I saw a program about the future lack of R @ D in America. Most research has been triggered by trying to find better ways to manufacture products. Technology from seemingly disparate industries overlap.
As an example when lasers were invented who would have thought it would change the cutting industries ,automotive and medical like it did. But if most industry is gone the immediate financial impact does not exist.Without industrial use the technology is mental exercise. There are a lot of people trying to improve the manufacture of autos. That includes electrical and hydrogen . It will be mostly be done in China and India. They can easily implement it in their assembly lines. We are becoming a financial center with shuffling papers and providing services as our product. We should have fought hard to keep our industrial base. What is the future for a mechanical.electrical engineer or a programmer. The work is not done here.
According to the CIA world factbook, in 2007, industry made up 20.6% of the US’s GDP. This is comperable to other “developed” countries (Germany 29.6%, France 20.7%, UK 23.6%, European Union as a whole 27.1%, Japan 25.2%. So, the US isn’t really an outlier…it’s pretty similar to other countries of its level of development.
For that matter, India only has 28.4% of its economy dedicated to industry.
Which program was that? I’d love to see it.
I’ve been saying for years that our R&D base is practically gone. Between 1990 and 2000 we lost the remainder of several major R&D labs – the main Bell Lans in Holmdel NJ, GTE Labs in Waltham MA. All the Polaroid labs. What was left of American Optical. Johnsomn and Johnson Labs in New Jersey. There have been cutbacks at other R&D labs that didn’t shut (IBM labs was required to show a profit – NOT including patent licensing fees!) New R&D labs were being built by companies like Bell and GE – but not in the US. This isn’t for lack of interest or talent – people wrere laid off when those places closed. It’s just cheaper to do it elsewhere.
I was lucky to be able to stay in research labs during much of that time. But it’s tough to do R&D when the manufacturing is elsewhere. And if we’re neither doing R&D nor manufacturing, what are we doing but management and money shuffling? And how long before the companies decided that that’s easier and cheaper to do overseas as well?
Along the New Jersey industrial corridor new huge buildings are going up – but they’re not factories, nor R&D labs. The factories are being torn down (and Bell Labs in Hol;mdel just missed being torn down). These new buildings are warehouses to store manufactured goods being shipped in from elsewhere.
So, gonzo, you think the Indians and Chinese are incapable of conducting research and development? Of course, this whole thing is premised on the notion that we are somehow losing our industrial capacity. As the cite above shows, that’s a premise that isn’t based on facts.
So, instead of bitching about it, why don’t you open a research/manufacturing center in the US? If your theory is correct, you’ll make a killing!
Or, did you mean that other people should risk their capital, but not you?
Nothing gonzomax has said would lead anyone to honestly sugggest that he didn’t think the Indians or Chinese are incapable of performing R&D. He’s bemoaning the fact that none is being done here.
And nothing being cited shows that we’re not losing industrial capacity. It;s pretty clear that we have, to a considerable extent, since more manufacturing has moved out of the country than has come in. Captain Amazing’s cite simply shows that, as a fraction of GDP. ours is in line with France (and lower than everyone else’s he cites).
John Mace’s suggestion is impractical – neither gonzomax nor I (nor anyone on this Board, I suspect) can bankroll an R&D facility. People with money are moving them to where the labor’s cheaper (and, not coincidentally, where the factories are – as I said, it’s good to have them together. And the companies see it as good to have them in countries where they’re trying to foster new markets). None of that contradicts what I’ve suggested that this is not a good thing for the US.
Outsourcing is not the same as offshoring. What actually happened was that all except the very biggest manufacturers outsourced their production to contract manufacturers like Solectron. Some of their plants are in the US, some are in Asia. Far from reducing manufacturing efficiency, this increased it, since these companies have the scale to invest in productivity improvements that companies with small factories do not. Don’t think CMs don’t care about this stuff, since a reduction in manufacturing costs goes right to the bottom line. Do you have any data that manufacturing efficiency has gone down? I’ve never seen any, and I would.
The real problem with this model is that a lack of vertical integration means that profit has to be maximized at each stage of the supply chain, not globally. If you have a contract to buy boards from a CM at a given price, you are not going to add component cost to your product even if it reduces manufacturing costs more. But this has nothing to do with where the board is made.
Hell no. I think that they will do it fine. They also have instant application. They have an industrial lab to see how things work out. At one time we were by far the biggest research country. I think we gave it away when we allowed our industry to be moved abroad.
I was involved in manufacturing for 35 years. I have seen how rapidly our technology changed. We were cutting edge. China and India will be now.
