Credit: Conrad Warre when too many companies outsource their manufacturing, industrial ecosystem may suffer from the consequences to long terme.2011By Thursday, July 7, William M. Bulkeley
It is called movement in economic value chain: US companies are still more design and create products that are built elsewhere. Prosaic manufacturing, with its razor-thin profit margins and ruthless competition, has been entrusted to Asia. But researchers who study innovation are beginning to see a troubling stigma: the ability to innovate sometimes disappears with manufacturing.
Professors of Harvard Business School David Pisano and Willy Shih put a lot of business people to rethink whether the manufacture of the issues with an article in the Harvard Business Review 2009 entitled "restoring American competitiveness." In addition to lamenting that outsourcing manufacturing reduced U.S. employment prospects and exacerbates the imbalance of trade, academics argued that economies where manufacturing skills cancel are less likely to cover future innovations. Because American companies ceased to LCD screens, for example, there is no in-house expertise to build screens for Amazon Kindle reader, even if its crucial technology was developed at Cambridge, Massachusetts. Because the expertise in thin-film deposition has moved to Asia with the production of semiconductors, Chinese firms have a leg up in the manufacture of solar panels.
Scholars characterize the ecosystem of innovation as a kind of industrial towns. Each company sharing the skills and knowledge underlying an industry. "The tragedy of the Commons, is that when a company takes the view in the short term, they don't worry about the value of the Commons," Shih. »
The problem of Commons is easy to see in an industry such as fishing. If a fisherman double its effort, he may double his income, but if all them double their effort, fishing will be quickly exhausted. Industrial Commons are somewhat different, because the participants contribute to the knowledge base and the supply chain rather than just consuming resources, but when a company to the outsourcing of manufacturing it exhausts the Commons just as certainly as overfishing.
When companies outsource their work, vendors close or moving, engineers learn different skills, local colleges fall courses of vocational training and the ecosystem is shrinking. Even if a given company employs just as many engineers and designers as before, they will be part of a smaller community. In their article, Pisano, and Shih noted that a lot of knowledge is still transferred between engineers of face to face meetings and which, according to some research, more industrial knowledge is transferred when people change jobs. A small ecosystem in which manufacturing is delegated to organizations in the offshore, of such transfers more difficult.
In addition, manufacturers to the coast tend to benefit their manufacturing expertise. Driven by the pressure to increase profits, they take an increasing share of the work of design for many products. Today, except for Apple products, almost all laptops are not only built in Asia but designed there is also good.
Shih, who is 57, was a veteran Manager at IBM and Eastman Kodak before coming to Harvard in 2007. Of his Office on the fourth floor in a building it shares with the marketing and finance professors he says that now he is able to understand the issues that he "could not quite articulate" when he was at Kodak.