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March 1, 2010

Mtg: Winner Take All: How Competitiveness Shapes the Fate of Nations

by @ 4:36 pm. Filed under ALL, BioEngineering, Communications, Computers/Software, Electrical/Power, Electronics Design, Engineering Mgmt, NanoEngineering, Optics/Displays, Semiconductors

WEDNESDAY May 12, 2010
SCV Components, Packaging and Manufacturing Technology Chapter
Speaker: Richard J. Elkus, Jr., Vice Chairman of the Board, Tencor Instruments
Time: Dinner at 6:00 PM; Presentation at 6:45 PM
Cost: $20 if reserved by May 10 ($10 for students, unemployed); $25 after & at door; vegetarian available; no cost for presentation only
Place: Biltmore Hotel, 2151 Laurelwood Rd (Fwy 101 at Montague Expressway), Santa Clara
RSVP: Through the website link

The strategic dilemmas now confronting America are deep and daunting. Though we face no immediate threat of another world war or Great Depression, we find ourselves in what could become a zero sum game. And we are losing. At the core of our growing problems is an exorbitant level of public and private debt relative to savings and the nation’s capacity to repay its creditors. And beyond America’s insatiable demand for credit lies another problem, one potentially much worse. The United States is rapidly losing its ability to commercialize its innovative strengths in the form of advancements in technology, products, and markets that are potentially explosive and scalable and thus strategic to any great nation. As a result of these losses, our ability to innovate, produce, and employ continues to decline. In the end, the country becomes unable to regenerate itself.
This is not a danger that looms on the horizon. It is the condition that faces America today. We are on the verge of losing our ability to compete â??- the only viable means to paying down the nation’s horrendous financial obligations.
The United States is no longer a significant factor in the consumer electronics industry, including television, cameras, recorders, and cell phones. Without the resources of China and other Asian countries, neither computers, iPhones, HDTVs, nor myriad other consumer electronics would be on the shelves of American stores. Two of America’s three automobile companies went bankrupt. We are no longer competitive in nuclear power. We face fierce competition in aircraft and ship building. We are no longer a significant supplier of machine tools. By 2007 nearly 80 percent of all semiconductor fabrication tools were being purchased for manufacturing facilities in Asia. The loss of these markets will ultimately hinder technological advances in the U.S. military establishment.
The high dependence of our industrial base on foreign design and manufacturing has ominous implications. Assuming China and India increase domestic consumption, substantially reducing their reliance on the U.S. consumer, America could become marginalized. Asia will be able to get along without us while we remain significantly dependant on them.
To resolve this situation will cost hundreds of billions in new investment over many years. As the nation tries to live within its means, our standard of living will fall. America will have to develop a totally different competitive strategy. We will have to become an exporting nation, selling more than we buy. In many respects the United States will have to take lessons from the Asian book of competitiveness. Without that understanding we will be unable to meet our assumed obligations. The America to which we have become accustomed will cease to exist.
We Americans went to get money from woefully overdrawn bank accounts only to find the banking system could loan no more. We then called upon the government not only to assume those debts that individuals and corporations could not meet, but to loan considerably more, hoping to avoid another depression. Deep in the national memory is the civil unrest and global savagery brought on by the Great Depression, which ended only through the winning of a world war. With our competitors devastated by the war and our homeland unscathed, we became the greatest industrial power ever known. Until the early 1970s, America had a positive balance of trade, dominating virtually every technology, product, and market. We have been living off that once lofty position ever since.
But for the last 30 years competitiveness has not been about the nation’s commercialization of innovative products in highly scalable markets, but about short-term returns on investment â??- returns offered by other nations happy to do our manufacturing and design for a fraction of our cost in wages and investment. The result today is the gutting of our industrial base, a structural imbalance in trade, and a fundamental loss in our ability to innovate and commercialize â??- two functions, inexorably tied together, without which America can never pay down its debt nor provide enough jobs.
Turning this situation around will demand great individual and collective sacrifice. It will also require that we grasp the principles of competitiveness: As end-use products, markets, and related technologies evolve, they become increasingly interrelated, interdependent, and integrated. They converge. As this infrastructure grows it becomes very difficult to define the difference between the functions of marketing, engineering, and manufacturing, let alone pick and choose what function you want to control. The development of the infrastructure is always evolutionary, never revolutionary. As it grows in scale, the amount of money invested in it grows exponentially. A semiconductor manufacturing plant that cost $50 million in 1984 could cost $6 billion today. Dropping out of the game often means you donâ??t get back in.
The United States has been exiting the game for nearly thirty years, a strategy rationalized through short term monetary gains and the dream that technology can be developed apart from the infrastructure that supports it. We assume a good idea will win no matter which nation builds the infrastructure. While a good idea might be worth a few dollars, the cost of technological innovation and ability to commercialize it will often run in the billions. America is in serious danger. It is time to develop a national strategy for international competitiveness.

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