Waking the sleeping giant

I recently heard a podcast about this commentary in BusinessWeek by Intel CEO Andy Grove.    The Yanks can be a slow moving bunch but once they get the ship turned around, it can be a steamroller.    I am growing increasingly convinced that manufacturing – good old fashioned manufacturing – is going to become a national priority again in the wake of the recession.

For the past 25 years, America really didn’t particularly want manufacturing – there were some southern U.S. states that pushed hard for it but as a country the model seemed to be “we do the R&D, software, finance, etc. and we’ll let other countries do the lower value manufacturing”. 

But when your labour market is short 7 million jobs, it changes your perspective on things.    I think you will start to see a few things:

1. More stuff like Andy Grove’s commentary guilting both companies and governments to make manufacturing a priority.

2. Even more lucrative tax incentive and support programs targeted to manufacturing jobs.

3. More focus on Buy American.

Don’t get me wrong.  I don’t expect plastic toys or tee shirts to be manufactured in the States but anything mid to high value with some J.I.T. sensitivity will be increasingly repatriated to the states.  Companies will adjust their business models to add more domestic manufacturing.

It’s just a guess but as was discussed in the podcast, India and China are now catching up to the States in terms of R&D, software, etc. as well as manufacturing.  Nothing is sacred anymore and the U.S. will need to re-assert itself.

I think this bodes well for New Brunswick.  We should be able to carve off a very small niche, I think, of this trend.

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One Response to Waking the sleeping giant

  1. Mike says:

    That is increasingly becoming talk around capital hill lately but I fear that it may be too late for such a reversal. I have been here in China for a little over a month now and have met a bunch of CEO’s and investment bankers. Most of which say the future is in China/Asia, more Asia through China actually. Pharmaceuticals, Chemicals, Automotive, and the list keeps growing. Many are finding it increasing more attractive to position themselves in China. Many R&D centers are being moved to China for its lower labor costs and for its domestic markets. One Pharma executive was explaining to me how the market for drugs like asprin has just begun to take off in China and is poised to become one of the largest in the world. Look at the domestic automotive market! It surpassed the U.S. in total sales last year! How can we compete with this?
    You may rebut with China’s focus on exports and a pegged currency but thats not going to change in a way that is going to derail this economy any time soon.
    I think it is going to be very important for the U.S. and North America to make sure they address this. Or is it already to late?

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