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Review: Producing Prosperity: Why America Needs a Manufacturing Renaissance

Building ProsperityThis review first ran in the May 6 edition of The Hamilton Spectator.

Producing Prosperity: Why America Needs a Manufacturing Renaissance

By Gary Pisano and Willy Shih

Harvard Business Review Press

$30

It’s a view of Hamilton that’s launched more than a thousand hours worth of rebranding consults, workshops and roundtables.

Drive across the Skyway Bridge and what do you see?

Maybe you keep your eyes on the road and dream of a postindustrial Hamilton where art is the new steel, everyone’s a knowledge worker and the factory floors and blast furnaces of Burlington Street are replaced with parks, biking and hiking trails and independent, fair trade coffee houses offering free Wi-Fi.

Or maybe you look out from the Skyway Bridge and see jobs and prosperity. You see thousands of Hamiltonians earning decent wages, paying off mortgages, putting their kids through school and saving for retirement. You see entrepreneurs and business owners finding new and smarter ways to sell even more made-in-Hamilton products close to home and around the world.

If we took Building Prosperity authors Gary Pisano and Willy Shih for a drive over the Skyway Bridge, they’d see an industrial commons worth fighting for.

Think of an industrial commons as a collection of manufacturers, suppliers and workers from different industries along with post-secondary institutions. Within a commons is a wealth of technological know-how, operational capabilities and specialized skills that make fertile ground for innovation.

“In an increasingly globalized world, location paradoxically matters more, not less, for companies because it can mean privileged access to capabilities in a commons that can keep you ahead of the competition,” say Pisano and Shih. “The presence of an industrial commons can exert a powerful gravitational pull on the location of industries and innovation.”

But the commons is under siege thanks to North America’s experiment in deindustrialization.

“Some economists see no cause for concern,” say Pisano and Shih. “In their eyes, the decline of manufacturing is a natural and healthy evolution toward a more knowledge-based economy focused on services and innovation. We argue that such a perspective is deeply flawed. The data tells a consistent and alarming story. When a country loses the capability to manufacture, it loses the ability to innovate.”

Yet when we talk about fostering a culture of innovation in Hamilton, do we think about it happening in the industrial heart of our city or in renovated downtown lofts and west end research labs?

“Innovation and manufacturing are often viewed as residing at opposite ends of the economic spectrum – innovation being all about the brain (knowledge work) and manufacturing all about brawn (physical work),” say Pisano and Shih.

The myths and misconceptions don’t stop there. There’s the belief that innovation requires highly skilled, highly paid white collar professionals while manufacturing gets by on low-skilled, low-paid blue collar workers. Or innovation is a high-valued-added specialty while manufacturing is just a low-value-added commodity. And innovation is creative and clean while manufacturing’s dirty and dull.

Having toured hundreds of factories in every industry the world over, Pisano and Shih say it’s a wildly inaccurate view. “In most factories we have visited, we have seen a lot more brain than brawn at work. Manufacturing has become knowledge work.”

And here’s why believing you can have innovation without manufacturing is a dangerous assumption. When manufacturing pulls up stakes, the industrial commons starts eroding. Suppliers struggle and go out of business. Companies in other industries that rely on those suppliers join the exodus. Highly skilled workers leave. “Even worse, the loss of a commons may cut off future opportunities for the emergence of new innovative sectors if they require access to the same capabilities,” warn Pisano and Shih. “The foundation upon which future innovative sectors can be built is crumbling.”

Four decades ago, American companies offshored to Asia what was then seen as low-value-added consumer electronics manufacturing.  But the commons that built those products is now the innovation hub for designing and building compact, high-capacity, rechargeable lithium ion batteries.  The same holds true for photovoltaic cells.

Pisano and Shih aren’t making a blanket call to save all manufacturing and don’t see an industrial renaissance creating a whole lot of new jobs thanks to technological advances. But they are calling on political and business leaders to do far more to strengthen advanced manufacturing in key industries that set the foundation for future innovation.  More investments in basic and applied research and greater awareness of the critical link between designing and making products are among their prescriptions.

“Manufacturing matters when it is integral to the process of innovation. The common assumption that the United States can prosper as an innovator without manufacturing is a dangerous one. In some contexts, manufacturing is just as important to the innovation ecosystem as strong universities, outstanding research and development and vibrant venture capital.”

So here’s hoping made-in-Hamilton light weight steel is the new art.  We stop apologizing and agonizing over the view from the Skyway Bridge.  And we start seeing our city’s industrial heart as an innovation hub and one of our city’s best competitive advantages.

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