02 Sep Future trends include the demise of U.S. manufacturing in favor of innovation
(WARNING: The following is a pro USA view of the world which does not acknowledge the “Post American Era” view being promulgated by economists, historians [or is that “hysterians?”], and many more pundits much better educated, articulate, and authoritative than I am — but this is my blog not theirs!)
Economists and pundits are having a field day trying to predict the future. How high will oil go? Are we in a post America era? What will the impact of a few billion more consumers be on global supply chains?
Come on, is it that difficult to see what’s ahead?
Look, I’m not an economist, so perhaps the clarity of my vision should be questioned, but I have little difficulty seeing where some things are going. I do not have a crystal ball and I’m not claiming any clairvoyant abilities. I can’t tell you what the price of oil and gold will be tomorrow, but you don’t need to see everything to see just a few things clearly.
Here is what I see.
1) The age of cheap labor is coming to an end. I’ve been saying this for years. In my last book, Smartsourcing, I talked about how low cost off-shoring was quickly coming to and end game. Sure you can still buy Asian labor on the cheap compared to labor rates in many developed countries. We are not at parity yet, but the gap is narrowing at an accelerated rate due to developing markets where consumer appetites are increasing, competition for labor is driving wages up, and a new socioeconomic class is developing.
When that happens, it’s inevitable that expectations will also rise. It also used to be that the U.S. could produce the vast majority of goods needed by the world. That balance started to shift in the 1950s.We fail to appreciate that although there may be an abundance of jobs for $10/hour, there are countries with enough $10/hour workers to eclipse the entire population of the developed world. It’s not that the labor is cheaper, just that there is so much more of it. As a result, the overall cost of developing and manufacturing products outside of developed economies will continue to be cheaper as the demand for all products increases and these countries produce much more of what the world consumes.
In addition, we are contending with aggressive government policies to subsidize industries, in the same way that Japan did during the post WWII era, and lax regulations that enable competition on an uneven playing field – which leads to the next point.
2) America has to get the hell out of ALL manufacturing and retool for what we are good at, design and innovation. We used to be the envy of the world when it came to groundbreaking technology. I don’t buy into the post America era crap. We are in a “Post American Manufacturing Era” and we have been fighting it tooth and nail for the last 30 years. We are scared to death of what we are leaving behind so much that we fail to look forward.
We take pride in the Made in America. Why? Let China make it. As long as we create it and design it, why does it matter who makes it? I know, because we will put to many people out of work. I guess a nation should never retool itself for the future. God help us. If that were true, I’d be pushing a jack ass up a hillside in a small village on the Peloponnese.
Yes, I know, maybe I should be — there are days I’d agree. Why are we so afraid to turn the corner? We’ve lead the world in virtually every industry over the past two centuries. We fed the world, transported it, and created its infrastructure and information super highways. I don’t believe for one minute we can’t continue on that path, if only we have the fortitude to dig deep into our collective gut and pool of talent.
3) Consumerism is exploding. In my 2001 book, The X-Economy, I ended the last chapter by drawing an analogy between the current state of global commerce and the popular conception that we only use 10 percent of the capacity of the human mind. I speculated on what the world would look like if we were able to double or triple the number of participants in the global economy. Guess what, we’re there. In 2008 we passed the 3.3 billion mark in active global cell phones. That’s half the world’s population (or at least close to it, if you consider that many people have two or three cell phones) I’m not saying anything you don’t already know.
But the question is what does this mean for the future? First, it means that demand for the cheap stuff is making that stuff much more and more expensive. Second, it means that there will be more opportunity than ever to innovate new stuff. And I’m not just talking about new gadgets but new business models that radically alter the way we behave as consumers. Third, it means that we are going to run out of just about everything over the next few decades. We need to rethink everything from how we manage supply chains to how we manage waste. It’s all up for grabs — wow! — if that isn’t an opportunity to innovate, there never has been one!
4) Bet on businesses that counter uncertainty. We are going to cling to certainty like a sinking ship’s passengers cling to life rafts. Any business that hedges uncertainty and provides even an ounce of certainty is a business to place a bet on. I see us getting away from buying anything and taking on the risk of devaluation and obsolescence. Banks will share upside and cover downside for home buyers. Major consumer product purchases will be bought as subscriptions. I’m tired of buying and throwing away laptops.
5) Get smart about travel. A decade ago, I ran a crystal ball session for a large trade-show with 70,000 attendees. One of my panelists predicted that the airline industry would crash and burn due to the availability of cheap teleconference facilities. He was only a decade or so early and had the argument backwards. Teleconferencing will not kill the airlines. They will due that all on their own, and Internet-based presence will fill the void. It may still take a while for us to adapt, but it’s no longer due to the technology not being there. And, as is the case with every radical shift in behavior, the catalyst will be a crisis in the existing model rather than a breakthrough in the new model. This doesn’t mean business will happen exclusively over the web. Face-to-face will always carry value and weight that can’t be replaced, but much more thought will be given to the value of trading time and $$ for face to face communications.
Retooling the USA
So, there you have it, five immutable trajectories into the future. And they all lead to one inevitable conclusion, the USA needs to retool itself to take the high ground. We need to rework our educational system as ambitiously we tilled the soil of the heartland 100 years ago. We need to set goals as audacious as those of the 1940s, 50s and 60s. We need to stop making excuses for what we are and rethink who we want to be and then advertise it to the world.
Of course, it’s just my view and my blog — and as is always the case, the difference between a visionary and a fool is just a matter of time.
Recent articles by Tom Koulopoulos
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