American Manufacturing: It’s Not Labor Costs

Mark Hemingway at the Weekly Standard points to this piece at Bloomberg on what’s holding back American manufacturing.

It’s not labor costs.

My host, a NASA engineer turned Silicon Valley entrepreneur, has just conducted a fascinating tour of his new clean-energy bench-scale test facility. It’s one of the Valley’s hottest clean-technology startups. And he’s already thinking of going abroad.

“Wages?” I ask.

His dark eyebrows arch as if I were clueless, then he explains the reality of running a fab — an electronics fabrication factory. “Wages have nothing to do with it. The total wage burden in a fab is 10 percent. When I move a fab to Asia, I might lose 10 percent of my product just in theft.”

I’m startled. “So what is it?”

“Everything else. Taxes, infrastructure, workforce training, permits, health care. The last company that proposed a fab on Long Island went to Taiwan because they were told that in a drought their water supply would be in the queue after the golf courses.”

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