How Did It All Begin? Was It Really Worth It?
June 4th, 2020
Well, it took a long-time, but it has finally happened. It took almost thirty years before people finally opened their eyes to the threat to our infrastructure and a global pandemic is the “smoking gun.” The “it” I am referring to is our ever-increasing dependency on goods from the Asian region. Our current, dependent situation did not happen overnight; rather, years of wishful thinking and reluctance to confront the large trade deficit, investigate vast instances of intellectual theft and trillions of dollars of one directional investment has cornered and depleted our economic might.
We have been so hooked to the very idea of buying everything from global hubs like China, Thailand, and India at prices so deflated (due to the aforementioned reasons stated above) that the average American family saves about nine hundred dollars a year by shopping at Walmart! I have to wonder if $900 a year is worth the potential societal, economic, and political pitfalls we are currently experiencing.
We need to ask ourselves: Who cares if that stuff is brought over from abroad? What does it matter? After all, who in this country wants to produce throwaway, cheap goods? What harm does it do if we can buy a BlueRay Player for less than thirty bucks at Walmart? It’s not like it hurts anyone…right? Wrong!
In the end, as we have discovered in the past few months, it has harmed all of us. Every US citizen, whether they truly understand or feel it, has been compromised by the decades long manufacturing and financial exodus to low cost labor markets. At no time has it been more evident than during this Covid-19 crises when we were faced with the facts that key medical devices, life-saving ventilators, could not be manufactured by US based companies like GE Medical because many key components that it took to build those products were coming from China. China was, effectively, closed for business during the early months of 2020. Talk about a rude awakening!
Then we discovered that most of our drugs are manufactured overseas, as well! I dare say discovered is not the right word because we knew all the time, didn’t we? It was a fact that was just too inconvenient to accept. This threat had not only been there all along, but we caused it ourselves, by eliminating jobs in manufacturing, engineering, and innovation in the cause of balance sheets, stock prices and bonuses for C-level executives.
Those of us in the printed circuit board industry have been damaged and ranks decimated by this greed-induced transition to Asia as much, if not more, than any other industry.
Here are the facts: Thirty years ago there were almost two thousand PCB manufacturers in the United States, producing almost seventy percent of the world’s printed circuit boards. All printed circuit board research, innovation and development came from here, Western Europe or Japan.
Then three things happened:
-First was that Nixon recognized China, not a bad thing in and of itself; in fact, it was a great diplomatic gesture; we needed more friends and fewer enemies.
-Second, the fall of the Soviet Union put us in a “trance” of sorts—we defeated the last “true enemy” and we could all relax and enjoy US hegemony (the spoils of victory). This false sense of security came over us all, leaving our economy for the taking.
-Third, the introduction of the North American Trade Agreement (NAFTA), constructed as a well-intentioned economic diplomacy, encouraged trade between the three North American countries. The purpose was to allow inter-nation state trade with our neighbors, with few economic restrictions, especially to the south.
When our large American OEMs took a look at doing business with Mexico, they found it wasn’t as appealing as they thought it would be, for a variety of reasons; however, the concept of farming out production led them to start thinking about other places in the world where they might be able to manufacture their products, cheaply and efficiently.
If not Mexico then where? And then it hit them: the burgeoning Asian market.
CEOs, Presidents, Boards of major US corporations shouted and pressed, “they are our friends and they are open for business!” Let us not forget the greed by our business leaders, as they flooded the untapped, inexpensive labor market with millions of jobs. I personally got caught in the hype, traveling to China multiple times during the late eighties/early nineties, hoping to establish a PCB footprint with access to the Chinese domestic market.
Over those few years I became aware that a mutually beneficial business relationship with China was not possible. They wanted complete domestic market control (no surprise)—I may be so bold to assume that this was a ruse from the beginning: inviting technology into their borders with open arms, only to perform acts of intellectual theft. This micro-level display I experienced has become analogous to the world market over the years.
We need to toss out the fallacy that the far east, knowingly and with full intent, stole our business. We gave it to them. Our big OEMs stirred by “expensive” US labor, cheap products, and increasingly frustrated with those pesky American regulations, flew over to China, India, Taiwan and others, handed them our business, our technology, our innovations, our intellectual property, dollars and economic future.
In the end, as we have come to realize these past few months, we have erred for decades, raising an economic giant that is looking us in the eye. And the result? Today there are fewer than two hundred PCB shops in the United States…Nay, in all of North America! We build less than four percent of the seventy billion dollars-worth of PCBs produced annually throughout the world.
Meanwhile China leads the way and builds almost seventy-five percent of the seventy-billion-dollar PCB market, including, of course, those precious ventilator boards.
Which draws out the question: Was that thirty-dollar Blue Ray player really worth it?