Andy Grove: How to Make an American Job Before It's Too Late

Great insight in this piece by Andy Grove, describes the current problem, problems with what we are and likely will do about it, and some better directions to move in.

It begins:

Recently an acquaintance at the next table in a Palo Alto, California, restaurant introduced me to his companions: three young venture capitalists from China. They explained, with visible excitement, that they were touring promising companies in Silicon Valley. I’ve lived in the Valley a long time, and usually when I see how the region has become such a draw for global investments, I feel a little proud.

Not this time. I left the restaurant unsettled. Something didn’t add up. Bay Area unemployment is even higher than the 9.7 percent national average. Clearly, the great Silicon Valley innovation machine hasn’t been creating many jobs of late -- unless you are counting Asia, where American technology companies have been adding jobs like mad for years.

He goes on to refute Tom Friedman's recent piece on Startups not Bailouts. I largely agree with Grove here, I have worked in and with many startups, they are a big part of what makes this a great place work but short term they cannot solve the 9.7% unemployment problem by themselves. Long term, the offshoring production problem is even worse (emphasis added)

Consider this passage by Princeton University economist Alan S. Blinder: “The TV manufacturing industry really started here, and at one point employed many workers. But as TV sets became ‘just a commodity,’ their production moved offshore to locations with much lower wages. And nowadays the number of television sets manufactured in the U.S. is zero. A failure? No, a success.”

I disagree. Not only did we lose an untold number of jobs, we broke the chain of experience that is so important in technological evolution. As happened with batteries, abandoning today’s “commodity” manufacturing can lock you out of tomorrow’s emerging industry.

This breakage is the part that's long worried me. One of the neatest things about technology industry is working with people from all over the world, but with each project that's outsourced there's some amount of the chain of experience and knowledge that's lost.

Comments

[Clive Robinson]

There are a whole load of issues about "off shoring", most are detrimental over the short term let alone the long term.

The one that most anoys me is that the organisations that do it assume their home market will not be effected by moving jobs over seas.

The simple fact is that you need jobs to make customers for products. If you as a company outsource the jobs to another country the staff you lay off will not have jobs thus the income capacity to buy your product.

Yes it might make your next couple of quaters figures look good but what do you do after that?

Jobs are the life blood of any country, the drip drip drip of them abroad gives rise to the slow death from anemia.

If you are a shareholder go along to the AGM etc stand up and say to the directors that you will vote against any director who outsources jobs abroad.

[mfg]

Andy makes some great point in his article.

Start-ups are only part of the answer.

Depending just on retaining "knowledge work" in the United States as a way of ensuring our economic future is both impossible and, frankly, foolish. If we lose the ability to scale manufacturing, we will soon lose the ability to design, and then innovate. You have to make things. Manufacturing is the foundation of an industrialized nation's economy, and we are currently reaping what we have sown by sending it overseas.

http://www.ncms.org/blog/post/Grove-on-mfg.aspx