I do get worried, in general, about decisions made for sound business reasons, that result in further deindustrializing the USA and making us less able to compete. What did you think of the Forbes articles?
Dick, it's a conundrum for sure. The US economy grows when products get cheaper, but building cheap products in China means that manufacturing abandons the US.
One comment I have is along the lines of Tom Friedman's concept of today's flat earth. There will never be a time when Americans purchase products that are uniquely American. The cost-effectiveness of commercial and industrial travel means that products from one part of the world will constantly travel to another part of the world.
This was inevitable, of course. The USA is a first-world nation with first-world wages; China is a third-world (probably second-world by now) nation with a tremendous industrial capacity.
This is not a new problem. We like to romanticize that North Carolina and New England were once the textile centers of America, but before industrialization, the railroad, and the like, each American town had its own textile center. Those very towns bemoaned the "outsourcing" of textile manufacturing and production in the mid-1800s to NC and NE, no doubt. The movement of the textile industries of the 20th century to Asia is just a variant on the same theme.
One lesson to the USA is that we must stay ahead economically, technically, and as innovators. Apple's iPad is a brilliant example. Lots of very talented, highly-paid engineers working in the USA; let the Chinese have the manufacturing. Let's trust train our sons and daughters to be engineers, not turn 18 and look for a union job on a manufacturing floor. Also, the information economy requires no manufacturing but is very good business and pays handsome wages. Let's not relinquish our American advantages in these and other markets.
Another lesson is that as the world has gotten flatter, in a mere 30 years (remember when "made in Taiwan" or "made in Japan" was a joke? I'm middle-aged and those were laughable in the 1970s), the living standards of the Chinese and Indians have risen. [I heard from one source that Chinese wages have risen, in real terms, by a factor of 10x. Soon they will not have huge cost advantages anymore.] In another 30 years I'll wager that their huge advantages in labor cost will be virtually gone, and manufacturing (cold fusion modules, ultra-light hydrogen rechargeable batteries, who knows) will start in the USA and never leave.
I believe that this trend toward outsourcing is temporary, on a cosmic scale. Perhaps our grandchildren will witness the return of manufacturing to the USA.
But for our lifetime at least, we can expect that anything we purchase that is made in quantities of tens of thousands will most likely be made overseas.
The overriding lesson to us is to not depend on manufacturing for employment as Americans. I have three children, all someday to be college bound, and all being pushed to never be blue collar, and to understand the distinction between white collar and blue collar. I say this not out of arrogance but out of practicality. Any American who allows his 18-year old to be satisfied with a blue collar union job is not doing the child a favor.
Another lesson is that job security, as our fathers and grandfathers knew it, are history. No one signs on with a company at age 22 and retires 43 years later. Think about it -- such longevity never made sense anyway. When the bean counters make decisions to shave cost here, close a plant there, it means some dislocation and job changes for employees. So be it. Just stay educated and on top of your industry and get other employment. I'm an engineer, a Chemical Engineer, and I have worked very few years as a Chem E. Ditto for technical colleagues, today, who have degrees in Physics, Math, biological sciences, etc. We've all been nimble, moved with the market and the economy, and stayed current enough to get past job interviews.
Hope I made myself clear; I ask your forgiveness in advance if I have irritated any personal sore spots.
Tom
There's another lesson from Apple -- that bean counters don't always dominate. For years, Apple has shipped a more expensive laptop; and even today's iPad costs more than a low-end HP laptop. Yet, iPad sales continue to explode. Why? Because Apple is a very clever, bold company which optimizes the blend between technology, performance, sales price, and marketing. And their products WORK by and large before entering the market. So consumers are willing to pay more.
Again, the lesson here is not what you expect -- train CEOs to become innovative and bold and tell their bean counters to go to h-ll (as I'm sure Steve Jobs did countless times) when they complain about cost, price, and market comparisons with other products.
Last point -- we should stop training Chinese and Indian engineers and scientists at our technical and business grad schools. Let them learn on their own and reserve all slots for Americans.