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Why it Will be Difficult to Revitalize American Manufacturing

It's not that our labor force isn't cheap enough. It's that government is too big.

5:12 PM, Jan 27, 2012 • By MARK HEMINGWAY
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Bloomberg recently ran a great series on the challenges to expanding America's manufacturing sector that's worth reading in light of the president's State of the Union rhetoric on jobs. It opens with this distressing anecdote:

“I’d love to make this product in America. But I’m afraid I won’t be able to.”

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.”

So begins my education on the hollowing-out of the American economy, which might be titled: “It’s not the wages, stupid.”

Read the whole thing here.

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