February 25, 2013 By Robert Bell
Last summer, according to The Economist, MIT surveyed 108 American manufacturers with multinational operations. It found that 14% of them had firm plans to bring some manufacturing back to America. Another 33% were actively considering it. Almost half of really big US firms, with sales above US$10 billion, plan to “reshore” some of their operations, according to a different study by Boston Consulting Group.
So, is the era of offshoring jobs over? Can American workers – and the communities where they live – relax? Can their counterparts in other high-cost countries from Canada to Europe look forward to a reshoring surge?
And if you live in China, India, Malaysia, Mexico or another offshoring destination – do you need to start watching your back?
I don’t pretend to have the answer. But I can tell you about something I saw with my own eyes. Last year, I had the privilege of visiting Oulu, Finland, one of our Top7 Intelligent Communities of 2012 which is also among the Top7 of 2013. I was taken to visit a Nokia manufacturing plant. Now, Nokia has been through some rough years, as its failure to keep up with mobile innovation cost it dearly. Oulu, home to one of the company’s major R&D facilities, has suffered right along with it. I was eager to see what the company was doing with the people and facilities they had chosen to keep in Oulu.
What I saw was a manufacturing plant, but of a very specialized kind. This facility exists to take prototypes of new equipment and turn them into production models. Its production capacity is deliberately limited to the thousands of units. Once they have worked out all the bugs and found the most efficient way to produce the product, manufacturing moves to Asia, where contract manufacturers make millions of them at per-unit costs that the Nokia plant could never equal. But the Oulu plant is not out of the loop. It also functions as the repair facility for the equipment it helps create. (They are making mostly wireless base stations and other heavy gear, not handsets.) Everything that fails in the field comes back to Oulu, where it is tested, torn down and diagnosed. The lessons learned go into product upgrades, which are put through the plant’s processes until they are ready to go to Asia and be implemented in mass manufacturing.
Most of the personnel in the plant are highly skilled, from engineers to technicians to design specialists. When they need to do a production run, the plant hires engineering and technology students from the University of Oulu to work part time. The young people appreciate the money and the chance to see high-tech manufacturing first-hand. Nokia gets products into the hands of customers faster and can make sure those products work properly committing to high-volume production. And the benefits run like a river through the economy of Oulu.
This looks to me like the future of communities in a century where business serves a global market. Modern economies prosper from being specialized. Some of the food that farmers grow feeds insurance brokers who sell them crop insurance. By specializing in different things, both do better than if they tried to do everything themselves. The way to be a successful community today – whether in industrialized or developing nations – is to figure out what you are good at and then commit to having the people, infrastructure and innovation capacity to deliver it.
About the Intelligent Community Forum
The Intelligent Community Forum is a think tank that studies the economic and social development of the 21st Century community. Whether in industrialized or developing nations, communities are challenged to create prosperity, stability and cultural meaning in a world where jobs, investment and knowledge increasingly depend on advances in communications. For the 21st Century community, connectivity is a double-edge sword: threatening established ways of life on the one hand, and offering powerful new tools to build prosperous, inclusive and sustainable economies on the other. ICF seeks to share the best practices of the world's Intelligent Communities in adapting to the demands of the Broadband Economy, in order to help communities everywhere find sustainable renewal and growth. More information can be found at www.intelligentcommunity.org.
Robert Bell is co-founder of the Intelligent Community Forum, where he heads its research and content development activities. He is the author of ICF's pioneering study, Benchmarking the Intelligent Community, the annual Top Seven Intelligent Communities of the Year white papers and other research reports issued by the Forum, and of Broadband Economies: Creating the Community of the 21st Century. Mr. Bell has also authored articles in The Municipal Journal of Telecommunications Policy, IEDC Journal, Telecommunications, Asia-Pacific Satellite and Asian Communications; and has appeared in segments of ABC World News and The Discovery Channel. A frequent keynote speaker and moderator at municipal and telecom industry events, he has also led economic development missions and study tours to cities in Asia and the US.
ICF co-founder John G. Jung originated the Intelligent Community concept and continues to serve as the Forum's leading visionary. Formerly President and CEO of the Greater Toronto Marketing Alliance and Calgary Economic Development Authority, he is a registered professional urban planner, urban designer and economic developer. He leads regular international business missions to US, European, Asian, Indian and Australian cities, and originated the ICF Immersion Lab program. John is a regular speaker at universities and conferences and serves as an advisor to regional and national leaders on Intelligent Community development. The author of numerous articles in planning and economic development journals, he has received global and Toronto-based awards for his work in collaboration and strategic development and sits on numerous task forces and international advisory boards.
ICF co-founder Louis Zacharilla is the creator and presenter of the annual Smart21, Top Seven and Intelligent Community Awards and oversees ICF's media communications and development programs. He is a frequent keynote and motivational speaker and panelist, addressing audiences of tech, academic and community leaders around the world, and writes extensively for publications including American City & County, Continental Airline's in-flight magazine and Municipal World. His frequent appearances in the electronic media have included both television and radio in South Korea, China and Canada. He has served as an adjunct professor at Fordham University in New York and is a Guest Lecturer at Polytechnic University's Distinguished Speaker Series. He holds a Masters Degree from the University of Notre Dame.