For many people in industry, the connections between innovation and manufacturing are a given—and a reason to worry. "We have learned that without a foothold in manufacturing, the ability to innovate is significantly compromised," says GE's Idelchik. The problem with outsourcing production is not just that you eventually lose your engineering expertise but that "businesses become dependent on someone else's innovation for next-generation products." One repercussion, he says, is that researchers and engineers lose their understanding of the manufacturing process and what it can do: "You can design anything you want, but if no one can manufacture it, who cares?"A specific example:
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. According to research by Erica Fuchs, an assistant professor at Carnegie Mellon University, the development of integrated photonics, in which lasers and modulators are squeezed onto a single chip, has been largely abandoned by optoelectronic manufacturers as they have moved production away from the United States. Many telecom firms were forced to seek lower-cost production in East Asia after the industry's collapse in the early 2000s, and differences in manufacturing practices meant that producing integrated photonic chips was not economically viable in those countries. Thus a technology that once appeared to be just a few years away from revolutionizing computers and even biosensors was forsaken. Economists might argue that we don't care where something is produced, says Fuchs, but location can profoundly affect "the products that you choose to make and the technology trajectory itself."(Full article here). (H/t Instapundit).
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