Tag Archives: globalization
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.
Will 3D printing be a disruptive change? Sure, but Forbes believes that we may be surprised by the result.
Contributor Tim Worstall poses an interesting counterpoint to some common conclusions about the impact of 3D printing on the global labor market.
First, Mr. Worstall suggests that there will be an experience curve for 3D printing – it will get cheaper over time to produce similar goods.
Which is, as we know, pretty much the way that manufacturing works. Things get designed, dreamt up, and they start out expensive. As we get better at doing whatever it is then prices start to drop: the clearest examples are in the computing and telecoms industries in recent years. Those examples are almost too tedious to recount in fact, they’ve been used so often.
3D printing will go through much the same process and it’s easy enough to see a time in which one has such a printer just as much as one has a paper printer. Need something, call up the part design over the web, pay a buck or two perhaps (and no doubt there will be open sourcers as well) and print out whatever it is that you wanted.
Now the key question is whether this will lead to an elimination in manual labor. As an example, we recently called the impact of 3D printing on the Indian labor market ”mind-boggling” because labor can be reduced dramatically or replaced by additive manufacturing.
But let us go to the extreme and assume that they are cheaper: so much so that manufacturing really does disappear. What does that do to wages? Yup, a fall in the costs of things is equal to, is by definition the equivalent of, a rise in real wages. So if 3D printers do take off it can only be because, by definition, they make us all richer.
Interesting view point, and one that seems to support the belief that 3D printing will be a $5 billion industry by 2020.
Factory photo by Just Add Light used under Creative Commons license.
A roundup of the top news On 3D Printing brought you from May 7 to May 13.
Monday, May 7
- 3D Printed Legs: Giving Amputees the Power of Personal Expression
- Impact of 3D Printing on Indian Labor Market “Mind-Boggling” [Opinion]
Tuesday, May 8
- Stratasys Announces Mojo: Lowest-Price Professional-Grade 3D Printer
- 3D Systems Acquires FreshFiber for 3D Printed Electronics Accessories
Wednesday, May 9
- MakerBot Looks to Occupy Wall Street’s Office Space
- Hey Red Sox Fans: 3D Print Your Own Fenway Park [video]
Thursday, May 10
- MakerBot CEO Bre Pettis is 3D Printing’s First Celebrity
- 3D Printed Curves: How the N12 Bikini Fits Your Body Perfectly
Friday, May 11
Robert Schouwenburg, CTO and Co-Founder of Shapeways, wrote an interesting blog post connecting venture capitalist Fred Wilson’s 100-10-1 rule of social services with the 3D printing and personal fabrication industry.
Fred Wilson – VC Union Square Ventures – often recites his rule of thumb of social internet services. It is the 100-10-1 rule. He sees with social internet services that on average 100% of users consume, 10% of users interact and 1% of users actually create.
When you apply the 100-10-1 rule of thumb, the opportunities for scaling such a service become immediately clear. As far as I know there are no exact figures available on how many 3D modelers / product designers there are in the world. But let’s assume there are 5 million of them. That would turn social fabrication into a 500M users opportunity. That is Facebook and Google territory. Just imagine 50M users interacting on personal fabrication and the effects it can have on product design and how we design products. This is a very significant opportunity. Of course, the big caveat is that not all 3D modelers / product designers are interested in social fabrication. Maybe only 10% or less. That still leaves a 50M opportunity.
Great analysis, but we believe the 100-10-1 rule will be broken for 3D printing and personal fabrication.
Let’s define the steps as 100% browse 3D printed goods, 10% buy 3D printed goods, and 1% make 3D printed goods.
First, the 10% will likely increase to 50% or 75% as the industry grows and buying a 3D printed good is as seamless as buying a SKU at Walmart.com or Walmart retail. This would be further aided if Amazon, for example, gets into the business of selling 3D printed goods.
Second, the 1% will likely increase to 10% with a combination of globalization and design software becoming easier
Globalization: 3D design of consumable goods will become a mainstream profession for people in developing countries, especially India and China, if there is an efficient marketplace for them to sell their designs.
Software enablement: How many people use Photoshop? Only professionals and hobbyists. But how many people use MS Paint? I would wager a decent size of the population who have computers have dabbled in MS Paint. If 3d design software is made to be as easy as MS Paint to create real, valuable 3d printed objects, the creation will increase. We are already seeing steps in that direction with Autodesk 123D and other tools.
The implication is that not only are there more designers and more purchasers, but a greater volume of 3d printed goods purchased, making the overall size of this industry quickly a multi-billion opportunity in the next five years.
Photo credit to anjan58 via Creative Commons.