U.S. losing high-tech manufacturing jobs to Asia

The United States lost more than a quarter of its high-tech manufacturing jobs during the past decade as U.S.-based multinational companies placed a growing percentage of their research-and-development operations overseas, the National Science Board reported Tuesday.

The rapid expansion of science and engineering capabilities in China and its neighbors pose a more formidable economic challenge to the United States, according to the group, with Asia rapidly boosting the number of engineering doctorates it produces and research dollars it spends.

The report comes as the Obama administration is seeking to make U.S. manufacturing more competitive through engineering and innovation. In June, it announced its Advanced Manufacturing Partnership and sank $500 million into the effort.

But as the National Science Board publication shows, vast government efforts in Asia are working along similar lines. It offered abundant evidence Asia’s efforts to attract and develop engineering outfits, and not just low-wage factories, have paid off. Since 2000:

Research-and-development expenditures in China and nine other Asian countries have risen to match that of the United States.

• The number of doctoral degrees in engineering awarded in China has more than doubled, and now far exceeds the number awarded in the United States.

• The number of research workers for U.S.-based multinationals working overseas has more than doubled.

“Over time, global science and technology capabilities have grown, nowhere more so than Asia,” according to the report. “In most broad aspects of science and technology activities, the United States continues to maintain a position of leadership. But it has experienced a gradual erosion of its position in many specific areas.”

The report also highlights the broader loss of related U.S. jobs.

The number of high-tech manufacturing jobs in the United States has declined by 687,000, or 28 percent between 2000 and 2010, according to the report.

Although the long decline of manufacturing employment in the United States is often attributed to the cheaper wages in developing countries, China and developing countries in Asia have in recent years sought to lure more sophisticated manufacturing operations — and better jobs — by expanding their engineering prowess through government investment in education and research.

The decline in U.S. manufacturing as a share of the nation’s economy and employment over the past decade “is not solely due to low-wage competition,” the president’s Council of Advisors on Science and Technology wrote recently. “We cannot remain the world’s engine of innovation without manufacturing activity.”

The National Science Board publication issued Tuesday found that other nations, by increasing their research and education spending, “challenge the world leadership role of the United States.”

“The continued increase in the trends of these indicators are cause for concern,” said Jose-
Marie Griffiths, chairman of the effort by the National Science Board, which is a policy arm of the National Science Foundation.

Just as China and other Asian countries appear to be gaining in engineering, however, other factors at work are expected to give a boost to U.S. manufacturing by making it more competitive with China.

Wages in China have been growing rapidly, lessening their advantage over those in the United States. Moreover, increasing automation in the United States is lowering labor costs. Finally, analysts said, U.S. workers are far more productive.

“When you add all this up together, there’s a lot of opportunity in the U.S.,” said Eric Spiegel, chief executive of Siemens, which has 65,000 employees and 137 manufacturing plants in the United States. “There’s still more skilled labor here than anywhere else in the world.”

Within five years, the cost gap between the United States and China to produce many goods consumed in North America will be virtually closed, according to a recent report from the Boston Consulting Group.

“China’s overwhelming manufacturing cost advantage over the U.S. is shrinking fast,” the report said.

Peter Whoriskey is a staff writer for The Washington Post handling investigations of financial and economic topics.
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