International Competition and the Decline of U.S. Manufacturing
This chapter reviews the U.S. manufacturing decline in the first decade of the twenty-first century, examining this from a series of dimensions, including the critical relationship between the production stage and the other parts of its innovation system. The profound challenge to U.S. production in the 1970s and 1980s from Japan's quality manufacturing model and its accompanying technology and process advances, which dramatically disrupted U.S. production practices, is the first issue that must be understood. The chapter then explores the rise of China's manufacturing economy; its innovative new production scale-up approaches knocked the United States into second place in world manufacturing output in a remarkably short period. Accompanying that rise was a parallel and related rise in distributed production by U.S. firms, with outsourcing of production stages and corresponding issues of “innovate here/produce there,” which could lead to “produce there/innovate there.”