Grove on what it will take to generate new employment in the US
Wednesday, July 21, 2010 at 12:03AM 
Bloomberg Businessweek piece by Andy Grove, legendary retired CEO of Intel.
Basic point: tech start-ups can't create enough jobs, as proposed by Thomas Friedman recently in the NYT.
Reality of the tech world: for every high-tech job in the US, there are ten connected manufacturing ones in Asia, like all those Foxconn workers cranking out iPods. Also, over time, it takes a lot more money to create even those high-tech jobs we keep. An HP could create a job for less than $10k back in the 1950s (when it did its IPO), but a Google today spends roughly $100k per new job.
Grove: "The obvious reason: Companies simply hire fewer employees as more work is done by outside contractors, usually in Asia." This results in Foxconn employing more people than Apple, Dell, MS, HP, Intel and Sony combined.
The same has happened with alternative energy. Good example: we stand on the verge of mass production of electric cars and trucks, meaning lithium-ion batteries are to electric vehicles what microprocessors are to computing, but we basically abandoned any attempt to lead the world in that sphere three decades ago when we stopped making consumer electronics devices. Grove doubts we can ever catch up now.
Groves passionate call is for America to begin once again valuing manufacturing and not simply give into the notion that, so long as we retain the knowledge work, we can stay current. His point is that there is much innovation to be found in the challenges of manufacturing:
Not only did we lose an untold number of jobs, we broke the chain of experience that is so important in technological evolution. As happened with batteries, abandoning today's "commodity" manufacturing can lock you out of tomorrow's emerging industry.
His prescription: "job-centric economics," because "losing the ability to scale will ultimately damage our capacity to innovate." Thus we need to "rebuild our industrial commons" even to point of taxing the offshoring of jobs.
As someone not given to such arguments, I found this powerful in its logic, especially as we consider biotechnology.
Reader Comments (1)
I truly believe we in the US can do manufacturing and that we should indeed value that kind of economic activity. But I don't think we have the correct business models in place. We need workers to think and behave as independent business owners and they should be owners in the business they work in and create; financiers need to fund and trust such business entities and the C-level folks need to actually answer to the share holder made up of indie workers and investors.
There is no reason why workers, c-level managers and investors can't come together to create startups that build batteries. The big problem is a change in mind set for all involved. Ownership and profit would be the driving factor and workers are not use to that mindset. C-level folks think they know more they they actually do and would have to allow worker ownership in a big way, and investors need to stop looking for the next 500 million business and fund 5 million businesses.
There is nothing like hard times to change minds. I have high hopes.