While manufacturing in the US has obviously declined over the last decades, the country still perceives itself as the frontrunner in education and innovation. However, as Eamonn Fingleton from the “New York Times” explains, its leading position in innovation gets more and more challenged if it exists at all anymore.
The data on patents filed in 2011 by of the World Intellectual Property Organization (WIPO) lists only one US-American company, Qualcomm, in its top ten. The first five positions are held by Chinese and Japanese companies like ZTE, Huawei, Panasonic and Sharp together with Germany’s Bosch. The number of patents reflects the increased Research and Development (R&D) activities in Asia. Especially in China the innovative landscape is shifting fast. The number of researchers doubled since 2000 and the country may overtake the US in research spending within a decade. This trend is fueled by economic growth, but, in addition, American Companies have started to move their R&D offshore. More than 25% of the R&D employees of US multinationals work abroad. Just five years ago the number was 16%.
Historically innovation has been linked to great inventors and individual genial ideas will always play a role. However, innovation now emerges from the interaction between design, manufacturing, and consumer research. Especially in the rapidly changing world of high tech products separation of organizational functionalities as critical as R&D within the continuous process of product development are both costly and unpractical. The data indicate that R&D will follow manufacturing and markets. A local loss in manufacturing capabilities is therefore often only the first step in losing the company as a whole.