U.S. manufacturing and technology: Innovation to keep sector going

August 7, 2012

While the transition of manufacturing work from the U.S. to China during the 1980s and 1990s has long been discussed, the move of this production back to American soil has occurred at a much quicker pace and without a lot of the fanfare of the outsourcing trend.

Though much of this transition back to the U.S., colloquially known as insourcing, is due to rising fuel costs and increasing wages for Chinese workers, another component of this move is the innovation and altered business strategy associated with American firms.

The Electrical Engineering Times reported that innovative U.S. technology has been one of the underlying factors that has brought manufacturing work back from China, and a number of specific sectors in the tech industry are going to begin ramping up American production levels in the near future.

Vivek Wadhwa, a former software entrepreneur and tech pundit, noted that the advances being made in the U.S. will almost cripple the Chinese industry, as only basic production tasks will occur in Asia if the current trend continues.

"Technical advances will soon lead to the same hollowing out of China's manufacturing industry that they have to U.S. industry over the past two decades," Wadhwa noted, adding that enabling technologies are only becoming more advanced due to increased investment.

Wadhwa noted that the most innovative technologies that will help the manufacturing sector are robotics, artificial intelligence, 3-D printing and new molecular materials. These specific industries are going to bring down costs, limit the possibility of waste and ease operations for local manufacturers.

"All of these advances play well into America's ability to innovate, demolish old industries, and continually reinvent itself," said Wadhwa. "The Chinese are still busy copying technologies we built over the past few decades. They haven't cracked the nut on how to innovate yet."

Laura Tyson, a professor at the Haas School of Business at the University of California, Berkeley, noted that the trade policies, despite the current deficit that exists, of the U.S. will also help to support this boom in the specific tech sectors.

"Trade also strengthens competition and encourages innovation, the major driver of economic growth. These benefits of free trade are realized regardless of whether overall trade is in surplus or deficit," she told The New York Times.