I just finished reading an article from the July-August issue of Harvard Business Review that I found frightening and thought provoking. The article is about Global Competitiveness — but the sub-title is what caught my eye — WHY AMERICA CAN’T MAKE A KINDLE. Although the Kindle was designed in California, the important components are made in China, Taiwan, and South Korea and the entire unit is assembled in China. Consider the major components:
- The battery comes from China — When America outsourced laptop computers to Asia we gave up on battery technology
- The display comes from Taiwan — We no longer have the expertise because we gave up flat panel LCD manufacturing to Asia.
- The wireless card is made in Korea — the Korean mobile phone industry is more advanced than ours, so the latest advances in wireless technolgy come from there.
- The injection-molded case comes from China — We don’t have much of this capability left inasmuch as we have outsourced most toys, consumer electronics, and computers to Asia.
We have focused on the short-term and “shareholder value” for the past fifteen years or so. But we have neglected to consider the long term sustainability of our manufacturing base. We have deluded ourselves into thinking that we can be a service economy (What !? Selling sub-prime mortgages to one another?) and that only we have “imagination” for the next great thing. I think that both of these assumptions are frightfully weak.
Frankly, I don’t know what to suggest except to say that all of us need to worry about our knowledge base and our collective willingness to mortgage our future for “every day low prices.” That said, there are NO short-term solutions. We need to rebuild our expertise so that we have the competitive advantage here at home to make some of the things we want to buy.
What do you think? Am I being a crabby old man and too narrow-minded or am I right to be worried about our future?