Manufacturing & The Economy
Helmuth Ludwig, CEO of the Siemens Industry Sector in the United States, writes in the Reuters blog The Great Debate that America is still indispensible to his company’s success. Siemens currently employs 60,000 in all 50 states:
- First, the idea that the world is “flat” has been supplanted by the idea that speed matters. Innovation speed is now understood to be a competitive advantage. So keeping design and manufacturing half a world apart – manufacturing in China, for example, when your design team is in California – makes less and less sense.
- Second, the assumption that lower wages always correlate with lower total cost has proved to be false. Manufacturers increasingly recognize that months-long transportation chains can contribute to substantial direct and indirect costs.
- Third, the belief that U.S. energy costs would be a long-term disadvantage has been deflated by unconventional fossil fuel reserves. The “shale gale” is driving U.S. natural gas prices to less than a quarter of those in much of Europe and Asia.
- Fourth, the faith that outsourced “low-value” manufacturing jobs would be replaced by higher-value service jobs has been adjusted to the reality that manufacturing underpins the economy. It is crucial to create and sustain steady high-wage employment.