Monday, May 07, 2007

Causes of America's Loss of Prominence

Senator Kay Bailey Hutchison rang the alarm bells over India’s and China’s threat to the American economy, only she left out a major player in this deteriorating situation, U.S. companies serving global markets.

The Senator cited a 2005 study on the number of engineers being trained in India and China as evidence of the loss of our pre-eminence. She failed to mention a 2006 Duke University Study showing the problem to be less severe. However, the study raised the same concern as Sen. Hutchison, the growing number of engineers trained in both Asian countries. It shared a statistic Kay Bailey didn’t mention in her column, 11 Indian engineers can be hired for the cost of one American.

Part of India and China’s high growth comes from American companies and even our government’s outsourcing work to Asia. She cites a reduction in the growth rate of patents as evidence of the problem. Historically, many patents come from private corporations vs. government agencies. From 1995 to 2000, 77.5% of internet related business method patents were filed by corporations, none by a government agency.

So why are American businesses not growing their innovations at the same rate as the 1990’s. My guess is the managerial climate of the 90’s fostered creativity and innovation. Leadership guru Dr. W. Edwards Deming’s influence rose through the mid 90’s until his unfortunate death. He cited management practices that stifle innovation. Unfortunately those became widespread in this decade. They include pay for performance, buying goods solely based on the lowest cost, and seeing employees as just another input, as disposable

Regarding innovation, he said “You cannot plan how to make a discovery” & “You do not plan innovation.” However, you can create the conditions for it to occur. On this the guru said “For Quality: Stamp out fires, automate, computerize, management by objective, install merit pay, rank people, best efforts, zero defects. WRONG! Missing ingredient: profound knowledge.” I believe he would add “outsourcing” and “pay for performance” to his list of faulty management strategies. His wisdom is missing from most American corporations and A.W.O.L from the halls of government.

A friend works in the corporate office of America’s largest small appliance maker. In 2006 they closed down their last plant in North Carolina. All products sold in the U.S. are now made in China. Who served on their board when this decision was made? It was none other than ex-Texas A & M University President Robert Gates, now our Defense Department Chief.

Senator Hutchison should know about Goodyear Tire’s outsourcing production to China as it will result in the death of a Tyler, Texas plant the end of 2007. The company saved $35 million by buying Chinese tires. A Goodyear spokesman stressed it continues to search for ways to eliminate “high cost production”. How many other American companies are sending their formerly high cost production to low cost India and China?

Do I believe Senator Hutchison’s bill will do anything other than provide low cost R & D to energy and space related companies? No. Even her education solution of competitive grants is piecemeal and insufficient to address the problem. Grants for teachers to earn masters and doctoral degrees sound nice until one considers they may be grading Genesis cited papers on God’s creating the earth in their physics class (if a bill in the Texas legislature passes).

The causes of America’s declining innovative role in the world are tied to our sorry state of leadership, intent on optimizing the country for business interests and a subsection of Christians. While not explicitly stated, Senator Hutchison’s column drives the first part home in spades.

1 comment:

PEU Report/State of the Division said...

The San Angelo Standard Times ran an edited version of this letter. It can be viewed at:

SOD also posted it on Senator Hutchison's website which should run through June 11th: