Home' Technology Review : September October 2011 Contents Q&A
TR: What prompted your concern about
the decline of U.S. manufacturing jobs?
Grove: The incredible magnitude of
job loss in the U.S. computer industry. In
the 1970s, the U.S . computer industry had
150,000 workers. This became two mil-
lion at its peak but now is back to 150,000.
Meanwhile, computers went from a $20
billion to a $200 billion industry.
To have that happen and for us to con-
tinue to repeat the mantra that innovation
and technology will save us, in the face of
evidence to the contrary—that was why I
wrote about this.
Aren’t automation and other productivity
improvements major reasons for this
decline in factory jobs?
No. Notwithstanding productivity,
most of those jobs still exist—just not
here. You can correlate what happened
in the U.S . completely to the rise of
contract manufacturing [in which a
company like Apple designs a product
and hands off the production to another
company]. One company accounts for 1.1
million computer manufacturing jobs—
Isn’t it simply cheaper to manufacture in
First of all, try to find an analysis
that tells how much cheaper. You can
probably get whatever answer you want,
depending on the assumptions you
make. Is the local supply chain saving
cost? How much of your support costs
[expenses related to manufacturing, such
as those incurred in product design or
engineering] do you assign to labor in
foreign countries? How much of the ben-
efit of moving a plant offshore is from tax
benefits from the host country?
The received wisdom is that “every-
body knows manufacturing in the U.S . is
dead.” If you believe those things and act
on them, they’re going to be true. I think
venture investments are influenced by
the “everybody knows” factor before the
first spreadsheet is run. And if you don’t
get the money to scale manufacturing
here, you won’t do it. And if you don’t
do it, your suppliers won’t move to the
United States either.
Do any other industrialized countries
provide clues to how the United States
might boost at least some kinds of
Germany managed—in complete con-
trast to the U.S .—to hold on to manufac-
turing and move it upscale. So they do
precision manufacturing, like Mercedes.
Siemens produces high-end imaging
products and power technology. It’s not
that Germany has no problems. It’s just
that employment is not among them.
For that to be more feasible in the U.S.,
what needs to occur here?
I think the biggest enemy of manu-
facturing in the U.S . is the pseudo-
knowledge that America is a bad place
for manufacturing. This perception will
keep manufacturing from happening
and thereby ensure that the reality will
fulfill the prophecy. I think for every
example where companies, states, cities,
governmental agencies do well on this
issue, our government should find ways
of drumming it into the consciousness
of people who are considering building a
plant or who are ready to enter a career
which is not manufacturing-based. It is
probably best to look at this as a major
You don’t sound confident that the U.S .
will recapture manufacturing jobs.
I think all of this is going to happen,
but it will happen too late. In World War
II, American manufacturing won the war,
but even then, it took them two years
to get moving, and that was a different
world. I don’t know any way to break
the cycle except to plug away and create
enough successes that you begin to raise
doubts about the conventional wisdom.
In an article he wrote last year in Bloom-
berg BusinessWeek, Andy Grove called
himself “a onetime factory guy.” It was
a reminder that the 74-year-old retired
chairman of Intel knows from experience
how costly and risky manufacturing can
be. Given these challenges, Grove argues,
the U.S. government should do far more
to nurture manufacturing, or else the
country will face dire consequences.
For one thing, losing the ability to
manufacture things domestically will
make it harder for innovators to scale
their ideas into products, he says. Indeed,
although photovoltaic technology was
invented in the United States, many key
innovations in solar power are happen-
ing in Asia now, largely because the nec-
essary manufacturing prowess is there.
Second, he argues, only manufacturing
can meaningfully reduce unemployment.
That’s why Grove thinks the United States
shouldn’t necessarily focus solely on
“high-value” production of advanced tech-
nologies; it might also be wise to boost
manufacturing of some lower-value goods.
In his BusinessWeek piece, he even
called for taxes on goods made overseas,
with the resulting revenue to be invested
in American manufacturers. Such pro-
tectionist measures are unpopular with
economists. But Grove remains con-
vinced, as he told technology journalist
Robert D. Hof.
Photograph by robyn twomey
The former leader of Intel wants
to see more manufacturing jobs
in the United States—by any
Sept11 Q&A.indd 28
8/5/11 9:59 AM
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