Watch the latest GPS special ‘Global Lessons: Putting America to Work,’ this Sunday at 8 p.m. ET.
By Willy Shih and Gary Pisano, Special to CNN
Editor’s note: Gary Pisano and Willy Shih are authors of the new book ‘Producing Prosperity: Why America Needs a Manufacturing Renaissance,’ and professors at Harvard Business School. The views expressed are their own.
Both U.S. presidential candidates have promised to bring back manufacturing jobs by promising new initiatives to support manufacturing. Listening to them, it would be easy to believe that growth in manufacturing will solve our unemployment problem. But if we look beyond the promises, we believe the reality will be a little harsher.
Manufacturing only employs 9 percent of our workforce, so expecting manufacturing to address our high unemployment rate is unrealistic. With any reasonable amount of productivity growth, we would have to grow manufacturing disproportionately relative to the rest of the economy in order for manufacturing to put a big dent in the employment rate. And while the offshoring of manufacturing led to the loss of many jobs, most of those jobs will not be coming back. The reason is many of those jobs were very sensitive to comparative labor rates (whether they are for lower skill assembly or more complex tasks), and as nations and regions who compete with us can offer equivalent capabilities at a lower cost, wining those factories and jobs back would require us to lower our pay rates and standard of living. We don’t want to do that.
We believe that the most important reason to bring manufacturing back and grow it in this country is that the ability to manufacture underpins our ability to innovate in many fields. When manufacturing process technology is not yet mature, or when products are tightly integrated systems that are not easily modularized, a great deal of the work in “industrializing” a product – that is getting it ready and putting it into volume production – is high value-added knowledge work that supports future innovation in the field.
A great example is Intel Corporation’s latest generation of “Ivy Bridge” family of microprocessors. Intel has invested tens of billions of dollars in its factories in Oregon, Arizona, and New Mexico so that they are able to produce the most advanced semiconductors. In order to produce its Ivy Bridge chips in the latest generation technology, it had to maintain a tight loop between the engineering team designing the chips and the engineers designing the manufacturing process. Understanding how to make a product in volume is very different from being able to build a one-of-a-kind prototype, and the process that engineers and workers go through is an important part of innovation. Many in the industry say that Intel has a two year lead on its competition as a result.
Another outstanding example of manufacturing capability sustaining innovation can be found at the GE Aviation Durham Engine Facility in North Carolina. If you walk across the floor where they assemble commercial engines that power the world airliner fleet, you see skilled teams who are constantly improving manufacturing processes. We saw one last year on a product that had been in production for over 10 years. Yet the constant back and forth with engineering, the teaming both on the floor and across disciplines, embody a unique capability that keeps GE in the lead in the large turbofan engine market.
Keeping manufacturing close to R&D is vital when you are innovating in biotechnology based drugs. Just because you can make a few milligrams in the lab does not mean your job is done – producing it in quantity at an economically viable price requires innovating the process. And the ability to do that requires nearly constant interaction between R&D and manufacturing. If the United States wants to be a leading innovator in biotechnology, it needs to have the capacity to innovate in manufacturing.
The manufacturing jobs that come back to America (and we hope there will be many) will not be the ones that left. The manufacturing jobs of America’s future will be more demanding of the skills of our workers, they will require more sophisticated computer skills, and an ability to work hand-in-hand with product designers to improve processes, or to assemble complex systems. They will require more education and training, and they will require continuing education as the pace of change in products and processes steps up. In short, manufacturing is becoming knowledge work. And more and more, such work will be a key enabler for America to continue as the most innovative place on the planet.