Google: Made In USA

Google is making its new Nexus Q  Media Streamer in the USA. Its a medium sized commitment and it could go wrong because the price is on the high end for media devices despite some of the new features – see a review here. But the significance is not small as noted in the NYTimes and Wired. Just 2 years ago Steve Jobs told President Obama that making electronics products in the USA was a distinctly losing proposition. Since then almost all electronics companies do most of their   final assembly in China  and a significant fraction of their parts supplies from foreign sources, again primaily from Asia.

google goof big time

But there is a price to pay for this dependence on Chinese and Asian suppliers. First, there is the isue of piracy of design ideas and production processes Suddenly suppliers become competitors as Apple has discovered in the case of Asus, Huawei,  and Samsung among others. Second, the ability to make quick and instant changes – despite all the IT connections and dual language technical expertise is hampered when domestically you can be as little as fifteen minutes away from a domestic supplier who speaks your language. Third, there is the increasing wages and costs in Asia that are rising along with transportation costs  to make domestic production more attractive though by no means cost competitive with Asia.

 

But perhaps the most important issue is the optics. First, Foxconn and some other Asian suppliers have very poor labor conditions, benefits, and a broader environmental record. Apple and other major electronics suppliers has been hurt by reports in the NYTimes and elsewhere about the these disparities.   But the other is sheer economics – outsourcing jobs at a time when they are desperately needed is simply raiding the Commons.  70% of the the US economy comes from domestic consumption. But as unemployment and partial employment persist, it simply does not pay to do blanket outsourcing.

And what Google has done is test that notion. The Nexus Q Media may not do well in the market [and the reviews have been unforgiving of late] – but that may be as much for reasons of design, styling and features as for price[some have complained of the higher price of the Nexus Q]. The current reading is that the Nexus Q may damage the Made in USA electronics image.  But what this observer likes is the challenge to the assumption that outsourcing manufacturing is the only way to go in not just in electronics but broader US industry in general. Bravo Google for this one.

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