The newsLINK Group - Connecting Intellectual Property and Manufacturing

Editorial Library Category: Manufacturing Topics: IP and Manufacturing Title: Connecting Intellectual Property and Manufacturing Author: newsLINK Staff Synopsis: For a long time, the U.S. manufacturing industry consisted of one big (and extremely noticeable) strategy: ship jobs to other countries that could make goods more cheaply than the U.S. could, and get rid of the good U.S. manufacturing jobs that were here. Editorial: Connecting Intellectual Property and Manufacturing 4064 South Highland Drive, Millcreek, Utah 84124 │ thenewslinkgroup.com │ (v) 801.676.9722 │ (tf) 855.747.4003 │ (f) 801.742.5803 Editorial Library | © The newsLINK Group LLC 1 For a long time, the U.S. manufacturing industry consisted of one big (and extremely noticeable) strategy: ship jobs to other countries that could make goods more cheaply than the U.S. could, and get rid of the good U.S. manufacturing jobs that were here. Between automation, the recession, and moving jobs out of the U.S., nearly $6 million middle-income factory jobs were lost between 2000 and 2009. It was a short-term success. That’s one reason so many companies got involved. But as a long-term strategy, it has come up short. Why? The answer has to do with understanding the role of intellectual property. For one thing, when manufacturing goes, it takes intellectual property with it. No matter how cheap it is to manufacture something in another country, the people who work in that country need training because they have to know how to do the necessary work. Guess what? Training people outside the U.S. how to make something means that company will eventually lose out when it comes to intellectual property. That is true even when you are very careful about such matters. When it comes to research and development, the necessary funding is closely associated with manufacturing. If manufacturing is being done somewhere else, it is a pretty good bet that the innovation is somewhere else too. That is a tremendous problem, because innovation has always been the thing the U.S. has excelled at providing. But innovation needs cash. It dries up when that is taken away. An illustration is in order. Consider one example from electronics manufacturing: ASUS. This is a Taiwanese company that takes its name from Greek mythology; ASUS is the shortened name of Pegasus. According to Forbes, it was founded in 1990. It began with a small number of employees who made motherboards. But just look at where the company is now: One company website says it currently employs more than 12,500 people throughout the world. Forbes says the number is now 25,459. ASUS makes computers, but it also makes many other products, including notebooks, tablets, and smartphones. Again, according to a company website, ASUS claims that the revenues for 2011 were $11.9 billion. Forbes says annual revenue is now $15.47 billion, with $1.61 billion in cash and $224 million in debt. In 2013, ASUS won 4,256 international awards and accolades for its high-quality innovation and design. A manufacturing beginning led ASUS to two things: lots of innovation and a great deal of money. This is not a surprise to anyone who understands the link between intellectual property and manufacturing. But while all that was happening in Taiwan, what was happening in the U.S.? The people who lost their jobs here found new jobs, if they were lucky. Those jobs usually did not pay as well; the way it currently is in the U.S., there are a lot of low-wage jobs and a few high-wage jobs, but not much in between. A June 2014 article on the website for POLITICO magazine has an example of what has happened. The article tells the story of David and Barbara Ludwig, who live in Reading, Pennsylvania. (You’ve heard of Reading if you’ve ever played Monopoly, because that’s where the Reading Railroad used to be.) David made $22 per hour and Barbara made $19 per hour. Unfortunately, they worked at Baldwin Hardware, which is a unit of Stanley Black & Decker Corp. Layoffs began in September 2008 because the company decided to move its manufacturing to Mexico. David lost his job in the first layoff. Getting a new job as a janitor took 20 months. It pays less than $10 per hour.

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