[n0nc3]

Why can't America build anymore? Is this a cultural problem, or a failure of public policy?

Healthcare, rail, aircraft, automobiles, shipping, pharmaceuticals, and now semiconductors. We can't make any of these things at scale anymore.

They turned GE into a financial institution. They sold Bell Labs off in pieces. Boeing can't safely update 1990s vintage air frames to accommodate modern engines. And yet, the market is on a tear. This is not sustainable.

[mythz]

The overarching reasoning for why manufacturing moved to China appears to be they have way more readily available skilled workers & that "The entire supply chain is in China now":

> "You need a thousand rubber gaskets? That's the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours."

> Apple had originally estimated that it would take nine months to hire the 8,700 qualified industrial engineers needed to oversee production of the iPhone; in China, it took 15 days [1]

Tim Cook on why Apple makes iPhone's in China:

> The number one reason why we like to be in China is the people. China has extraordinary skills. [2]

[1] https://theweek.com/articles/478705/why-apple-builds-iphones...

[2] https://www.inc.com/glenn-leibowitz/apple-ceo-tim-cook-this-...

[onlyrealcuzzo]

Taking 9 months to diversify manufacturing of a $2T business is probably worth it.

I don't buy time being the problem. Once manufacturing is in the US, then what? It probably costs 10x+ what it would cost in China or India. That's the bigger problem.

[mythz]

> Taking 9 months to diversify manufacturing of a $2T business is probably worth it.

It's not clear why the most valuable company in the world should abandon their logistical strategy and industry envious high margins to risk their focus and war chest on a gamble that would almost undoubtedly make themselves more uncompetitive with lower margins, increased prices and less units sold.

As for diversity, iPhone parts are sourced from multiple countries, whilst most are assembled by Foxconn in China, they're a Taiwanese multinational manufacturer with factories in India, Thailand, Malaysia, the Czech Republic, South Korea, Singapore and the Philippines.

Apple already manufactures their larger more expensive Mac Pro and iMacs products in the US but I don't see them manufacturing any iOS devices unless it's mostly automated by robots.

[bleepblorp]

> Why can't America build anymore? Is this a cultural problem, or a failure of public policy?

America can't build anymore because America's executives have chosen to steal every piece of wealth they can take without leaving anything behind to build for the future.

American business culture has become far more interested in zero-sum rentierism and financialization that rapidly concentrates existing wealth in the hands of the wealthy than in technological innovation that creates new wealth over the longer term.

The collapse of American industry is the entirely predictable consequence.

See also

https://www.forbes.com/sites/stevedenning/2011/11/18/clayton...

for a similar but slightly different take.

[holstvoogd]

This is a large part of the problem if you ask me.

I did some research a few years back into (somewhat unrelated) process management practices. What kinda stood out to me is that in the 50s-60s many businesses transformed their leadership. They went from having engineers that grow into their leadership positions to having dedicated managers. With business degrees.

Just speculation, but I feel this shift in management culture coincides with the loss of a lot of the technical production capabilities of the west. And is closely followed by the money-grab culture.

[chii]

> engineers that grow into their leadership positions .. to having dedicated managers. With business degrees.

this also happens in software companies i feel.

The underlying issue, i suspect, is that engineers are not "people persons" - less able to manoeuvre politically, and "play the game". But in any societal organization, those who can play the political game can win.

Thus, the dedicated managers end up in those positions. They play the political game, and they get rewarded for it - because they control the reward scheme when they get to those high positions.

Meritocracy is an illusion that gets used by those playing a political game to make engineers feel they are not part of the game.

[danuker]

My suspicion is that the near zero interest rates make investment not worth it. The same is in Europe (it's even negative).

https://tradingeconomics.com/united-states/interest-rate

If investment (real investment, based on profit) is not worth it, and only the central bank wants a piece of the overpriced action, then we have essentially a centralized economy. This breeds stagnation.

Contrast to China, who had healthier yields, and only lowered them for COVID: https://tradingeconomics.com/china/interest-rate

[tomp]

This doesn't make sense - zero interest rates make investment worth more.

10% interest rate => "why invest in this new factory for a 10% return when I can just keep money in the bank?"

