Why manufacturing processes matter

Here is an interesting insight from MIT’s Technology Review that show why having a manufacturing base in the US matters. The article “Location Matters in Manufacturing” discusses finding by Professor Erica Fuchs that the shift of manufacturing to East Asia in optoelectronic and advanced materials areas caused new technologies to abandoned because they did not fit into the outsourced East Asian manufacturing processes. And those processes drive the industry: “surprisingly, says Fuchs, she found that manufacturing variables were far more significant than consumer preferences in determining the economic viability of the automotive technologies.”
Fuchs is looking into follow up question — can new companies in the US and other developed countries use these new technologies to compete against the incumbents? That, I believe, depends on if we have a robust innovation policy here in the US. If we can craft policies to effectively support these new companies build around these new technologies, then we might be able to harness the process of creative destruction. But if we don’t, we are likely to get the destruction without the creative part.

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