James Dyson reinvented the vacuum. Now he wants to remake the economy
theglobeandmail.com
theglobeandmail.com
I would hope that the leaders of our country don't feel the need to lessen our standards on working conditions in the name of economic recovery. I think that would be backward progress.
Another excerpt caught my attention: "After all, it was the financial-services and property sectors that collapsed; industry-driven economies such as Germany and Singapore experienced record-breaking export booms and avoided the crisis."
With that in mind it would seem then that our current troubles are due to many of our economy's eggs being in one basket, so-to-speak.
It doesn't seem such an attractive idea to make a U-turn back toward making manufacturing our strong point- it seems to me we have a better chance building on what seems to be a strong foundation in technology, to make that our strong point, and then re-invest in manufacturing only to a degree enough to have a safe amount of diversification in our economy. I've read lately somewhere about a trend in 'high-tech' manufacturing, which seems like the kind of industry that would maintain high(er) growth levels.
Dyson seems to be arguing that the government should create low-quality engineering jobs that CEOs can create and get rid of as fast as they can spin an EC2 instance up and down. That's certainly great from the CEO's point of view, but from the perspective of the worker that is in and out of a job before he can buy a month's worth of groceries, it's kind of terrifying.
The reason why Germany, Singapore and other strong manufacturing-based developed countries have succeded so well is NOT because they have taken the worst elements of Anglo-Saxon capitalism and added back a few factories!
These countries have long had a strong, focus on engineering from education through to supply-chain all the way to elite managers, executives and corporate governance.
For example, in the Germanic countries, long-term stakeholders (such as family founders and employee unions) exist and are powerful. This reduces the impact of the flighty capital and short-termist control from mere free-standing shareholders (this includes the share-compensated manager class and private equity companies). This is important because it is the abililty of a company to continually invest in its long-term interests that enables them to keep several steps ahead of the purely labor-intensive efforts from new entrants such as from China or South America.
Combined with the success of the Mittelstand (Small and Medium Enterprises or SME's in Anglo-speak), the result is that German companies make high quality widgets and whole products that are in great demand the world over and to all intents and purposes irreplaceable.
In addition, it is culturally and financially highly acceptable to be considered an engineer in those countries.
Even their debt-sparse financial system encourages business which are only viable if they are able to create cash upfront, which is considerably easier for a well-run, long-term managed manufacturing business rather than many service companies.
A good vacuum marketed as the greatest vacuum ever isn't really that bad. The Dyson bladeless fan[2], however, appears to be just a big gimmick and kind of a shitty fan.
1: www.amazon.com/Dyson-DC25-All-Floors-Upright-Cleaner/dp/B0014E3GM0/
2: http://www.amazon.com/Dyson-Multiplier-Table-10-Inches/dp/B0...
Don't get me wrong, both companies are very impressing and they make their customers happy, but usually they don't have the best hardware of their industry.
I've had mine for over 6 years now, so perhaps there's been a quality shift in the interim, but I've had nothing but good experience from mine.
Offtopic, while I haven't given it thought before now enough to consider myself a fanboy, I also quite like their bladeless fans and the hand dryers I've seen in rest stops.
Too large to summarize. The report, in whole, might be worth skimming.
> Both Professor Holman and David Phillips, Emeritus Professor at Imperial College believe that without the stimulation produced by making elements combust and fizz, pupils won’t continue science beyond GCSEs. “All the evidence points to practical work being the thing that pupils like to do,” Prof Holman said. “This isn’t about how do you get more Grade Cs in GCSEs, it’s about how you inspire more young people.”
"Ingenious Britain"
http://media.dyson.com/images_resize_sites/inside_dyson/asse...
You can't use trade barriers anymore because if you block someone then you're getting blocked too. At the same time you can't let companies choose between local or abroad else those going to dirt-poor countries will have an unfair competitive edge that may bankrupt the ones that stayed, something that already happened 20 years ago.
You know what's the biggest industrial innovation right now? Toyota's new model factory: it's designed to be moved at any time to anywhere in the world, cheap and fast. It has a lower degree of automation than most car factories, why? Because Toyota realized it was easier and cheaper to hire people than to use robots which are still very expensive and need to be reinstalled and reprogrammed each time you move them.
That's the future of manufacturing: if X place is cheaper than our current location then we're moving everything there.
1. The graph shows there's been a mere 25% increase in manufacturing output value since the 70s. The economic value growth of other sectors has been far greater than that.
