The global impact of China's universities will surprise anyone who associates authoritarian one-party states with academic suppression or who remembers the "lost generation" that endured Mao Tse-tung's repressions of the 1960s.

The Communist Party elevates technocrats into the highest possible positions.

The new president, Hu Jintao, studied hydraulic engineering; his predecessor, Jiang Zemin, graduated as an electrical machinery engineer. Premier Wen Jiabao launched his career as a post-graduate geologist; his predecessor, Zhu Rongji, trained as an electric-power engineer.

The wonkish elite makes no small plans. As they build an industrial superpower, Beijing brushed off protests from the international community and environmental groups over the construction of the giant Three Gorges Dam - a project that gouges a lengthy section of the Yangtze River valley, flooding cities and displacing 2 million people in the process. Dubbed the biggest public-works project since the Great Wall, the Three Gorges, when complete, will provide hydroelectric power to help fuel the industrial revolution.

Far from eschewing academia, China has created what can be called an "Educational-Industrial Complex."

"The links between the professors and the enterprises are very strong now," said Zhang at the Ministry of Education.

Lucent Technologies, Microsoft, IBM, Texas Instruments, Hewlett-Packard and a host of multinational companies work directly with the universities to develop talent and incubate new technologies.

In nominally communist China, even academics celebrate capitalist success. Tsinghua University incubates many of the technology companies now listed on the Shanghai Stock Exchange.

"Mathematics and physical fundamentals for Tsinghua are much stronger than in other nations," said Zhang Lin, dean of the university's information technology department. "We have a solid foundation in theory. It's our duty to contribute to the economics of the nation."

Zhang's department, with 500 master's students and 300 doctoral candidates, has hatched the Chinese standard for flat-screen televisions, software for anti-terrorist facial-recognition, and speech-recognition programs.

Across campus, Su Wu runs Tsinghua's department of industrial engineering. Three years ago, only 30 Chinese universities offered such a discipline; now, 109 do.

"China wants to become a global manufacturing center," the professor said. "This is one of our goals."

Rockwell Chief Financial Officer Mike Bless is well aware of that commitment. "It's one of the few nations in which industrial automation is one of the accepted areas of major study," Bless said.

Rockwell reinvents itself

Milwaukee company moves toward 'knowledge work'

The big questions for the world's advanced economies is: Can China innovate? Will it match American ingenuity?

Rockwell's Don Davis, who earned his mechanical engineering degree from Texas A&M University, believes Chinese entrepreneurs are inherently innovative. The Milwaukee-based company works directly with Tsinghua, Shanghai Jiao Tong and the nation's 16 most cutting-edge universities. It develops talent, ideas and technologies, and it hires the cream of the crop.

Those partnerships, which Rockwell carefully cultivates from a central office in Beijing, have helped Rockwell reinvent itself. A decade ago, Rockwell's automation business manufactured industrial equipment hardware - it made "stuff." Today, CEO Davis says half of Rockwell's 21,000 employees are knowledge workers: engineers who consult and develop manufacturing solutions.

"The labor content in our products is very low," Davis said.

Rockwell maintains a corps of Chinese-educated engineers all over China. Its Chinese operations fit perfectly into the new structure: Up to 60% of Rockwell's 330 full-time staff do technical or engineering work, said Scott Summerville, head of Rockwell's Asian operations. Rockwell entered China in 1986 and has 11 facilities in nine cities.

"One thing you can say about China is that change is incessant, and it's rapid, and it's deep," said Michael Byrnes, Rockwell Automation's chief representative in China.

U.S. is 'comfortable'

China continues to build factories, ports, schools

Those peering into the crystal ball see two views of a brave new post-industrial future. The owlish Greenspan is among the optimists.

In a separate House hearing in July, angry congressmen lashed out at Greenspan's free-market views at a time when the U.S. was bleeding manufacturing jobs. Won't the nation's economic security be compromised if its manufacturing base corrodes, the lawmakers demanded to know.

Greenspan's answer: It doesn't matter, as long as Americans can import whatever they need.

"If there is no concern about access to foreign producers of manufactured goods, then I think you can argue it does not really matter whether or not you produce them or not," he said. "The main issue here is the question of the security of supply of those essential types of goods, which will always be required by human beings - food, clothing, shelter and the like."

Labor economist Joel Popkin is less sanguine. In a report last summer commissioned by the National Association of Manufacturers in Washington, Popkin concluded:

"If the U.S. manufacturing base continues to shrink at its present rate and the critical mass is lost, the manufacturing innovation process will shift to other global centers. Once that happens, a decline in U.S. living standards in the future is virtually assured."

China, for its part, continues to evolve, building new factories, new ports and new universities.

"We've gotten comfortable," said Marquette's Jaskolski, a former member of the National Science Board, which monitors national education. "We're importing the techie stuff. We're no longer generating enough of it on our own."

