A furor broke out last week after it was reported that the uniforms of U.S. Olympians would be manufactured in China. "They should take all the uniforms, put them in a big pile, and burn them," said an apoplectic Sen. Harry Reid. The story tapped into the anger -- and fear -- that Americans feel about the loss of manufacturing to China. Seduced by government subsidies, cheap labor, lax regulations, and a rigged currency, U.S. industry has rushed to China in recent decades, with millions of American jobs lost. It is these fears, rather than the Olympic uniforms themselves, that triggered last week's congressional uproar.
But Ralph Lauren berets aside, the larger trends show that the tide has turned, and it is China's turn to worry. Many CEOs, including Dow Chemicals' Andrew Liveris, have declared their intentions to bring manufacturing back to the United States. What is going to accelerate the trend isn't, as people believe, the rising cost of Chinese labor or a rising yuan. The real threat to China comes from technology. Technical advances will soon lead to the same hollowing out of China's manufacturing industry that they have to U.S industry over the past two decades.
Several technologies advancing and converging will cause this.
First, robotics. The robots of today aren't the androids or Cylons that we are used to seeing in science fiction movies, but specialized electromechanical devices run by software and remote control. As computers become more powerful, so do the abilities of these devices. Robots are now capable of performing surgery, milking cows, doing military reconnaissance and combat, and flying fighter jets. Several companies, such Willow Garage, iRobot, and 9th Sense, sell robot-development kits for which university students and open-source communities are developing ever more sophisticated applications.
The factory assembly that China is currently performing is child's play compared to the next generation of robots -- which will soon become cheaper than human labor. One of China's largest manufacturers, Taiwan-based Foxconn Technology Group, announced last August that it plans to install one million robots within three years to do the work that its workers in China presently do. It has found even low-cost Chinese labor to be too expensive and demanding.
Then there is artificial intelligence (AI) -- software that makes computers, if not intelligent in the human sense, at least good enough to fake it. This is the basic technology that IBM's Deep Blue computer used to beat chess grandmaster Garry Kasparov in 1997 and that enabled IBM's Watson to beat TV-show Jeopardy champions in 2011. AI is making it possible to develop self-driving cars, voice-recognition systems such as the iPhone's Siri, and Face.com, the face-recognition software Facebook recently acquired.
Neil Jacobstein, who chairs the AI track at the Silicon Valley-based graduate program Singularity University, says that AI technologies will find their way into manufacturing and make it "personal": that we will be able to design our own products at home with the aid of AI design assistants. He predicts a "creator economy" in which mass production is replaced by personalized production, with people customizing designs they download from the Internet or develop themselves.
How will we turn these designs into products? By "printing" them at home or at modern-day Kinko's -- shared public manufacturing facilities such as TechShop, a membership-based manufacturing workshop, using new manufacturing technologies that are now on the horizon.