2. It does not show the vastly greater growths in manufacturing from other developed countries, including the US!
3. How manufacturing behaves in a downturn is very closely related to how the business is managed (i.e. during the boom part of the cycle). If industries or many companies take on large amounts of debt and merely trim costs in the name of efficiencies during booms, instead of optimising for cash, new investments or your best assets, they will suffer in the inevitable downturns, etc. The former practices are common in Anglo-Saxon capitalism.
Thus, the implication that manufacturing necessarily is more volatile during a downturn than services is superficial. It may be for the UK up till now, but it does not have to be that way and, even if it were, it may not be enough of an issue. How do you think some of those productivity gains were previously made - low hanging fruit?
Excuse me? Apple's pushing the limit of display technology by using layered pixels. Google has invented and is maintaining an index on the sum of the world's knowledge. Facebook and Twitter have invented contraptions that make information dispersal nearly frictionless. And this guy says the Western world has lost its will to invent and make things?
Robots will, in the next few decades, wipe out all the labor benefit that China has. Their huge population base value will shift to being a huge liability.
Bring 5 million manufacturing jobs back to America through 100 million robots (that never riot, demand wage increases, unionize, go on vacation, can work 24/7, and get better constantly), and the cheap labor advantage that China has completely disappears. The only question is who will dominate robotic manufacturing, not whether it'll happen.
The reason all component manufacture are in Asia is because labor costs make up a much larger percentage of the total cost for smaller lower margin components.
The final labor cost for a Dyson is much higher than just what they pay for assembly, you have to add all the wages for each part up the chain.
And that's a total BS claim. Apple is sitting on $100 billion now and still whining about how there are no companies in the US with sufficient manufacturing capabilities, as if that's forcing them against their will. In reality, there is nothing stopping them from creating such factories in the US or elsewhere. However, they can't get 10,000 workers in employee housing and, at the snap of their fingers, put them all on the assembly line in back-to-back 16 hour shifts. Ultimately, it's not about production facilities nor simple labor costs, but rather how they can treat Chinese workers.
Look at this teeny tiny little pick and place machine. ( It can place 500 components a minute.)
(http://www.acrosemi.com/eng_samsung_SM411.htm)
Or at this slightly bigger setup:
(http://www.acrosemi.com/eng_samsung_fulllineSMT.htm)
These still need staff to run. You need staff to program the machines; you need staff to load components; you need staff to move the product around; you need staff to maintain the machines.
And then you need staff to do the things that your robots can't yet do.
I have no idea how much someone would get paid for that in US, but I know it's a lot less in Poland / India / China / etc.
I think these were mostly for Telecom vendors, but it was just small batch PCB production for hire stuff.
I've got to believe the labor costs were a small fraction of the overall business costs. Just one component could be $50, so the inevitable loss of the occasional part, or a PCB that didn't pass QA would cost 10X more than the labor costs for the entire hour it was produced in.
(I forget the name, but you know, the conveyor oven thing
that melts the solder)
Today's factory robots are absolutely nothing like what's in the lab today, and what's coming this decade.
Not sure about this, however, China has been hedging against this as well. This is why they are securing all the natural resources in Africa.
The US is SO fucking short sighted - while China has been thinking 50 to 100 years in advacne with respect to securing all the resources in Africa, the US believes it can just keep spending on a military that will be used to seize resources after political manipulations.
The myopic view that the only resource that the US should be securing (oil in the mid east) is because the US' vision comes from greed-now viewpoint. (i.e. profit as much as possible on the near term, future be damned)
There IS NO LONG TERM VISION in the US - from energy policy, tech, health etc.
This is what is killing us.
On the other hand, powerful robots would destroy many jobs.
Those robots need to be constructed; R&D'd; improved; maintained; installed; removed; and the robot ecosystem would support millions more jobs. The efficiency gains would justify the expenditures. The US economy will be made over by robots; we have the most efficient, large production economy on the planet, and are still the world's largest manufacturing nation (ahead of China, we export less).
Our labor force participation rate has dropped from 67.5% in 1999/2000, down to 64% now; our U6 unemployment number is 15%. Millions of net job gains by taking manufacturing back from China, would not destroy many jobs at all (domestically), quite the opposite.