0% interest rate => "well if I want to make money, I need to invest"

Feel free to blame other things - maybe 0% inflation rate (higher inflation => more opportunity cost of not investing) or QE (which is similar to 0% interest rates, but still different - a 0% interest rate environment persists since early 2000s whereas QE only started after 2009) which is much more problematic as it floods the market (but not the economy) with money and pushes equity prices through the roof (despite shitty fundamentals).

[danuker]

There is one option you have not looked at:

0% interest rate -> I'll take my money and leave for greener pastures (other countries such as emerging markets).

[bleepblorp]

This explanation just reworks the question into one of why western interest rates are so low.

Western central banks can't raise interest rates above the lower bound without triggering unacceptable unemployment or even deflation. Indeed, the highest safe rate has fallen in the wake of every recession.

To me, this suggests major structural problems in the western economies. It's hard to think of a single explanation that applies to all (pre-pandemic) zero-interest rate western economies, however. The economic foundations in Australia, Canada, the UK, the US, and the EU are different enough that there is no obvious single structural fault common to all of them.

[jcfrei]

> The economic foundations in Australia, Canada, the UK, the US, and the EU are different enough that there is no obvious single structural fault common to all of them.

There is one though: changing demographics - the median age of the population is going up and the percentage of the working population is going down.

[MacsHeadroom]

This is it. China's capable labor force has a lot of growth left in it yet.

The Western world has been relatively stagnant in this regard for two generations already.

[Red_Leaves_Flyy]

There are very real structural problems in the US economy. Look anywhere and you'll find them.

[baybal2]

The reason is class conflict, or more precisely its absence.

> They turned GE into a financial institution. They sold Bell Labs off in pieces. Boeing can't safely update 1990s vintage air frames to accommodate modern engines. And yet, the market is on a tear. This is not sustainable.

You very well see what's wrong going here. The US economy, and government institutes seem to be overran by a class of self proclaimed "value adders:" heavy hitter "pro-managers," financial "engineers," and, of course, everybody's favourite — lawyers.

It's very natural to conclude that an engineering company like GE shouldn't have been given to bankers, to be turned into a... bank, and Boeing shouldn't have been entrusted to outsourcing managers, to be turned into an outsourcing management company, and dozens electronics companies shouldn't have been given to lawyers, to be turned into patent litigation services companies, and so on, and so on.

Yet, US — one of few countries affording such high level of employee control of their companies, and quite militant unions ends up with workplaces whisked away from under the nose of their employees.

I see a simple explanation: Americans completely prematurely decided to bury the axe of class warfare, and traded peace for progress.

No conflict — no progress.

I am not advocating for violent revolution right away, certainly not that. You do not kill people over the ownership of green paper, that's morally wrong to do so. But you do not let such people simply live comfy life without opposition.

Take a look at other countries, even though they may well lag behind US on worker rights, and don't have a culture of union militancy, and overall worse off compensation even for high skill work, yet you don't see factories turning into banks, or if they do, they quickly see workers voting with their feet.

From my experience, I'd say even in China you do see factory workers changing workplaces when they feel "malaise in the air" in the company, and don't wait for company's malaise turn into (their) financial trouble.

[jl2718]

Your analysis is good, but your synthesis seems absurd. Class conflict would be good for productivity? Clearly no. You made your case for the failure of a society run by financial parasites, but so far it seems they’ve defended against class conflict by converting a huge number of people from a productive and capable working class into financial dependents of income redistribution from the middle class. This has been the character and the result of all such ‘class conflict’ so far, and it only makes things worse.

[baybal2]

I am not at all advocating for income redistribution at all bankers, MBAs, lawyers are free to earn, and hold to their money as they are, but you do not let every job, and position in the government given to them just for them being such.

I'm rather advocating for fighting the massive loss of common sense, where you get every nook, and cranny in the society/companies/government being stuffed with those of inappropriate class, and being firm, and forceful with that, when, and if needed.

[jl2718]

What I find remarkable about this is that I have no idea whether it is a far right or mainstream left position.

[abacadaba]

> I am not advocating for violent revolution right away, certainly not that.

no of course not, that would be terrible pr

[cromwellian]

Depends. SpaceX pretty much owns the global launch market, and has out built and out innovated every other country's aerospace companies.

