No matter how much attention you paid to the 2012 presidential election, you know that job creation is a hot issue. Throughout their campaigns, both Obama and Romney spoke a great deal about their plans to bring jobs back to America. Similar conversations were had at the Clinton Global Initiative conference in Chicago (CGI America), which I attended a few months ago.
The event brought together a cross-section of business and government leaders to discuss ways of promoting U.S. economic recovery and the panel in which I participated specifically looked at how to bring manufacturing back to America. Not surprisingly, the discussion quickly turned political with talk of how American manufacturing is at a crippling disadvantage to Asian manufacturing due to taxes, infrastructure, lack of government subsidization and investment.
The majority of my co-panelists were somehow involved in shaping government policy, thus I was easily relegated to being a quiet bystander. I'm not a politician, nor am I involved in determining or influencing public policies. But I work in the engineering industry and have a background in design, manufacturing and technology at Synapse, a product development firm in Seattle.
Bringing manufacturing back to America, and therefore creating more jobs for our citizens has nothing to do with politics in my mind. Rather, it has more to do with good old American ingenuity and ambition. Better engineering design has the potential to revamp American manufacturing and bring it to the forefront as relevant and competitive again.
In the past, American companies have had the perceived luxury of relying on their manufacturers' inexpensive labor to complete straightforward -- albeit important -- parts of the engineering design, keeping overall costs low. But in the last couple of years there has been an increasing trend towards producing higher value consumer products that deliver a better customer experience, with Apple being the obvious leader of this movement. As consumers, we're no longer willing to settle for poorly designed and poorly made products at cheaper prices.
It's easy to see how this trend will continue; local shops will become more aggressive, engineers will continue to produce designs that require less hand-work and are better suited for automation, wages in Asia will continue to rise, and consumers will continue to demand higher quality and be willing (within reason) to pay a premium for it.
With product design reaching a new level of sophistication, the back-and-forth involved in perfecting the design, coupled with the commodity-oriented mindset typical of high-volume contract manufacturers, could potentially make the cost of ownership much less attractive than expected. And, most importantly, thanks to automation, companies that manufacture consumer products have been able to already reduce the labor component to a very small part of the cost of ownership.
As we've seen in the headlines, some companies are already seeing the benefits of making products in the U.S. Among the most visible are General Electric, Caterpillar and Google. While there is no single reason for the shift, industry analysts largely agree that it has to do with the demand for better quality and shorter cost coupled with ease-of-use reasons.
This is not to say there is not a place for offshore manufacturing. In fact, partnering with manufacturing companies in other locations is a good solution in certain situations, such as manufacturing for those domestic, overseas markets. However, as economies grow in China and other regions and manufacturing costs increase along with rising labor costs and a demand for improved working conditions, we have an excellent opportunity to re-balance the manufacturing landscape in a way that can help the American economy.
I know what you're thinking: Do automated factories really help boost manufacturing jobs in America? While increased automation would not create as many of the traditional line-worker jobs that labor-heavy factories would, but automated manufacturing facilities require management, facilities, administration and other technical support and logistical staff, thereby creating direct and indirect jobs that improve local economies. In fact, Intel has proven this to be the case -- since 2010, the tech giant has created more than 20,000 jobs in Arizona as a result of its "insourcing" efforts.
This shift will require a commitment from onshore manufacturing companies, and potentially the government, to build the infrastructure necessary to support these opportunities. The willingness to take risks and provide this support would be a huge push to start the domino effect that could bring manufacturing back onshore. American companies have become very conservative with infrastructure investment, which has resulted in leading-edge opportunities going offshore in order to fulfill needs.
There is no magic pill that will allow America to reemerge as a competitive leader in consumer electronics manufacturing, and there are certainly many issues that need to first be resolved on a governmental policy level. That said, better design is helping to solve part of the problem, and could potentially play a big role in making "Designed and Manufactured in the U.S.A." an easier and more realistic proposition.