Editor's Page -- A Wake-up Call From Asia

China and India very aggressively are pursuing advanced manufacturing. Increasingly, China's exports to the U.S. are composed of advanced-technology products.

If you think competitors in China, India and other emerging economies will settle for low-value-added, high-labor-content jobs forever -- or even the near future -- you'd better wake up. Are you directing your company into head-to-head competition with massive numbers of these new, lower-cost companies, whether high-tech, low-tech or anywhere in between? Have you determined how to integrate your company into a global supply chain that increasingly includes your low-cost colleagues? If not, you are at risk of becoming irrelevant.

Not convinced? Ask yourself and honestly answer a few pointed questions. Do you truly believe that companies in the world's developing countries are satisfied with following along in the U.S.' shadow? Do you really believe that they'll wait patiently until we're ready to offshore a small selection of the particularly noisome work in the industries that we pioneer?

Isn't that not only illogical but a bit arrogant?

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China and India very aggressively are pursuing advanced manufacturing. Increasingly, China's exports to the U.S. are composed of advanced-technology products. And just in the past month alone, Intel, Microsoft and AMD announced world-class investments in India to build an infrastructure for more complex high-value added work. Singapore, too, is committed to take its manufacturing sector to a new level.

Yes, I know some of this competition is unfairly subsidized by aggressive currency management and other means. That's why you must also continue to challenge public policy leaders to ensure trade rules are followed. For too long we've allowed politicians to get away with the stock response that the jobs we've lost in manufacturing will be replaced by higher-value-added manufacturing jobs, financial jobs and other service sector jobs, as if such jobs are "safe" from foreign competition. Ask them to explain how such logic squares with recent headlines. Just last month J.P. Morgan said it would add 4,500 employees in India by the year 2007, mainly by setting up operations in Bangalore to support its growing structured finance and derivatives businesses globally. Such jobs are not the simple, low-value call-center work that up to now we've associated with this developing economy. And J.P. Morgan isn't alone; UBS and Goldman Sachs earlier made similar announcements.

Yes, global restructuring will push U.S. industries to higher-value work, and statistics show that's happening. But can we afford to be so arrogant that we believe that these fast-growing countries will leave finance and other lucrative services industries to us?

While you work to rectify weak or misguided government response, you've got to get on with dealing with global realities. I do not tell you this to elicit a woe-is-me response or to suggest that these developments are bad. Indeed they are good news for the world economy. They can lift millions of the world's citizens out of poverty. Rather, I say it to reiterate the urgency about meeting the global challenge and capturing the global opportunities. We must think differently about the challenges and opportunities we face today, think more deeply about what it means to operate on a truly global scale and act quicker.

No country has a monopoly on innovation, and whatever advantages we have can in a very short time disappear. Other countries know the route to prosperity is through manufacturing and are fiercely competing to attract the world's best manufacturing companies, and best manufacturing technologies to employ their workers and build their economies.

I believe the U.S. will maintain its leadership of global manufacturing, but there are no guarantees. We're not going to succeed if we are complacent. It's time to challenge the too-simple sound-bite logic of the politicians and to prepare your company to compete on a global scale.

Patricia Panchak is IW's editor-in-chief. She is based in Cleveland.

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