Editor's Page -- When New Technology Becomes Old

Dec. 21, 2004
History proves the power of U.S. innovations.

Manufacturing executives who are writing to IW are angry, frustrated and, in their own words, frightened at the dramatic contraction of the U.S. manufacturing sector during this recession. Drowning in a tidal wave of imports and squeezed between pricing pressure and rising costs of doing business in the U.S., they're desperate for relief from what many of them contend is unfair global competition. The challenges have many calling for, in the words of one reader, "a public policy shift that levels the playing field of international competition." They have a point. Our public policy leaders, blinded by the promise of a service-based economy, seem to be failing to see the critical role manufacturing plays in our nation's economic strength. As a result, they are slow -- some say they are failing -- to take action that will ensure a strong manufacturing sector in this country. Yet waiting for government intervention is not enough. Even as we lobby government officials for relief, manufacturers must take steps now that will ensure their near-term survival and long-term revival in a world of intense competition -- whether it's fair or not. Last month I expressed optimism that new technologies will lead to the next manufacturing renaissance. One skeptical reader wrote to tell of getting a good laugh from the column. "I wonder," he asked, "what do you call high tech? Servers? PDAs? dig[ital] cameras? Printers? . . ." All, he pointed out, are manufactured mostly in China now. The reality that this reader and many other manufacturers haven't faced up to, however, is that these technologies are old. Sure they're continually updated with the latest state-of-the-art improvements, but most are based on technology that's been around for decades. I'm talking about technologies that are now -- or in the near future -- poised to come out of the research labs, such as nanotechnology, biotechnology, telematics, flexible electronics and grid computing. History tells us that new technology and innovation will return U.S. manufacturing to its former glory. In the '70s, low-cost foreign manufacturers captured the once-lucrative chip manufacturing business. U.S. manufacturers roared back with advances in microprocessors and launched the PC revolution. At the same time Japan Inc. nearly devastated U.S. car manufacturers, bringing to the states low-cost, surprisingly high-quality cars and redefining the nature of competition in the segment. U.S. automakers rose to the initial challenge and later countered with the minivan and, a few years later, the SUV. By the 1980s, PC manufacturing -- the high-technology of the day -- moved offshore. Once again, U.S. high-tech manufacturing regrouped with new technologies clustered around the Internet and high-speed telecommunications. This loss of industries to low-wage countries, along with the creation of new ones -- what economists call "churn" -- is nothing new. Nor are the charges of unfair competition during intense periods of churn. What is new is that now we're in a time of accelerated churn, when technology is copied by developing countries with astonishing speed. This commentary is not meant to belittle manufacturers' current concerns about unfair competition and other issues that are hurting U.S. manufacturers' ability to compete. Their complaints are valid and will bring about much-needed changes in public policy. But it is to remind them that we must prepare for the hyper-competitive future by continually innovating new technologies and processes to keep U.S. manufacturers ahead of the competition. Patricia Panchak is IW's editor-in-chief. She is based in Cleveland.

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