The Importance of Industrial Hothouses
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Image courtesy of The Economist
The topics of digital fabrication and advanced manufacturing are nothing new, but a recent report in The Economist—which highlights these trends under the sweeping theme of "The Third Industrial Revolution"—elucidates their roles within a broader economic context than the one in which they are typically discussed.
One of the most interesting insights concerns the rationale for developing manufacturing centers in various locations. The common wisdom for the intense manufacturing activity based in China, for example, is based largely on the low cost of labor there.But the reality is more complicated—and interesting. As an illustration, researchers at the Personal Computing Industry Center at the University of California at Irvine determined in a cost study of a typical $499 iPad that only $8 goes towards Chinese labor, out of a total $33 spent on labor costs worldwide. With such a small percentage of international labor expenses, one might ask why iPads couldn't be manufactured elsewhere. The answer is that Shenzhen (where Foxconn is based) is an incredibly successful industrial cluster, with "a network of firms with sophisticated supply chains, multiple design and engineering skills, intimate knowledge of their production processes and the willingness to leap into action if asked to scale up production."
This notion of a successful manufacturing nexus reminds me of Barton Kunstler's book The Hothouse Effect (Amacon, 2003), which investigates the basic ingredients required to develop the so-called "creative hothouses" that have influenced technological history, from the Roman Empire to the Bauhaus. According to Kunstler, many of the elements required to produce the hothouse effect relate to social networks—from shared values to the exchange of ideas and education. The UC Irvine study reveals the relationship between an intricate, nimble, and proficient network of suppliers and fabricators and economic success. As digital fabrication and collaborative, distributed manufacturing continue to take hold, the social network will not diminish in importance. Although the hothouse effect may increasingly take shape in the form of online tools and distributed connections, it is the strength of these connections that will determine the economic success of future material technologies.
