What should U.S. corporate and government leaders do to accelerate a shift?
Over the past few decades, the dominant strategy among most manufacturers has been to shift production to lower-cost countries such as China. Flip over your Apple iDevice of choice and you are likely to see: “Designed by Apple in California. Assembled in China.” However, an important shift is occurring as so-called advanced manufacturing creates the possibility for an American manufacturing renaissance.
Typically, labor makes up a smaller component of costs in advanced manufacturing, decreasing the production advantages of lower-wage countries. As wages in these countries continue to rise, the economic rationale for distributed production is decreasing. Further, a rapidly changing world increasingly demands locating production closer to end markets.
In an award-winning 2009 Harvard Business Review article (“Restoring America’s Competitiveness”), Harvard Business School Professors Gary Pisano and Willy Shih offered a number of useful suggestions. The professors urged government leaders to ramp up spending on basic and applied research, focus on “grand challenges,”and let ailing giants falter. They suggested that companies should rebuild foundational R&D capabilities, embrace new financial tools such as real options to ensure that they appropriately prioritize risky projects, and increase the technological competency of their Boards of Directors.
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Source: Scott Anthony | The Atlantic
Image: Oak Ridge National Laboratory