Why should the larger world care about the decline of manufacturing in the United States?
That it has declined is not in doubt. Between 2000 and 2010, the number of jobs in American manufacturing fell by 34 percent; it was, in all, a loss of six million jobs. Much of that labor was not eliminated by declining demand for goods, or by automation of production, so much as it moved. The United States is no longer the largest manufacturer in the world; that honor now belongs to China, which manufacturers 19.8 percent of the world’s goods. By contrast, last year the United States’ share was 19.4 percent.
Each of those lost jobs bears the weight of its own story; and yet, as Technology Review’s editor, David Rotman, writes in the first story in this special issue on manufacturing (“Can We Build Tomorrow’s Breakthroughs?”), “If you believe that … moving manufacturing to places where production is cheap makes companies more competitive, such a shift might not matter beyond its implications for the U.S. economy and its workers.” But in fact, as our stories show, a healthy manufacturing sector in the United States is important not only to Americans but to everyone.
That’s because “it turns out it’s not necessarily true that innovative technologies will simply be manufactured elsewhere if it doesn’t happen in the United States,” Rotman warns. He argues that the United States, for a variety of reasons, remains the most prolific inventor of new technologies, but that the shrinking of American industrial capacities makes it less likely that those technologies will be built and broadly used.
Photonic integrated circuits (analogous to electronic integrated circuits, except that information signals are in the form of light) are an example. The development of integrated photonics was mostly abandoned by American optoelectronics manufacturers when, seeking lower production costs, they moved manufacturing outside the United States in the early part of the last decade. There, “differences in manufacturing practices meant that producing integrated photonic chips was not economically viable,” writes Rotman. A technology that had been expected to make computers faster and more easily integrated into the photonic telecommunications networks was not widely adopted.
Unlike the information technology industry, where a device like the iPhone may be “designed by Apple in California and assembled in China” (for less than $7 of the total cost), most industrial sectors cannot easily separate research, development, and design from production. Often it is only by manufacturing stuff that companies learn what inventions are practical and viable to produce next. Novel production technologies such as 3-D printing, sometimes called “additive manufacturing” (see “Layer by Layer”), will allow companies to do things they could not do before: rapidly make prototypes, or construct complicated parts from expensive materials like titanium with little waste. But unless they understand manufacturing, companies will likely not be able to fully exploit the new opportunities.
Perhaps the example that best illustrates the importance of innovation to manufacturing comes from China. As Kevin Bullis explains in “The Chinese Solar Machine,” “Ten years ago, solar panels were made mostly in the United States, Germany, and Japan … Today Chinese manufacturers make about 50 million solar panels a year—over half the world’s supply in 2010—and include four of the world’s top five solar-panel manufacturers.” Leading them is Suntech, which achieved its prominence not through cheap labor; solar cells are made with expensive equipment and materials, and labor accounts for just a small fraction of the costs. Suntech has succeeded by “tweaking manufacturing processes to decrease the cost of manufacturing conventional solar panels.” The company is now commercializing a radical new technology. Its expertise in manufacturing suggested a simple, low-cost way to adapt a “horribly complicated process,” hitherto a lab curiosity, to the assembly line. The new technology “allowed the company to reach efficiency levels and cost reductions that [the solar industry] … had set as targets for 2020.”
Suntech’s technology was developed at the University of New South Wales and at Suntech’s own headquarters in Wuxi. But more genuinely novel technologies are developed in the United States than in China. Most innovations must be manufactured to have any impact. Those innovations will require comparable innovations in manufacturing if they are to be produced efficiently. In some cases, the innovation—making something scarce or expensive common or cheap—will be the manufacturing process itself. That’s why American manufacturing matters.
In our July 2011 Business Impact special report on advanced manufacturing, we analyzed some of the brightest ideas for reviving U.S. manufacturing. Read that, and this issue, and write to me at firstname.lastname@example.org and tell me what you think. —Jason Pontin
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