"Do I think we can take this back?" he asked. "Absolutely, I think we can take this back. But it's a long, hard road, and we've got to be committed."

Rick Romell of the Journal Sentinel staff contributed to this report.

From the Dec. 31, 2003 editions of the Milwaukee Journal Sentinel

[XBob]

66 - "What we can do is try to make it easier for US companies to succeed. Tort reform and de-regulation are good places to start. I loath protectionism. However, if China is part of the WTO, the WTO should enforce basic human rights regulations on China."

good ideas.

Let's add another - de-link the chinese yuan from the US dollar, and let appreciate in value against the dollar, instead of under bidding all the time, making chinese stuff far cheaper than it really is.

[XBob]

68 btttttttttttttttt

"The real problem, long term, is that this nation is in the process of placing its technological future in the hands of outsiders, and it never ceases to amaze me how many FReepers either fail to grasp that, or, if they do, seem to cheer it on ..... we will have to depend on outsiders to help us do that. And if those outsiders are not inclined to do so, we will have no option, because the home-grown talent, the intellectual capital, will have vanished along with the industries and professions"

[Paulus Invictus]

Do you demand "Made in America" at Wal-Mart et al? I wonder if you shop in almost any big box store. If you do, you help the Chicoms do all these things and much more. Our nation is quickly being filled with in-flooding immigrants with no controls on our borders. These people will stay, will not be made into engineers and math experts, but will cut the lawn well and cook for the yuppie moms.

As for our ruptured school system, it has been taken over by socialists with an agenda that guarantees we will fall further behind the third world nations in education. India and China, the biggest nations, are proving that our system is a huge failure. Where is our tax money for education going? Ask the Chappaqquidic Kid. He wrote the gazillion dollar education bil that Bush signed and we pay forl.

[RiflemanSharpe]

Americans do make things. If you look you will find excellent quality in thosed products. I have.

[secks]

Well said.

I'm currently working on CS and EE degrees. All the American students joke about how there won't be any engineering jobs left stateside in a decade or so. Of course, the foreign students plan on returning to their home countries, in order to compete with American engineers.

Doesn't anyone see how unfair it is to allow foreign countries to educate their students here, when so much of our higher learning is taxpayer-subsidized?

People, it's time to wake up an realize that what benefits China and India doesn't neccesarily benefit us. If we're going to put our country first, then we've got to start raising the tariffs and focusing on domestically-produced merchandise. Otherwise, this country will become completely service-oriented, with no R&D or manufacturing bases to speak of. Is that really worth a cheaper sneaker or memory chip?

[Doc On The Bay]

SIGH!

There MIGHT be a "FEW" American Engineers who MIGHT understand That, "The Future Marches on...," & that WHATEVER the "Future" Becomes, Either "America" is a MAJOR PART of IT, or "America" becomes a "footnote in History."

WE BEGAN the "Quest to Go To The Stars!!--", so Either we Resume That Quest, or we ABDICATE to another Culture!!

So a LOT OF US are "Waiting,"--Either we COMMIT TO the GENETIC DESTINY of our SPECIES, or we Capitulate to the "Drones with Accountants' Souls!"

Either we "GO TO THE STARS," or we INVOLUTE, & "Feed ALL the "Hungry!!"

TOUGH CHOICE!! --""GUNS or BUTTER!!"

SO, in 100 Years,--WHERE will We Be??; --& WHERE can we GO in 100 years ??

After ALL, we will LIKELY be a LOT "POORER" after a Century of Feeding the "Non-Contributing Poor," a Hundred Years from Now, than we are Now!!

Are you PLEASED that--if you Stop "The Best & Brightest" from attempting to take Humankind to the Stars--you MIGHT HAVE "FED" a few more sad, Incompetent Souls needing help from their "Fellows!"

Are the "Immediate needs" of some Few who are Incapable of providing for Themselves worth Sacrificing the FUTURE of our Species??

I GUARANTEE that the VAST MAJORITY of us--EVEN "Those In Need"--would AGREE that "Humankind" is Worth MORE THAN THAT!!!!

If you "Poll" Humans--EVEN "Those In Need,"--you will Discover that we ALL want to "Go OUT!!"

There is a UNIVERSAL WILL to Resume the Manned Exploration of Space--& a UNIVERSAL WILL to put MEN ON MARS!!

DESPITE a UNIVERSAL CONTEMPT for "NASA,"--the WILL to "Go Out" is Universal!

"W" has a HUGH opportunity to make a HISTORIC DECLARATION!!

This is America;-- "W" has a HUGH opportunity to harness our Boundless Energy to go BACK to the Moon--& On to MARS!!

But Then, the "BeanCounters" will Probably Object!!