Speaking of Musk, Tesla is now worth more than most automakers, is on a tear, and most likely will be outproducing everyone at making batteries.

I don't think this is purely an 'access to labor' problem. It's a problem of vision and risk tolerance. Musk is willing to try new approaches, even if they fail (eg trying to make a 3D almost 100% tesla factory before having to retreat to using humans)

Silicon Fabs are one of the first industries to be almost 100% automated. So clearly the issue isn't access to labor, but for Intel, it's more like they made a bad bet, and didn't "fail fast", they've been doubling down on bad bets and not willing to be more dynamic.

When you look at Aerospace: SpaceX, Sierra Nevada, Rocket Lab, Relativity Space, it's clear, small focus teams can pull off amazing things, even in high-capex high-risk high-regulatory industries.

The failure of GE and owners is due to bean counters being put in charge instead of missionaries. Take GE's Nuclear division, why are they still putting money into BWRs & PWRs? Decades went by, they are not dropping any money on pebble beds, molten salt, thorium, etc. And why wait for MIT's SPARC to limp along? If they had an Elon Musk figure, he would have put them on a race to build a prototype, even if it failed, in a year, not 5 years.

Monopolies, and access to cost+ government contracts I think have killed a lot of innovation.

And if the big 3 automakers want to compete with Tesla, they need to replace their management with hardcore EV geeks who have passion and LOVE the space, and give them the resources to spin up a new division with all new people and processes. Otherwise, they're going to shamble along, and continue to try and milk their existing business lines until they die.

This is a management problem, not a labor problem. You can't solve this problem by shoveling more STEMs straight outta college onto it. There's a tendency to think China's massive stem graduation firehose will magically mean leadership, but that's million man-month thinking. It's not simply about access to labor that's the problem. Companies with 100 employees outcompete companies with tens of thousands all the time (take WhatsApp vs my employer, Google, in the messaging space)

[phkahler]

My phrase to explain it: Engineering is not a "cost center" it's an investment in the future. Do you want to cut investment or go big on the right ones?

Most big companies just want to collect rent rather than make investments.

[chii]

the economic incentives for a hired management is not aligned with innovation.

A hired CEO has incentive to make the company continue to be profitable during his/her tenure. This means conservative thinking and business continuity. Not taking big, risky bets that pay off multiple 100x in 10 years.

A new company, owned by the CEO level people, is not going to fall into this trap.

[Symmetry]

I'm not sure that what you're alleging is true.

For healthcare we make plenty of it and lots of people from elsewhere in the world come to the US for operations. Our problems there are all with healthcare billing, not healthcare production.

US freight rail is actually pretty good. For why our passenger rail is terrible that comes down to high construction costs and this https://bikeeastbay.org/rail/fra.html. The costs are a combination of the rest of the world inventing techniques that the US considers to be Not Inveted Here and a penchant for regulation by lawsuit rather than regulation by beaurocracy.

The US and EU are the two places you can get really good aircraft, it's a major manufacturing export center for the US. China, for example, still can't make modern jet engines and while the fusilage and electronics of their newest combat jets are fine its speed, acceleration, and fuel efficiency are well behind US jets for that reason.

The US is a major pharmaceutical exporter.

The US is also a major semiconductor exporter, we're one of the three countries in the world along with Samsung and Taiwan that are still in the race while something like a dozen companeis have dropped out of the race as capitcal costs keep going up.

Shipbuilding, yeah, US shipbuilding can't compete on the global market because US laborer are relatively expensive.

Basically high wages mean that the US can only compete in manufacturing in high value industries like the ones you mentioned. Things like aircraft, pharmaceuticals, and semiconductors. But we're not going to be a textile exporter until the rest of the world gets to be as wealthy as we are now.

[kube-system]

> we're one of the three countries in the world along with Samsung and Taiwan

Haha. Samsung is a whopping 17% of Korea's GDP, but they haven't renamed the country yet. :)

[alecco]

What obstacles would you face starting a competitive new big factory in US or Europe. Think it through and you'll figure out some of the answers. And watch "American Factory".

[boznz]

Strangley we are getting 3 examples of this with gigafactories (shanghi, texas, berlin) so there could be hard facts in a few years