3D Printing iPhones in America: Disrupting Foxconn’s Assembly Line
Forbes contributor Baizhu Chen writes about economics with an emphasis on the US and China. He recently wrote an article about how the US could take back manufacturing from China and the implications of that move.
This article was a reversal on an earlier stance where he said that US doesn’t make iPhones because we don’t want to. Here was is original logic:
America does not produce iPhones here because we, the average middle-class American family, demand that Apple outsource its production to China. The 10 largest shareholders of Apple are all either mutual funds or institutions. The largest shareholder is Fidelity, and the second Vanguard. If Apple is not able to generate good returns for the average American, we will punish these mutual funds by moving our retirement money to somewhere else. So who decides to locate the manufacturing bases of Apple, Dell, and Nike to China or other countries? Average Americans, who seek high returns on their investments.
Mr. Chen published a revised point of view where he explained how 3D printing technology will be the catalyst for disruption of this traditional low-wage assembly line work.
We can make iPhones in America, but not under today’s cost structure and technology. Lining up thousands of American workers in the 20th century style assembly line, doing repetitive work day in and day out, is not going to win manufacturing jobs back to America from developing nations. Making iPhones in America would require some great American creativity and productivity. This will become increasingly possible given the emerging new technology, especially the additive manufacturing which uses 3D printers turning layers of materials into solid objects.
But, a 3D printed manufacturing concept diverges from the classic scale economy model and becomes de-centralized.
3D printing technology overthrows the notion of a scale economy. Putting thousands of 3D printers in the same location will not improve cost competitiveness over scattering them in different places. Future manufacturing will be a very de-centralized process. 3D printers have become so cheap (personal 3D printers cost as low as less than $1000) that in the future, consumers can even produce their shoes, toys, kitchen wares at homes or a shop nearby. They can download the designs from the internet, tweak according to their tastes, and change the sizes for their own purposes. Future manufacturing no longer needs thousands of workers doing repetitive jobs in the same location.
The de-centralization of manufacturing therefore removes the need for hubs like China to produce everything.
The widespread use of 3D printing technology in manufacturing could lead to de-globalization of manufactured goods. In the past century, we have seen a globalization process in which companies allocate production sites in countries that make the most sense in terms of costs, far away from consumers. In this process, China and other developing nations have become the manufacturing hubs, producing products for consumer nations like the United States. The use of 3D printing technology will counter this globalization process, and could pull manufacturing away from China or other developing nations back to countries where products are consumed.
Ironically, now that low-wage jobs overseas can be replaced by local technology, high-skill design jobs can now be globalized and shipped overseas.
While manufacturing of goods could be localized with additive manufacturing, the professional services including engineering, design and intellectual protection will be globalized. This has a profound impact on redistribution of income among nations. America, leading in additive manufacturing technologies, will undoubtedly be the biggest winner in this process. American companies, not only can print “things” in local printing shops in America, but also in China for Chinese consumers using American designs. This could even reverse the trade balance between America and China.
Which means that America will not see a resurgence in assembly line jobs. To the contrary, the US will now face competition for skilled digital engineering and design jobs, and tomorrow’s engineers need to be trained with this in mind.
However, those hoping this process will generate a large number of manufacturing jobs in America will be disappointed. The additive manufacturing will not bring back 20th century assembly jobs to America. What is needed more for America’s future is engineers, designers, and IP lawyers. Politicians arguing for solving unemployment problem by bringing back iPhone assembly jobs are looking in the mirror backward. They should be moving forward by focusing on policies to improve our education to produce talents for future manufacturing.
Read the full article by Mr. Chen at Forbes.