|
My real point, though, is that consolidation is inevitable. Production jobs ("Scaling," etc.) are going to become less important over time, not more important, whether they're in China or America. Any forward-looking argument that doesn't take that fact into account is flawed from the outset, and I think Grove's piece falls into that category. Is it really healthy for Silicon Valley if Apple has a factory cranking out iPhones in Cupertino, Google has a 99%-identical factory for Droids in Mountain View, and Palm has yet another factory producing Pres in Sunnyvale? What's the point? The hardware's all very similar from a production viewpoint, or it soon will be. In a rational business climate, all of these products would be made on the same line, by a company that sells manufacturing capability to the highest bidder. Competition will happen on a purely IP-based playing field, not on the factory floor. Going back to the Tektronix example, when Tektronix finished one of those CRTs, they practically had a one-of-a-kind relic on their hands, a part that would not only not fit in any one else's oscilloscope, but could in most cases be used only in a single model in their own product line. They didn't have what we'd call excess capacity, and if they did, they darned sure wouldn't use it selling excess tubes to the competition, because those tubes were a big part of what made their overall product competitive. So every manufacturer of those particular widgets had to either build their own CRTs or buy them from a common vendor (in which case their scopes sucked). Tektronix in 1960 couldn't afford to treat production as a red-headed stepchild in their overall business plan... but they sure can today, when the bulk of the test equipment they sell is OEM'ed out of China just like everything else. Sorry, but IMHO, the production of solar panels, portable fusion reactors, or whatever is just going to take the same inevitable course. The business will be commoditized if it prospers at all. Trade policies and externalities have absolutely nothing to do with that. |
You're begging the question; there is a country beyond Silicon Valley, and Grove's argument is that what is best for Silicon Valley (meaning, the bottom lines of a few tech firms which together only employ a small percentage of the U.S. population) isn't necessarily what is best for the country as a whole.
Put more directly, it's not clear that there are enough IP-based jobs to keep the United States at or near full employment. To do that, which we need for social stability, because high unemployment is intensely corrosive, we need to capture some of those manufacturing jobs. And it might be worth doing things that hurt tech companies' profitability in the short term -- taxing outsourced manufacturing, for instance -- in order to achieve that.
If we don't, the "rational business climate" might drive all the manufacturing overseas, leaving the U.S. with a very small number of employed people doing the design work, and hordes of disaffected, unemployable people with nothing to do. As you point out, once you have the production line set up in China, it makes sense to just scale it out there rather than build a second one here.
The long-term social effects of such a 90/10 split would be very bad, and would in all likelihood eventually make it very hard to be very profitable at all. So it might make sense for IP-centric design companies to take a short-term hit and try to maintain something closer to full employment, lest they find themselves first up against the wall when the welfare proletariat they created revolts.