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Bill Gates’ Favorite Author Says America Must Produce Goods

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An interesting article in Wired Magazine on manufacturing from a great thinker.Logo Wired

“There is no author whose books I look forward to more than Vaclav Smil,” Bill Gates wrote this summer. … In a world of specialized intellectuals, Smil is an ambitious and astonishing polymath who swings for fences. His nearly three dozen books have analyzed the world’s biggest challenges—the future of energy, food production, and manufacturing—with nuance and detail. They’re among the most data-heavy books you’ll find, with a remarkable way of framing basic facts.

Smil teaches at the University of Manitoba. He says the practice of OEM’s offshoring their supplies is really dumb.  Keeping the design here doesn’t work for many reasons.  Here is the relevant Q&A.

Let’s talk about manufacturing. You say a country that stops doing mass manufacturing falls apart. Why?

In every society, manufacturing builds the lower middle class. If you give up manufacturing, you end up with haves and have-nots and you get social polarization. The whole lower middle class sinks.

You also say that manufacturing is crucial to innovation.

Most innovation is not done by research institutes and national laboratories. It comes from manufacturing—from companies that want to extend their product reach, improve their costs, increase their returns. What’s very important is in-house research. Innovation usually arises from somebody taking a product already in production and making it better: better glass, better aluminum, a better chip. Innovation always starts with a product.

Look at LCD screens. Most of the advances are coming from big industrial conglomerates in Korea like Samsung or LG. The only good thing in the US is Gorilla Glass, because it’s Corning, and Corning spends $700 million a year on research.

American companies do still innovate, though. They just outsource the manufacturing. What’s wrong with that?

Look at the crown jewel of Boeing now, the 787 Dreamliner. The plane had so many problems—it was like three years late. And why? Because large parts of it were subcontracted around the world. The 787 is not a plane made in the USA; it’s a planeassembled in the USA. They subcontracted composite materials to Italians and batteries to the Japanese, and the batteries started to burn in-flight. The quality control is not there.

Can IT jobs replace the lost manufacturing jobs?

No, of course not. These are totally fungible jobs. You could hire people in Russia or Malaysia—and that’s what companies are doing.

Restoring manufacturing would mean training Americans again to build things.

Only two countries have done this well: Germany and Switzerland. They’ve both maintained strong manufacturing sectors and they share a key thing: Kids go into apprentice programs at age 14 or 15. You spend a few years, depending on the skill, and you can make BMWs. And because you started young and learned from the older people, your products can’t be matched in quality. This is where it all starts.

You claim Apple could assemble the iPhone in the US and still make a huge profit.

It’s no secret! Apple has tremendous profit margins. They could easily do everything at home. The iPhone isn’t manufactured in China—it’s assembled in China from parts made in the US, Germany, Japan, Malaysia, South Korea, and so on. The cost there isn’t labor. But laborers must be sufficiently dedicated and skilled to sit on their ass for eight hours and solder little pieces together so they fit perfectly.

4 Responses to “Bill Gates’ Favorite Author Says America Must Produce Goods”

  1. Thomas Crumm says:

    Michael, Thanks for passing this along. It is nice to see Bill Gates finally getting his mind around a vitally important issue in his homeland. Vaclav Smil is picking up on some of the key issues, but still does not grasp where industry is headed. His, “The whole lower middle class sinks” tells me he has not yet come to grips with what will happen when industry is wrested from the grip of short term financial decision makers and creative craft skills oriented leadership takes over.

    Smil’s comment “laborers must be sufficiently dedicated and skilled to sit on their ass for eight hours and solder little pieces together so they fit perfectly” suggests he has also not begun to grasp the evolution in processing technology that is coming. When America’s creative craft skills oriented leadership steps up it will foster a return to apprenticeship beginning at age 15. Apprentices will be the future leaders of a high tech/high skill/wealthy segment of America’s economy. Art of the Long View thinking will surpass short-term maneuvers thinking. Smil’s hint that American workers just need motivation (just need to be hungry enough) is a poor vision of where America is headed. A willingness to toil for long hours at mindless tasks should not and will not be the future. Bill Gates has set his sights too low.

  2. Bruce Bishop says:

    Mr. Crumm,

    You say, “A willingness to toil for long hours at mindless tasks should not and will not be the future.”

    In order to obtain a college degree, a person must have an IQ upwards of 115. For the majority of our population, those whose IQs range from 70 to 115, manufacturing has provided an opportunity to earn a middle class income. Without manufacturing, these folks are limited to jobs in retail, food service or other non-tradable services, all of which pay half or less of what manufacturing pays.

    It might also surprise you to know that there are many people, with IQs well above 115, who elect to “toil for long hours at mindless tasks,” because it suits their needs and because they find fulfillment in other ways. You might check out the book “Rivethead” by Ben Hamper, for a clue as to how and why a very smart person might choose assembly line work.