Robots are amplifiers of human labor, not replacements. They still must be created, cared for, upgraded, overseen, and so on. The whole point is about one American with 30 robots to manage, becoming as labor efficient on price to output as 30 or more Chinese workers. The improvement scale in robotics is almost limitless; direct human labor however is extraordinarily limited in its capabilities.
5 million new jobs courtesy of taking manufacturing back from China would instantly push our labor force participation rate back up to where it was in 1999. While we'd simultaneously generate a massive pool of new domestic wealth by keeping that money here instead of sending it elsewhere for someone else to benefit from. We'd make more of the goods we consume; and we'd export more goods to the rest of the world. Competing with China is just one example, the reality is we'd want to look to create jobs by competing with everywhere we've lost manufacturing to since 1964 when America had 55% of all global manufacturing.
And then let's remember that efficiency gains produce more wealth. Wealth is not a static pool to be swapped or stolen back and forth. Neither are jobs. It's entirely likely that we'll be able to create entirely new products that are now impossible courtesy of advanced robotic manufacturing, and that will mean completely new jobs, that would not have existed otherwise (versus say taking back old product manufacturing from China or similar).
Since we cannot know those factors today, the best we can do is draw a number of different scenarios.
Let's simplify this to 2 scenarios. One scenario is yours. Another scenario is of larger unemployment. Since it's hard to set probabilities, let's assume they have equal probabilities.
I think this is a more reliable forecast of the future with robots.
[1]how much better u.s. robots will be then non u.s. robots, the cost of shipping, the importance of starting conditions(for example the Chinese supply chain), how many jobs will each robot create and what kinds of jobs,will there be new kinds of jobs created and how many , etc.
are you sure about this?
I recall china took the lead a couple of years ago, and if I understand the UN data[0] correctly they seem to confirm this.
That's it right there. He wasn't allowed to expand his factory. Presumably it was on land he already owned, right? It was an existing factory. He had to get permission to grow the economy by expanding, and that permission was denied.
That's the core of it.
So long as you need government permission to do anything, and that permission comes from someone who has no incentive to give it, and plenty of incentives to deny it (e.g.: covering their butt) this trend will continue.
The british (and US) culture is "you have to get permission before you do anything", and that's a form of regulation that is really harmful to growth. That gives a lot of power to people who can be petty... but it also creates a lot of make work jobs that are politically very valuable (because , you see, donate to the right campaigns and your permission comes very easy. Donate to the wrong person and you have trouble doing anything.)
The correct form of regulation is after the fact- if you do something wrong, violate someone's human or property rights, then you are punished.
Its not like the permit based system is doing any review (that's the excuse but they rarely are funded well enough to really do this).
I remember a friend who lived in central california who wanted to build a house. He was in an earthquake area and as a geologist he mapped out the fault lines and knew the relationship to his property of the nearest fault and thus the specific danger. He had a house designed that would withstand an earthquake on that fault and wanted to build it. He wasn't allowed to do that-- because his design was not the off the shelf slab house design. Liquifation makes slab houses very poor in an earthquake, but that is what the kid in the permit office was able to approve. He was literally forced to build a house that was unsafe to live in, because he couldn't get permits to build a safe one. They had no interest in doing an engineering review (that costs money) or in seeing the work of the engineers he'd hired. It was total joke. His alternative was simply to sell the land and move to another state.... instead he built his house (it was his dream house after all) only on a foundation that he knows will not survive the earthquake.
> In 2002, the company transferred vacuum cleaner production to Malaysia. Dyson claimed that they requested planning permission to expand the factory to increase vacuum cleaner production, but that this application failed. However, the local government claims that no such permission was ever sought, as the land Dyson planned to use was privately owned and the original owner did not want to sell.[0]
> Although nearly 800 manufacturing jobs were lost, Dyson states that the cost savings from transferring production to Malaysia enabled investment in research & development at their Malmesbury head office.[1]
And
> The correct form of regulation is after the fact- if you do something wrong, violate someone's human or property rights, then you are punished.
That's completely nonsensical, there are millions of things which can not be fixed when destroyed, the only way to handle them is to prevent them from being broken in the first place. Post-regulation of razing somebody else's home or of dumping toxic sludge on commons is indefensible.
[0] http://www.allbusiness.com/government/government-bodies-offi...
Google cache tells us it's a Lexis Nexis cable-- essentially a press release. It's probably true, I don't see any real reason to doubt the facts of the matter, but still, we don't know who actually wrote that puff piece.
Edit: come on now, if you're going to downvote, provide an explanation.