We have an Opportunity to Pursue Our Dreams--Before we are TOO Poor to do so--so, do we have a "Leader" capable of "Seizing the MOMENT!!"

THIS is our "Chance" for "Greatness!

Will "W"s" "Handlers'" UNDERSTAND it, or will we "Devolve to Mediocraty??"

Humankind may NEVER AGAIN be Capable of a "Reach for the Stars;"--CAN "W" Rise to the "Occasion??"

SO MANY of us HOPE THAT "W" seizes this brief Moment & Gives Us the "Impetus" to "Go OUT!!"

So MANY of us FEAR THAT "W"--&/or his "Handlers"--CANNOT COMPREHEND that THIS is the time when ALL factors are "Ready."

If we Don't "Go Out Now,"--we may not be "Able Again" for several Centuries!!

[disclaimer]

University in China

University in the USA

[superloser]

Are average America so stupid not to see own future written on walls?

I always enjoy your posts because they ring true.

The "Average American" has grown up accustomed to the world being their oyster. It has been that way "forever" as far as they are concerned and they feel it will always be that way.

The "Average American" also doesn't see anything beyond his own food plate. So long as it is full, he doesn't care about anything else until it is too late. Such is how Modern America runs. Very few people are looking past today into tomorrow.

The "Average American" won't even learn a second language in order to compete successfully in the global marketplace.

The un-average American sees the handwriting on the wall and is busy preparing for it. Most un-average people I know are learning multiple languages. I'm up to four right now besides English I can handle "ok" with a dictionary. Such is life in Modern America where the majority of people are complacent and not striving for anything more than what they currently have. There is always something holding them back or in their way or something another Government program will solve for them if we just give more of it away...

The "Average American" will get quite a wake-up call when they discover they have been completely eclipsed because they have become complacent. Addicted to Government assistance, they will lead us into a complete Socialist mess.

Indeed, even many posters here on FR are advocating Socialist/Communist solutions such as socialized medicine (see the Prescription Drug Benefit threads for details) and additional Government interventions to provide "benefits" for people.

I've feared for our Republic for years. We seem to be doing all we can to get rid of it.

The solution is for people to wake up and realize it takes hard work to stay on top. That means putting America first no matter how hard it bites. BUT, too many people can't see past their own food dish or even five minutes into the future. They figure "someone will take care of it" but unless THEY are the ones who do so, nobody will.

We are quickly becoming a nation of wimps if we haven't already. The "Average American" doesn't want to do the heavy lifting.

Sorry for the rant, but I'm as disgusted with the "Average American" and the silliness in the US as you are.

[ninenot]

Well--I sure didn't go to EITHER of those Universities.

Drat.

[RightWhale]

A 5 cent person can push a button and make something of equal quality of a 5 dollar person pushing the button.

Here we are making a good-faith transition to a post-industrial society, and these ignorant, backwards savages just entering their industrial revolution are going to kick our butt. There is no justice or respect in the world.

[XBob]

90 - "these ignorant, backwards savages just entering their industrial revolution are going to kick our butt. There is no justice or respect in the world"

Right you are - I have seen it happen too often. It is much easier to 'improve' than to 'invent', especially when you 'steal' the 'inventions' which you are 'improving'.

For example - China and numbers of other countries are skipping the expensive infrastructure of national telephone systems and cable TV systems, and going directly to cellular phones and satellite TV's. Saving all that money and time.

[RightWhale]

I think of some of the most famous philosphers in history. It might be tempting to assume they were bookish and never went out if it rained. But it seems they were, in many cases, extremely tough SOBs. Even a guy like Cicero with his high manners and good-uncle advice. Tough man. We should be like that. Advance to our higher level if we must, but be ready for whatever the street may offer. That may be what bothers us, or myself, about the Leftists. Just do this, they say, and the world will be rosy forever. Kucinich hovers at his higher mental state. But so did Gurdjieff, but Gurdjieff could walk into the most dust-blasted town in Armenia and immediately establish himself as a survivor. I wouldn't bet on Kucinich.

The world is not rosy and shows no sign of ever becoming so. So let's go ahead and build our crystal palaces but keep our swords crystal sharp as well. In other words, if we are shipping our industrial and manufacturing capability offshore, let's be sure we can at least stay on the boards of directors.

[Thisiswhoweare]

"There are many agents like this on the net these days. Companies pay people to post positive stuff about their products, pretending to be an ordinary user."

It is called 'perception management'.

[XBob]

You give up too easily. At least a few are thinking about preventing/solving this disolution of our nation:

A Plan to Save American Manufacturing.

http://www.freerepublic.com/focus/f-news/1049895/posts

[chimera]

That is why I say if you're in college now, go into the law and prepare for a life of torts if you want to make a good middle class living.

