March/ April 2013 Three Ways to Bring Manufacturing Back to America

The much-ballyhooed “in-sourcing” trend is real enough. But it won’t amount to much unless Washington acts.

By Anne Kim

A final benefit of this network might be to counteract what Robert Hayes and William Abernathy called (in 1980!) “competitive myopia,” in which “maximum short-term financial returns have become the overriding criteria for many companies” as the imperative to maximize shareholder returns is increasingly urgent. By providing both the venue and the support for “patient capital” and longer-term investments, the network could help American companies recapture the vision that led to the breakthroughs of the twentieth century.

Another idea would be to train more American engineers, and keep the foreign ones we educate. America produced just 10 percent of the world’s science and engineering graduates in 2008. Moreover, a high proportion of these were foreign, including 57 percent of engineering doctorates and 54 percent of computer science grads. America is facing a potential shortage in one of manufacturing’s key raw ingredients: engineers.

One thought-provoking proposal to boost the pipeline, offered by a Florida task force on higher education reform, is to offer discount tuition for degrees in “strategic areas of emphasis,” such as math, science, and engineering. With college costs soaring, bargain engineering degrees might draw students who would otherwise choose different majors.

And if immigration reform does happen this year, Congress should dramatically expand high-skilled immigration so we don’t export back to our competitors all the foreign-born engineering graduates we’re producing. One idea, proposed in this magazine, is to provide foreign science and engineering students with green cards on graduation, so they can land a U.S. job more easily.

The third and final way Washington can lure back manufacturing is to stop building new cliffs to leap from. We need to end the self-inflicted wounds caused by short-term dramas over our long-term fiscal challenges. “If Congress has limited political capital, we should be spending less of it inflicting harm on the country and more of it on doing good,” says Ed Gresser, executive director of Progressive Economy, a Washington think tank. “If the U.S. government weren’t doing so much to damage confidence, we might be better off.”

Before businesses decide to invest, they need long-term certainty about their future tax liabilities, confidence that the government will be operational for more than three months at a time, and assurances that America won’t default on its debts or stay fixed on a course toward budgetary ruin.

Few things could do more for the long-term economic stability of America than a true “grand bargain” on deficit reduction, health care cost control, and government spending. Tax reform also wouldn’t hurt.

Hopeless as it currently seems, Congress and the administration shouldn’t give up. As Australia’s foreign minister, Bob Carr, observed, “The United States is one budget deal away from restoring its global pre-eminence.”

Anne Kim is Editor of Republic 3.0.


  • Jim Eckland on April 10, 2013 10:28 PM:

    A Tariff-Revenue system of 20-30% on all goods and services would certainly speed up the process and raise some much-needed revenue..

  • Ries on May 03, 2013 11:52 AM:

    A good article, and I agree with your three (really about 2 dozen) things we should be doing.
    One small quibble- a $1500 3D printer does NOT replace a chinese factory. It might be capable of making cereal box toys, at a rate of about one every three hours, but 3D printing is far from a production technology at this point. Especially one that is cost competitive with chinese salaries and government subsidies.
    Instead, you should read up on Haas, the California company that is the largest machine tool manufacturer in the US, and one of the top 3 in the world, or on Flow, the american company that developed waterjet cutting. Both of these are real technologies, real american innovations, and both sell lots of machines to China.