Does America Really Need Manufacturing?

Gary P. Pisano and Willy C. Shih

Too many U.S. companies base decisions about where to locate production largely on narrow financial criteria. They don't consider whether keeping manufacturing at home makes more sense strategically or take into account the impact it might have on their ability to innovate. The result has been an exodus of manufacturing from America, which has weakened the capabilities that domestic firms need to keep inventing high-quality, cost-competitive products. One problem is that it's hard to tell when moving production far from R&D will do damage. To make that determination, say Harvard Business School's Pisano and Shih, executives need to examine two things. The first is modularity, or the degree to which product design can be separated from manufacturing. When modularity is low, product designs can't be clearly specified and design choices affect manufacturing processes in subtle, difficult-to-predict ways (and vice versa). The second is the maturity of the manufacturing process. Immature processes are ripe for innovation, but over time opportunities for improvement become incremental. Viewed through the modularity-maturity lens, relationships between manufacturing and innovation fall into four quadrants: pure product innovation, pure process innovation, process-embedded innovation, and process-driven innovation. In the first two quadrants, locating design near production isn't critical, but separating the two functions is risky in the third and fourth quadrants. This framework will help business leaders make better sourcing decisions and reinvigorate America's innovation-driven economy.

Read the article here.

Tags: Manufacturing

Post a New Comment

I would prefer to remain anonymous

By hitting "Submit" you agree that your comment, in whole or in edited form, may be posted online. Comments are selected on the basis of relevancy and variety; not all will be posted.

  • 18 Apr 2012

    Phil Marsh

    My observation with regard to the need for US manufacturing is that our manufacturers need middle income assembly workers, typically non-degreed, to buy their products, but in the spirit of competition and a lot of greed, they off shored production to reduce cost. The middle class US workers lost their jobs and a major cause of the current economic problem is because if there are no US manufacturing jobs, there is no one left to buy the cheap products. It is a classical catch 22. It is too late to bring manufacturing jobs back. The damage is too deep. When we off shored the assembly jobs, we off shored the technology behind the products including trade secrets. Multinationals operating freely in the US with no regard for our county's future compounds the problem. Most recently the engineering product design jobs are being off shored. The result is terrible product designs like front end loader washing machines. In some cases t he companies bring low cost engineers to the US under the B1 visa program right in the middle of a recession and claim there is a shortage of engineers. Phogenix did that and lost hundreds of millions, but they all keep doing it. I remember that incredibly stupid slogan "this is the information technology age" so why worry. Well look around. We already exported our information technology years ago when this all started. What is our economic future? It is grim.

  • 23 Jul 2012


    It's so sad. This month we have done many office moving jobs. When speaking to them they are either just closing or we are literally taking there office items right to the container to go oversea's. It's good as far as a moving company goes but sad to see another job moving oversea's.

  • 21 Aug 2012


    The question "Does America Really Need Manufacturing?" isn't really answered or even addressed here. Instead the question appears to be "Do US companies need US-based manufacturing" which, to me at least, is a lot less interesting or urgent. Companies can make their own decisions and the marketplace will judge whether they did the right thing. But it is government that establishes the legal/tax/regulatory framework within which that decision is made. If America Really Does Need Manufacturing, policies can be oriented to make domestic manufacturing more appealing. So it really does seem that an answer to the question posed by the headline is important and urgent.