Manufacturing at home
U.S. innovation, feeling the pull from abroad
Thursday, September 16, 2010
IN SATELLITE BEACH, FLA. During the depths of the night, Fred Maxik is often struck by an idea for building a better light bulb. When that happens, he rolls over and scrawls a diagram or a few words on the wall beside his bed with an indelible black marker, a practice his wife tolerates because he offers to repaint their room every six months.
"I don't want to lose the thought," says the graying, pony-tailed inventor.
Now, in a coup for Maxik and the company here he founded, the object of those pre-dawn inspirations is going on sale at Home Depot, the nation's largest lighting retailer. The bulbs, assembled at a plant here with about 250 workers, are illuminated not with electrified wires but energy-efficient light-emitting diodes, or LEDs - a method many industry experts consider the future of lighting.
Lighting Science Group is, as a result, just the sort of manufacturer that many, including the Obama administration, have said they would like to keep in the United States.
But while the company's manufacturing roots lie here, they may not remain.
The connection between American innovation and manufacturing, which for generations created U.S. jobs, has been unraveling under the pressures of globalization, and the light-bulb industry may be a prime example.
Ordinary incandescents, the bulbs pioneered by Thomas Edison, are manufactured almost entirely outside the United States, with the country's last major General Electric factory set to close this month. The company will continue to make incandescents in Mexico and China.
In the near term, compact fluorescents are expected to replace the traditional bulbs that are being phased out by new U.S. energy standards. But CFLs, as they are called, are almost entirely made in China, though it was an engineer in the United States who came up with the breakthrough design.
Now, as Lighting Science rapidly expands its production of what is considered the next-generation technology, the company is being courted by China and Mexico. Aside from the enticement of lower-wage workers, those countries offer significant cash incentives for capital equipment and labor, amounting to as much as $4 million, company officials said.
The United States, by contrast, has offered financing under the stimulus program, but the process has proved too cumbersome for the small company. Lighting Science is largely owned by Pegasus Capital, a private equity group.
The incentives are "a game that the foreign governments are playing, but the U.S. isn't," chief executive Zach Gibler said. "Like any manufacturer, we have to look at our options."
As the United States seeks to counter a decades-long drop in manufacturing employment, one of its key challenges is making sure that manufacturing - especially in high-profit, high-skilled, high-wage pursuits - remains in this country.