From confronting a pandemic with new mRNA vaccines to shaping tomorrow with SpaceX’s rockets and Apple’s new chips, we see that the material world still has the power to excite.
Yet even as more people than before value tangible products, that admiration has not produced a wider shift in thinking that treats manufacturing as an important strength in the technology world. The U.S. president and Congress are pressing America to rebuild its manufacturing base. Federal incentives help, but government action by itself can only achieve so much. Success should mean not simply adding excess capacity, but restoring American manufacturing ability. That will require direct involvement from the tech community, which should stop writing off manufacturing as a “commoditized” task unworthy of smart people.
Software is fashionable, but we need more than software to reshape our physical world. Software alone will not construct manned bases on Mars. Software alone will not decarbonize the atmosphere. And software alone will not make our cities gleaming wonders. America needs to be a place that builds. Manufacturing capacity isn’t merely a nice-to-have to respond to emergencies, but is the key to realizing a technologically-accelerating civilization. The Bay Area once led in manufacturing — it was where transistors were first produced at scale, spawning the computing industry — and can do so again. Let’s once more prioritize the “silicon” in Silicon Valley. To do so we have to prize manufacturing as more meaningful work.
Technology is process knowledge
At first look, U.S. manufacturing appears healthy: real output is near record levels, after all. And America achieved enormous success in ramping up mRNA vaccine production, thanks to a huge push from the scientific community and substantial government backing for both purchases and production.
But the vaccine success was an exception to a broad stagnation in manufacturing capabilities. Over the last few years, smaller companies have struggled to quickly produce relatively simple goods, larger companies are failing to master technologies that other countries have mastered, and construction of public infrastructure is regularly subject to outrageous cost overruns. It’s not just that manufacturers couldn’t produce items as uncomplicated as masks and cotton swabs early on in the pandemic. Manufacturing leaders like Intel and Boeing have also fallen on hard times: The former has faced persistent difficulties migrating to more advanced process nodes, while the latter’s 737 MAX has laid bare a challenged engineering culture.
We need to acknowledge that something fundamental in American production culture has broken. A steady deindustrialization is one reason that America can no longer build. The manufacturing workforce today has shrunk by 40% from its peak in 1980. Only around 10% of integrated circuits are manufactured on American shores. Some of the declines are due to automation and technology upgrading. But American businesses also embraced offshoring manufacturing with a greater zeal than those in other industrialized countries. While manufacturing as a share of U.S. GDP has shrunk from 25% in the 1950s to just 11% in 2020, that share in Germany, Japan, and South Korea has been basically stable around 20% in the last few decades.
To reindustrialize America, we need a more subtle understanding of what technology really is. Technology can be divided into three parts: tools (like pots, pans, and the stove); explicit directions (like recipes); and, above all, process knowledge. That is the learned experience of what cannot be written down. Everyone understands that no memo can spell out every detail of a job. It should be clear that someone with no cooking background would struggle to do something as ordinary as frying an egg, even with a brilliantly equipped kitchen and exceptionally detailed recipes. As I have written before, that practical know-how is everything.
If every patent and blueprint vanished tomorrow, we would still remain an advanced industrial civilization, because trained engineers are ultimately the source of technology. But if people vanished, then no amount of detailed instructions could rescue us, just as a pharaoh from the past could not build a modern car even if given the most intricate blueprint. Rather than treating intellectual property and tools as the final goals of technological progress, we should see them as byproducts of training better scientists, engineers, and technicians.
The loss of eight million manufacturing workers since 1980 has broken apart process knowledge in industry. Shutting a factory sets off a chain reaction of loss. A factory is a place where many skills are learned: not just line workers, but also machinists who refine tools, modelers who decide how resources are allocated, and industrial designers of new processes.
This is not an argument that everything can or should be “made in America.” For U.S. companies, moving manufacturing offshore has often made strong business sense. In particular, it has been extremely profitable for Apple to concentrate on design while having its phones assembled in China, and for Facebook and Google to distance themselves from the physical world and largely operate in the digital sphere.
But a focus on the most profitable slice of the value chain has resulted in the broad neglect of manufacturing skills. It’s not just that the number of manufacturing workers in the U.S. has collapsed (which means the loss of a great deal of industrial process knowledge) but fresh grads are finding it much more exciting to work in finance or software, both of which scale beautifully, instead of improving industrial processes. The costs of that decay and lack of new entry are now being painfully felt, for both small and large American manufacturers.
As Germany, Japan, and South Korea have demonstrated, it is possible to keep manufacturing at a stable share of GDP. I will concede, however, that they have also lost manufacturing workers even as manufacturing output has increased. In my view, though, these countries still did something right: they answered globalization by moving up the manufacturing value chain, while the U.S. manufacturing base mostly answered by giving up production. What these countries understand is that technology is, at bottom, about process knowledge. They have not taken the dismissive view that manufacturing is “commoditized” and therefore should be sent to China. Instead, they show that knowledge must be practiced if it is to be preserved even at its present level. That has meant sustaining a domestic talent ecosystem capable of continuing to figure out how to do new manufacturing work in better ways.
A technologically-accelerating civilization
Giving manufacturing a larger role is not only about having the capacity to respond quickly in crises or about bringing back the economic health of industrial leaders. It is the key to ensuring that America can still accomplish large things. The Bay Area is a close-knit network in which universities, investors, skilled managers, and a large pool of engineers are near one another. Imagine how much stronger it would be if it were also a place where technologists could easily reach manufacturing facilities to quickly create new products. Historians and innovation-cluster experts know that a dense web of economic links is part of the magic that makes an ecosystem function. It worked not only for chips, giving Silicon Valley its name, but also for automobiles, biotech, space, and more.
In modern manufacturing, advances in software and communications technology have made it easier to place hardware far away. But by separating design from manufacturing, we have weakened the feedback loops between them. It is no longer as easy for inventors and creators to trade ideas quickly and test new things. Ready access to manufacturing capability would let knowledge flow, moving up and down the stack to improve both design and production.
This inability to manufacture keeps America from leading. For instance, there are few major American robot makers; the field is dominated by Europe and Japan. If much more of the world is to be powered by robots in the future, shouldn’t America lead in both building robots and owning the IP of robot making?
Imagine the gains from controlling far more of the hardware production around the smartphone. Offshoring iPhone production to Shenzhen has helped that city become the world’s hardware innovator. Years of steady worker training have turned thousands of line engineers into the world’s top experts in electronics assembly. That has fueled the rise of Chinese smartphones, which dominate the developing world today, and made Shenzhen the leader in follow-on products — “the peace dividends of the smartphone wars” as Chris Anderson describes it — including consumer drones, scooters, wearables, and much more.
America should not be satisfied with being a country that invents new things but leaves others to actually make them. It is not only about robots or consumer electronics. The U.S. should also lead in other crucial technologies. Renewables are one example — the solar panels that will power the batteries that will power electric vehicles.
The U.S. has a remarkable capacity for great science and new invention. But it is consistently outperformed by other countries when it comes to scaling those ideas. Rebuilding manufacturing will help America avoid the mistakes of the recent past, improve today’s technologies, and lead the industries of the future.