Of endings and beginnings and bailouts

I recently left my job of 12 years at Freescale Semiconductor (née Motorola Semiconductor Products Sector) and started with a new company, essentially out of the semiconductor industry and into the realm of making money by licensing intellectual property. It has been a big change that was motivated in no small part by the precipitous decline of the semiconductor industry in the United States.

Recently, John Cole at Balloon Juice has asked in regards to the Big Three automakers in the United State, “why bail them out?” There are some who argue that car manufacturing is a “strategic industry” that cannot be allowed to leave the United States.

My question is this: how is making cars more strategic than making the integrated circuits that go into the smart bombs and missiles and computers and other high tech instruments that we now depend upon to minimize casualties on our side when we go to war?

Guess what… the industry that makes those integrated circuits has already left the country. Only one major company still has plans and the ability to build state of the art integrated circuit factories in the United States. Yet, I don’t hear anyone claiming we need to bail out the troubled semiconductor companies.

The vast majority of computer chips are now made in Taiwan or Singapore, within shouting distance of China.

Is this really how we want a truly strategic industry to be run, with the factories offshore and located near our biggest potential rival?

What is our strategic direction and are we making the right choices to support it?

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The second best thing about space travel is that the distances involved make war very difficult, usually impractical, and almost always unnecessary. This is probably a loss for most people, since war is our race’s most popular diversion, one which gives purpose and color to dull and stupid lives. But it is a great boon to the intelligent man who fights only when he must – never for sport.

—Lazarus Long

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Jack, there are a number of ways of looking at both questions.

You could start with Econ 101 – minimise costs; that would explain (not only) the exportation of the chip industry to Japan Korea Taiwan (lets call them the “New West”). There are a whole bunch of “strategic industries” that have disappeared into “foreign” hands – telecommunications, aircraft electronics, NZ (out of factories in China) makes something like 60% of the frequency generator chips that drive cell phones and GPS systems, shipping (try moving a container out of the western States without it going to Singapore first), ad nauseum…

Why is car manufacturing a strategic industry that needs to be well supported? I could suggest that there are a lot of Hummers and other RVs yet to be sold, but that would not be “right”.

Start with the potential for something like 3 million unemployed. That would require considerable “strategy” to avoid.

Think about the fact that after the truckers those 3 million are probably the most unionised workers in the States and militant to boot and there is a further reason for “strategy”.

Third, take a good part of the volume of the US steel industry offline (because of the collapse of the car manufacturers) and you will have even greater reason for “strategic” thinking.

Mind you, in all of those instances the “strategic criteria” would not be so much economic as political. Neither of the Demos or the Repubs could afford to have the collapse of (at least) two of the biggest industries happen on their watch. It would be political suicide.

Forget the fact that the US car industry is about 15 years behind ROW in design and development. They are dinosaurs frantically trying to evolve after the asteroid hit earth.

Forget the fact that (if the US cars being imported to NZ – Chrysler mainly – are any indication) the product is total crap; “intelligent design” on a par with the human body and the “quality” of a 1960’s Edsel.

Yep, a whole bunch of “strategy” is needed.

I would like to see some of those care plants retooled to make train cars and for us to develop a high speed coast to coast line with connecting routes from each of the lower 48. That would employ people and build a much needed alternative to air and cars.

uhhh, make that car plants.

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