Read a thought provoking article written by “Only the Paranoid Survive” Andy Grove in the recent issue of Business Week ( July 5th, 2010) on “How to make an American Job”. http://www.businessweek.com/magazine/content/10_28/b4186048358596.htm?chan=magazine+channel_top+stories
I must say, it’s an intense depiction of a very core issue that US is dealing with currently, and with the June 2010 unemployment at 9.5% with 6.8 M people as long term unemployed ; the issue certainly needs a fundamental shift not only in thinking but a timely implementation for it to have any meaningful impact over next decade. Over the last 20+ years US has virtually transferred the responsibilities of Manufacturing to Asia and particularly China and Mr. Grove argues that there is an extremely strategic connection between Innovation and Scaling of business that ultimately creates job, which the US so badly needs now more than ever before.
The view that only core innovation will be able to sustain US economy and someone else can do the execution will ultimately also ensure that most of the jobs are created elsewhere, which is what has happened in the last two plus decades. The center of gravity of innovation will also shift to locations which have the scale of execution / manufacturing available. There has to be a balance that US has to drive between pushing all of manufacturing to emerging economies v/s having them in the country. Keeping them in country in US will also mean driving overall cost of operations significantly down to ensure global competitiveness. US Govt. policies are critical to drive the investments towards creating a massive manufacturing environment that will help to create large scale employment in country. Many US companies – Large and Small Medium Businesses – have global presence and have created their own operations in multiple countries to take advantage of the local talent and also local subsidies. Companies treat the world as one – interconnected ; yet, Countries need to ensure that they have policies, environment, talent and infrastructure for them to be considered by companies in local job creation. Inspite of infrastructure and capital environment US has lagged significantly in job creation because of both lack of local talent and favorable manufacturing policies.
One of the suggestions that the US Govt must consider is to allow all the overseas funds from US companies to be brought in-country tax-free and match them with equal grant as long as they are used by these companies in creating massive manufacturing factories for products and services that will ensure significant job creations locally. Its not about having a protectionism environment ; its about ensuring that structures are in place to ensure constant and dynamic global competitiveness. Connection of free market with job creation is key, it’s as much a social responsibility as its economic, as ultimately that’s the only long term sustainable way to ensure continuous prosperity of the country.
(Views expressed in the blogs are author’s personal views only and do not represent the view of his company)