This interesting article in Forbes (Aug.17,2011) proposes that “decades of outsourcing have left US industry without the means to invent the next generation of high-tech products that are key to rebuilding its economy”. Even if Amazon wanted 
to, says Forbes, the Kindle could not be made here because of the migration to Asia of: (1) the circuit connectors (to China); (2) the display (to Taiwan) ; (3) the case (to China), because the supplier base for toys, electronics, and computers went there; (4) the wireless card (to Korea), the center for mobile phone components; (5) the controller board (to China), when the US transferred printed boards to Asia; and (6) the battery (to China), when it migrated with the manufacture of notebook computers.
The main point, however is that the decline of manufacturing in a region sets off a chain reaction. Once manufacturing is outsourced, process-engineering expertise can’t be maintained, since it depends on daily interactions with manufacturing. In the long run, say two Harvard profs, “an economy that lacks an infrastructure for advanced process engineering and manufacturing will lose its ability to innovate”. Already lost are 2 dozen industries ranging from flat-panel LCDs to rechargeable batteries to desktop/notebook/netbook PCs to hard drives. The list of industries “at risk” is even longer and more worrisome.
Take the story of Dell Computer and its Taiwanese electronics manufacturer as an example of an industry lost. The supplier started by making the simple circuit boards inside the PC. It then proposed: “Why don’t you let us make the motherboard for you? Circuit manufacturing isn’t your core competence anyways and we could do it for 20% less”. On successive occasions, the supplier took over: (1) the PC assembly, (2) the supply chain, and finally (3) the design. Dell’s revenues were unaffected and its profits increased. But the next visit from the supplier wasn’t to Dell, rather to Best Buy, offering its own brand PC at 20% less than the Dell!
Discussion questions:
1. What are some other industries lost to Asia?
2. What can the US do to reverse this decline?