Today's Washington Post carries a front-page story entitled "How Innovation Killed the Lights." It's a tale already told in other places and in other contexts, of how a small General Electric plant that had been manufacturing the now old-fashioned incandescent light bulbs is closing down. It focuses on the human impact of a couple of hundred lost jobs, and suggests (as the title indicates) that "innovation" was responsible.
Well, in a way, yes. Technology advanced to a new concept of residential light bulbs, the compact fluorescent (CFL for short) and the end result was the expiration of this plant. But that's a little too "post hoc, ergo prompter hoc" for my taste. I see the story differently.
To me, this demise of this plant demonstrates not the effects of scientific/technological innovation, but the results of a lack of manufacturing/business innovation. The latter is at the root of our current economic doldrums. New ideas are always coming along, sometimes driven by technology, sometimes by changes in society's approach to a product. In the case of light bulbs, it was both. This kind of change is a given. New techniques, new materials, new ideas ... all these can wreak major changes in a product or an entire industry.
But the success of our economy depends on how well business adapts to it. It's said (even in business circles at times) that if you're not a part of the solution, you're part of the problem. More germane here is a slight rephrasing: If you're not a part of the future, you're part of the past.
As CFLs were developed (in the U.S.!), with a clear advantage in much lower energy consumption, a sharp company would have begun to look at ways of producing. Of course there were problems (early versions needed to be hand-blown) but the Chinese solved them (and now have moved beyond that labor-intensive stage).
Couldn't we have done that in the U.S.? Yes, most certainly; but the first reaction of General Electric was to oppose any efforts at legislation that would create incentives to switch, or to make it easier to begin producing CFLs. So GE, often touted as one of our best and most innovative companies, immediately became not an innovator, but a defender of the status quo.
Eventually, years too late, GE checked out the costs of producing the new bulbs in the U.S., but they looked only at the prospect of converting the old plant to the new production, even though it's pretty well known that retrofitting can be more expensive than building anew. Not surprisingly they found it would cost too much, and the product would have to be priced significantly higher than the Chinese-produced ones. (It's worth noting also that GE already had an investment in the alternate, but second-class, technology of halogen lighting.)
So General Electric, a paragon of U.S. industrial might, ceded the market to foreign manufacturers, following two principles that seem to have become ingrained in U.S. business thinking since the 1960s, both detrimental to our leading position in trade and manufacturing:
1. Keeping up with technology is expensive and its benefits are usually longer term; seek protection from innovation, stick with what you know, and just keep producing it, modernization be damned. This errant thinking has infected the course of events in U.S. industries as disparate as automobiles, major home appliances, and energy (which latter industry still insists on defining itself in terms of coal, gas, or oil and ignores alternate energy sources).
2. Manufacturing is old hat; making physical products isn't important; focus instead on shuffling assets to create an impression of growth. Weird new financial instruments and the sale of "services" are where the real profits lie.
And thus have we lost millions of manufacturing jobs over recent decades. Captains of industry became corporals. This outcome was not inevitable; but until American industry regains a keen sense of risk-taking and a willingness to innovate, we're likely to see further deterioration of our economy.
In the same issue of the Washington Post, Steven Pearlstein makes a cogent case that we won't make much headway in reducing unemployment until we can restore a manufacturing sector that remains competitive in good times and bad.