    People who are clueless about manufacturing assume that eventually most factory work will be automated. The fact is, there are very few products which lend themselves to automation. The bulk of the manufactured products we buy involve “long hours at mindless tasks.”

    There are also a lot of very smart people who support manufacturing without toiling at mindless tasks. These would include managers, accountants, cost estimators, industrial engineers, manufacturing engineers, mechanical engineers, design engineers, process engineers, systems designers, industrial psychologists, quality engineers, trainers, millwrights, CNC programmers, CAD designers, and a variety of consultants.

  3. Thomas Crumm says:

    Mr. Bishop, I appreciate your comments, and respectfully submit that I have a very different perspective on manufacturing. You might check out Howard Gardner’s research into eight areas of multiple intelligences. Gardner recognizes all people do not think the same way. In manufacturing the ability of an organization to apply multiple intelligences determines how long the manufacturing company will remain competitive. Vaclav Smil displays a deep understanding of this when he says.

    “Most innovation is not done by research institutes and national laboratories. It comes from manufacturing—from companies that want to extend their product reach, improve their costs, increase their returns. What’s very important is in-house research. Innovation usually arises from somebody taking a product already in production and making it better: better glass, better aluminum, a better chip. Innovation always starts with a product.”

    Bottom line, many types of intelligence are not measured by today’s IQ tests.

    Also, your take on Ben Hamper’s book the The Rivet Head is very different than mine. I grew up in Flint, Michigan and enjoyed many holiday meals engaged in conversation with Ben. We both worked at the Flint Truck Assembly plant. Ben’s declaration of respect for the physical demands and pride that workers draw from their jobs along an assembly line is well written. So is his explanation of the boredom that drove him and many like him to take a medical leave and never go back to the assembly line.

    Ben’s capture, of how little the supporting people you mention understood the internal culture that kept the assembly line running, is brilliant. (“….include managers, accountants, cost estimators, ….. CAD designers, and a variety of consultants) Ben’s account of the short lived mascot Howie-Make-Um sums it up. The idea that Howie in his rabbit costume was somehow going to inspire a higher level of concern for quality along the line was an insult the intelligence of the assembly line culture. Ben’s tale of how his compatriots dealt with the insult is hilarious. It is indicative of how little the support staffs of manufacturing operations are able to contribute to what is being communicated up and down an assembly line from minute to minute. Ben’s writing still challenges what has evolved to be the foundation of America’s industrial sector and reveals there are many more people with high IQs working along assembly lines than acknowledged. Ben does not suggest that his cohorts wouldn’t choose more fulfilling career, if they had a choice.

    Howard Gardner’s work in defining intelligences is beginning to serve early education and personnel departments as they sort through applications. Gardner’s work better suits the approach to manufacturing defined in What Is Good for General Motors? Solving America’s Industrial Conundrum than the traditional IQ test.

    Bottom line, there is a lot of intelligence in America’s population that in not being used. Many individuals, families, and whole communities are unable to contribute to our economy because we do not use manufacturing systems and business models, or make policy decisions that encourage contribution.

    Thank you again Mr. Bishop for taking the time to reply.

  4. Bruce Bishop says:

    Mr. Crumm,

    Thank you for your thoughtful response. I doubt that you and I would disagree about many of these issues. Your approach is more theoretical, whereas mine is based on knowing and interacting with those individuals who, despite low IQs, did have some special aptitudes and abilities.

    While I was impressed, at the time, with Howard Gardner’s work, I didn’t really see it having much direct application to the problem of saving U.S. manufacturing jobs. I learned early on that assembly line workers would often come up with better solutions to problems than I would, simply because they were closer to the problem, and because they would be personally impacted by the “solution.”

    What I observed, while working my way through six Fortune 500 manufacturing firms, was that people with special abilities will find an outlet for those abilities, either within or outside the organization. Many of them, while working “mind-numbing” jobs for years, as Ben Hamper did, wrote books, started their own sideline businesses, took on leadership positions in their church, their community or in special interest organizations. Of course, many of them simply moved up in the organization, as managers, as quality control technicians, as human resource specialists, as Industrial Engineering Specialists or various other jobs which utilized special cognitive skills and aptitudes.

    Frederick Winslow Taylor, in his 1911 book, “Principles of Scientific Management,” recognized many of these special abilities. For anyone who managed to read beyond the first chapter, where so many became “offended,” Taylor identified the themes which would become popular among “behavioral scientists” seventy years later.

    Nevertheless, we have drifted a bit off topic. These behavioral bits are the “icing on the cake,” and they will only get a fair hearing if there is a robust manufacturing sector, with jobs to spare. Such is not the case now.

    The purpose of this website, Trade Reform, is to push our government to adopt a supportive role toward manufacturing, as opposed to an adversarial one. The “progressives,” who are currently in power, have driven manufacturing OUT of this country, by ratcheting up regulations and taxes.

    The United States will NOT survive without manufacturing. Unless we can convince, or elect, a government that will take a strategic approach to manufacturing, our nation, as we have known it, is doomed.

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