Are you talking research or R&D? Only a tiny part of Holmdel involved research. I suspect very few people in Holmdel ever went to a factory. I worked in manufacturing research for AT&T, Western first and then Bell Labs, so I went to pretty much every factory we had. Most of the research people at AT&T were in Murray Hill, but even that was mostly development.
Unless you’re talking about manufacturing R&D, I don’t see how you can say R&D can’t be done without manufacturing. The company I work for only manufactured its own stuff completely when it was small, and did system assembly after that. We’re doing plenty of R&D. Fewer and fewer IC design houses have manufacturing, since fabs are too damn expensive. That hasn’t cut down R&D at all.
I think it is natural for government to fund real research, since the results will be more broadly available. How many good ideas got locked up inside a company that didn’t want to exploit them until they were “stolen” by someone else or the inventors left to form a start up. Look what happened at Xerox PARC. We even tried to sell some of the software that came out of our research on the outside, and we were terrible at it. IBM tried also, with equally bad results.
Holmdel didn’t close because of the end of US R&D, but because AT&T and its successors got managed into the ground, and because the center of gravity of research moved from NJ and MA to Silicon Valley. When I decided to leave Bell Labs there was practically no where else in New Jersey for me to go. When I left Intel finding another job was easy, I didn’t have to move, and my commute decreased.
The “R” of “R&D” is Research. Whever anyone talks about the loss of R&D, they immediately start talking about just Pure Research, equating it to “Blue Sky” research, which always pisses me off. R&D is Research and Development, and Bell Labs did both – not Development directly for manufacturing plastic handsets, but a lot of their work was geared for not-too-far down the road applications. It wasn’t Blue Sky.
And Bell Labs may have been managed badly, but its fall coincided with the closing of too many other R&D labs. The nineties were a bad time for those labs – Textron Labs (formerly the Avco Everett Research Labs) shuit down, too. And I note that this was in advance of the fiberoptic purge and the dot-com bubble.
I didn’t say R&D can’t be done without manufacturing. I said it’s easier if you’tre near manufacturing – and not just manufacturing R&D. It’s easier to get and borrow equipment, to divert stock for experimental purposes. A LOT easier than if you have to go out and buy all the stuff. I speak from experience here.
Why? Could you elaborate?
Not at all. You think that you need to be able to manufacture something in order to bother doing basic research…or even focused research? Why? If I develop a new battery that is 100% more efficient than the current crop, that recharges faster and gives the user a pony, I don’t need to manufacture those batteries…I simply need to patent the process and then sell (either here in the US or abroad) to someone who DOES have the capital and/or manufacturing capabilities.
Um…do you have any facts to back this incredible statement up with? Is the majority of research and development of electrical and hydrogen alternatives being done in China or India? Afaik the majority of such research is being done in Japan, in Europe and…well, here in the US.
While I have no doubt India and China are also doing some research on this, I seriously doubt they are major players at this point. Once the market picks a winner in the alternative fuels war (IIRC Japan is betting rather heavily on hydrogen while I believe Europe is going more toward rechargeable electric or hybrid), once the processes and products are developed and the market carved out…THEN you will see India and China going great guns to develop the manufacturing capability to meet the demand.
No they can’t. It’s going to take a complete retooling of their current manufacturing plants, retraining of their work force, etc etc. And FIRST the new technology needs to be researched, developed, manufacturing processes and markets developed, etc etc before the Indians and Chinese can even start to retool. The nation(s) that actually develop the next big thing are going to have a bit of a jump before the India’s and China’s of the world take it, re-engineer it, repackage it and make it better and cheaper.
America is in a post-industrial age…we can’t really compete on the world market with mass produced manufacturing because our labor costs are so much higher. That doesn’t mean we can’t or aren’t developing new products, new processes or new technologies…we can and we are. We just aren’t alone anymore…other nations are also doing the same kinds of things.
Depends. Not all jobs lend themselves to being outsourced. In addition new processes and new technologies when they first appear on the market lend themselves to being produced in countries like the US, at least initially because their higher labor costs are balanced with the fact that the number of manufacturers is limited initially. If, say, GM develops that mythical battery I described earlier then they are going to initially manufacture it here most likely…at least in the short term.
My question to you gonzo is…well, what would you do to solve what you obviously see as a problem? Would you cut our labor costs so we could compete with the China’s and India’s of the world? Would you subsidize industry so they could compete? Would you force companies to manufacture products at a loss? Or would you impose large tariffs on countries attempting to import goods and services into the US?
-XT
In fact, according to the World Factbook, in 2007, our industrial production growth rate was at .5%, showing that we increased industrial production that year. Admittedly, it’s not by much, and, in fact, is less than most of the rest of the world (We’re 168th out of 181), but, in fact, we’re gaining industrial capacity.
