I've been reading Andrew Liveris' book: Make it in America." Liveris is the Australian-born CEO of Dow Chemical Company who believes America is not only losing manufacturing jobs, but the innovation is moving offshore as well because of several factors---costs, proximity to manufacturing facilities, R&D incentives and necessity.
Liveris, a chemical engineer, uses the case of Amazon partnering with E-Ink to develop the Kindle based on a new electronic ink that was developed in the MIT Media Lab in Boston. But because of costs and LCD technology shifted to countries like Taiwan, the manufacturing of Kindle and Barnes and Noble's Nook, is located in foreign countries such as Taiwan.
So while it was some solace that even though the manufacturing was occurring elsewhere, R&D was still in America. Then my bubble burst when Liveris makes the point that China and India are making a strong bid to become the "innovation superpowers" as well.
To back it up, the first e-mail I opened this morning came from the National U.S. India Chamber of Commerce located in Denver citing a Deloitte report outlining the steps India is taking to become the innovation superpower. And, it is just not India as Deloitte's report states:
"Countries, world over, attract R & D investments by providing benefits in the form of tax credits, super deductions, tax exemptions, grants, etc. Certain countries provide wage bill credits as well."
So while some prominent U.S. politicians and activists distort the real issues and rail about "corporate greed, or tax loopholes and government give aways," China and India are content to let us wallow in uncertainty and carve one another up.
In 2006, the Chinese government launched a 15-year plan to make China into an "innovation-oriented society." To achieve that goal it needs to increase R&D investments by 85% by 2020. So it is offering incentives to U.S. companies to not only move their production, but R&D there too. Meanwhile, our Congress and state legislature are toying with the idea of letting the modest R&D incentives simple slip off the books by not acting to reauthorize.
As Liveris states: "where the manufacturing goes, the ideas follow!" Considering how important manufacturing is to Washington State, we ought to be thinking about what we can do to keep it here and enhancing its ability to compete.
Don C. Brunell, President (DonB@awb.org)