I recognize the intended irony, but there are some on FR who would interpret this literally and cheer this on. So, to preempt that, let me say that even with this scenario, the wheels come off eventually, once all the lawyers have sued everyone else out of business. Then they turn on each other, and their malpractice insurance companies go out of business for lack of being able to pay the claims.

We can take a cue from the natural world on this one. In a normal, in-balance biosystem, the ratio or predators to prey is about 2 to 3 percent. That seems to keep everything on an even keel, preventing overpopulation while at the same time supporting a reasonable level of predators. But when the sh*t hits the fan, and the optimum balance of sharks to victims gets out of balance, eventually the sharks eat each other. In the economic analog, the system implodes (i.e., revolution is the order of the day).

[RightWhale]

Fairbanks is cut off from the outside world. The rail line goes to Anchorage. There is a paved road to Whitehorse. The big freighters fly in to refuel. Now, if a person wanted to open a furniture factory he would have to rely on the local community to buy his product. Some would, no doubt. Most would go to a 'Going Out of Business" furniture outlet or Fred Meyers to buy furniture as they do now due to cheap furniture being good enough for apartment renters and people who will be leaving town in 3 years or less anyway.

But let's say I get my banker to spring for the $5 million to set up, get my steel building, my parcel including zoning change, my Chinese tools and wood fasteners, and find a couple workers who still have most of their fingers. Find some decent wood and have it flown in and start making furniture, and beat on Frank to get the railroad extended to Canada.

There is no industry here. Mining put the town on the map, but mining supports a couple 1000. What are the other 100,000 doing? People b**ch that the private sector cannot compete with the public sector. It's about 50-50. This is a gov't town. That's our industry. The town was built on Lend-Lease and that's all it is now.

So why would anyone with more than half a brain be trying to get some industry going in Fairbanks? A row of scrapers and front-end loaders doesn't count because that's all here to do construction on gov't money. No manufacturing industry would survive its original bank loan: can't ship product anywhere, transportation kills, and can't beat the cheap factory seconds imports. That's all we get here--factory seconds. And labor--American labor values itself highly. Don't know how they justify this anymore since they offer nothing spoecial.

I don't believe this situation is particularly unusual. Somewhat extreme toward the bad transportation end of the spectrum, and no decent local raw materials. Probably similar to business stories everywhere. That's why industry is non-existent here. The oil business, of course, is totally independent of local conditions. Oil is not expected to be part of the community forever. 20 years and out. Bu-bye, and thanks for the infrastructure that connects East Overshoe and West Beardump.

[XBob]

97 - "There is no industry here. Mining put the town on the map, but mining supports a couple 1000. What are the other 100,000 doing? People b**ch that the private sector cannot compete with the public sector. It's about 50-50. This is a gov't town. That's our industry. The town was built on Lend-Lease and that's all it is now. "

Why does anyone live there except for miners? Government subsidy apparently.

Perhaps youall could grow pinapples and oranges and grapefruit too. haha!

Believe it or not, Fairbanks is not representative of the US. So our economic policies should not be set based on Fairbanks economics.

If you live on the tail end of transportation and climate, you export low weight, high value things - like gold, or if you must manufacture something - Eskimo IceCream or silicon chips or furs.

And why do you need to import timber into Alaska? Canada exports timber.

[afraidfortherepublic]

"We're not creating enough in math and science and engineering," said Don Davis, chairman and chief executive of Rockwell Automation Inc., a manufacturer that has remade itself into a multinational corporation based on knowledge work. "And in my mind, that's an enormous problem."

Yes, Don. And you have made hollow shells out of your Wisonsin manufacturing plants -- outsourcing most of the work to China and Czechoslovakia. Do you really expect students here to spend 4-6 years pursuing an engineering curriculum when there are no jobs? Your executives jet around the world on fat expense accounts and pontificate endlessly about producing goods in foreign places -- I know because some of them are my friends.

My question is: who is going to buy your goods after all the manufacturing jobs in the mid west are gone? As a matter of fact, who is going to buy your over-inflated houses after all the manufacturing jobs are gone?

It's not just the low wages paid in the Asian and Eastern European countries that is the problem. There are governmental subsidies for their goods plus tremendous governmental pressures on the American manufacturer.

[RightWhale]

why do you need to import timber into Alaska?

Our local timber isn't much good. Some willow is okay, but most willow is very small. Perhaps if local timber were highly processed like Finnish plywood it would be okay, but our spruce is mostly black or swamp spruce, very light or full of pitch. Looks like our main industry, not counting oilfield support, is military cold-weather training.

There is plenty of mineralization, but development of such resources, aside from gold and oil and a few other spot mines, is frozen by Federal edict. It's a strange place. Lots of potential outside of primary manufacture, yet nothing is allowed to be done. Frozen shortly after the Territory was purchased, possibly because of pressure from eastern industrialists. Coal was discovered immediately, and development was frozen just as quickly. Still happening to this day.