When manufacturing is offshored, we may lose many potential insights that can only come through the experience of producing things ourselves.
Why is China so good at making solar panels? According to this article from The Atlantic, the answer has to do with the outsourcing of semiconductor production. When computer makers sent this manufacturing overseas many years ago, it didn’t seem as though they were giving away a core capability. However, the experience with processing silicon and applying it in thin films proved directly relevant to solar panels, and set the stage for innovations in designing and making this end product.
The moral is as follows: When manufacturing goes away, part of what is lost are the many potential insights that can only come through the experience of producing things.
To read even more on manufacturing as an innovation resource, see this article, which looks at the early days of high speed machining.
That same Atlantic article linked abovealso offers a formula for promoting (the article says “reviving”) U.S. manufacturing. The formula includes reducing corporate taxes, renewing the tax credit for R&D, ensuring access to low-cost capital and implementing a manufacturing training program seamlessly extending from high school into community college.
You may or may not applaud these steps. Personally, I’d favor reimbursement for employers’ training efforts. What would your industrial policy include?