The other thing that comes to mind when reading the OP is that not all industry is created equal. A sweatshop making t-shirts is going to have less R&D associated with it than a factory making microprocessors. Of the industry we’re “losing” to foreign countries, how much of it is the high quality/high tech microprocessor kind, and how much of it is low quality/low tech stuff like t-shirt sweatshops?
There is nothing impractical about putting together a business plan and selling it to some investors. It happens all the time. Unless, of course, your business plan isn’t any good…
Stop trying to back this one up. What you are saying is trite. Most of us here do not have the requisite knowledge, connections or money to get such a plan started. So talking about the issue isn’t just a matter of brass tacks and hitting the grindstone.
One thing that is not recognized by the OP is the lack of an academic culture in India and China. The University systems in these nations need to become world class before such R&D as he is describing really takes off. This is still a few decades out. There is a lot of structural development not yet put together in these nations that they will require to become competitive with the west. It’s going to happen, but these things aren’t exactly adoptable as simply as it’s being portrayed.
The fact is is that as you design and develop a product ,you are constantly looking at ways to improve it and the manufacturing of it. Sometime the changes are small and sometimes they change everything. But they are a result of trying to make a better product. If we do not make the product, if we do not deal with it and the manufacturing daily ,we will not have the same familiarity and drive. Sometimes you just look at a line as it works and an idea comes to you. Sometimes you read a magazine of new products and tools. Then say aha I can use that to cut a step out of our line. It will not be the same if it is in China.
98% of people who say they are doing R%D are doing pure D. There is really no difference between my friends at Allentown who did processor and DSP design and my colleagues doing processor design at my current company. At Bell Labs we split projects into three classes. < 2 years was pure development. Area 11 did > 5 years. Most of the research I was funded for was 2 - 5 years. (Usually 30 - 50% of my group’s budget came from research money, and for a while I ran a 100% research project of a bit over $2 million. )
The pure R part is gone except for a few monopolies, but the D is as good as ever.
All for the same reasons no doubt - the purely financial return no longer justified them, and the non-monetary returns were no longer enough. The budget for my center went into the Bell System capital base, and our profits were a percentage of that base, so whatever they spent on us had a guaranteed return, even if we never did anything useful. Plus, our purpose was to improve manufacturing efficiency, so it was easy to justify to the regulators. Our budget approval process was basically the Western Electric board coming in the morning, listening to a few talks, signing the check, and then going to play golf in the afternoon. We were not as effective as we could be.
Depends on what you’re making, I suppose. Sample ICs coming from next door might be a little bit faster than ones coming from across the country, but not much. Even in AT&T, which had manufacturing, did not have it co-located with R&D. Denver did, but Indian Hill products (switches) got made in Oklahoma City. Holmdel and Whippany didn’t have manufacturing at all.
I think the local optimization I mention in post #7 is a much bigger problem But I do miss being directly connected to a fab where I can get the data I want, and not beg for it from our supplier.
If you have contracted with a CM for a certain price and a certain quality level, and are getting it, you have no financial incentive to try to do things to improve manufacturing. In fact, if your product goes on a line with a bunch of other products from other companies, twiddling with the process for your product may screw up the others, so the CM is going to optimize over all products,not just yours.
Now if you are talking about a small factory for one company, I can see it, but I toured a few factories around Portland last week, and there were some 40 year old machines in one of them. They can’t afford to upgrade everything, but a bigger factory with more customers might.
It’s a tradeoff. My salary came from manufacturing for much of my career, so I’m biased towards it, but outsourcing does have advantages.
Financial. That is it. I have worked at companies that have outsourced a little. then more and then practically everything. Then when they were losing control and the continuity was gone they began to bring more and more in house. The proper level is hard to tell .
But as far as America is concerned,when industries go abroad ,the R@D go with it. The future product and build development go with them. Soon it belongs to someone else and we are outsiders to the technology.
There is a famous Harvard Business Review paper, from the late '80s, I think, about core competencies. Few companies core competencies involve janitorial services, so they contract those out. My company is very good at designing chips, but has never tried to make them, and so we have always outsourced that. That was a good move.
If your core competency is manufacturing, great. But you need enough volume to compete with companies that only do manufacturing. The benefits of having your own manufacturing had better outweigh the increased costs, especially since your competitor can afford more engineering for process improvement. Yes it is painful, especially if you are supporting the internal one.
As for off-shoring, perhaps we won’t have to worry much longer. The May 19 E-Week has a little piece mentioning that the Chinese are opening a factory in South Carolina because it is cheaper. Not the salaries, but the land. So, if the dollar continues to fall maybe we’ll get it all back.