In my previous posting, I painted a gloomy picture of American manufacturing. But competitive advantage might change in the future.
American product design is world class. Innovation is still dominated by American companies. This is well known. The big secret, seldom seem by consumers, is the industry that supports rapid product development. Call it Prototype Production (PP).
If I'm designing a stethoscope, I need prototype mechanical components - chestpieces, eartips, metal parts, and so on. There are companies out there that will build these parts in a matter of hours! I design the parts using 3-D computer aided design software, upload the design files to their computers, and within a day or two, I can receive the parts exactly as I designed them.
Electronic circuits are no different. I can design a circuit, send the design files over the Internet, and a company will manufacture the printed circuit boards, use robotics to place the tiny components and within days I will receive completed assemblies with hundreds of components.
Think about the power of this capability - any person with a computer
can design virtually any mechanical part or electronic circuit, using a laptop computer, and have it produced in days.
Following from my previous posting, consider the potential for an Innovator's Dilemma facing Chinese manufacturers. Right now, it makes sense for American manufacturers to make these small, expensive prototypes and small production quantities needed by product designers. There are Chinese companies that can do the same thing, but most large Chinese manufacturers aren't going to "waste their time" catering to such small customers as design engineers.
However, these small American production houses are starting to climb the ladder from very small runs to production runs of a few hundred units at a time. They have extreme flexibility built into their systems in order to make dozens of different prototypes in one day. The Chinese do not.
What if markets become fragmented? What if the cool product to own is one that is so personally customized that it cannot be produced on a massive production line but has to be made to order?
Just as Americans dismissed cheap products to stick with higher margins, Chinese companies may dismiss low volume production. These amazing prototyping companies that are catering to the creative design community may find themselves catering to the masses, as teenagers decide to design their own products and design becomes an activity of the masses.
The fitness landscape might change once again, and we might find that this new industry of prototype production becomes the "new mass production". Foxconn in Shenzhen, China, with its 250,000 employees churning out iPods, iPhones and laptops might just become a dinosaur, supplanted by the 20-person custom design shop down the street.