Making It in America

I'll have the American flag flying outside my house this holiday weekend. It's not a statement of my patriotism so much as a view of summer as a time when all of those fun, all-American activities take place: baseball, competitive hot dog eating, and parades. It's the perfect time to let Old Glory fly.

So when summer rolls around I probably feel a bit more patriotic than I might at other times of the year. Rubbing elbows with the chubby guy in star-spangled suspenders and Uncle Sam top hat on July 4 has to make you proud to be an American, right? I wished more people thought so.

I came across this tale of a young man named Yet-Ming Chiang in the Chicago Tribune a couple of weeks ago. Chiang is the inventor of safer and more long-lasting battery technology, but he has experienced trouble trying to manufacture in the U.S. The article provides a quick description of the problem:

"So why are Chiang and his company, A123 Systems, having trouble moving to full-scale commercial production? The answer is a story of both the obstacles to a rebirth of U.S. manufacturing and of the tantalizing possibilities if such a rebirth could be achieved.

"The obstacles are rooted in the sad history of manufacturing's decline in the United States: Despite the promise of Chiang's batteries, many in Wall Street and Silicon Valley were incredulous when he and other leaders at A123 asked for capital to build factories in America: Asia, yes, but Michigan, why would you want to?

"Even more daunting, virtually all of the world's battery-manufacturing industry is in Asia, where plants can be built faster and supplies and equipment are much easier to get than in the United States. These days, it's hard to find Americans who even know how to build a battery factory.

"That's why A123 had to give in and build its first plants in China, where the company could move into production quickly to show auto industry customers that it could deliver on future contracts."

You just have to shake your head. I understand that Detroit could have been considered an expensive place to manufacture, but wasn't there anywhere else in the U.S. that could have been considered an alternative? I mean, Texas is a pretty cost-effective place to live and work, plus they've got good barbecue.

That sort of comment already reinforces the image of the Wall Street and corporate fat cats that see people, or "labor," as they would refer to it, as a bottom-line expense, not as a resource. The reality of these types of people doesn't extend past the doormen who await them at their luxury apartments or the gates that separate them from the unwashed masses.

These controllers of venture capital don't have any allegiance to bettering America. They are committed to maximizing the return on investment for their shareholders.

Check out what happened to A123 with that decision to commit to China first:

"Now, A123 has five plants in China. Bart Riley, an A123 co-founder and chief technology officer, figures it took about nine months to get a Chinese factory up and running, one-third the time typical for the U.S.

"The quicker launch helped A123 make a name for itself through Black & Decker, which in early 2006 began putting A123 batteries in its Dewalt power tools. Since then, A123 has been supplying batteries and battery systems for New York City buses built by Daimler, among other customers, and the company has agreements to develop products for Chrysler, Navistar, and American green-car maker Fisker Automotive.

"But in ramping up production in China, A123 paid an immeasurable price, Riley said: Loss of its intellectual property, the ideas and engineering that made its products better.

"The company did what it could to slow the technology transfer by breaking down the manufacturing process into steps, Riley said, but 'we ended up having to teach these guys how to make our state-of-the-art, world-class batteries. … And some of them are (now) competing with us directly.'"

If America's business leaders can't recognize the huge risks associated with that sort of short-term thinking, it's easy to see how we end up with Wall Street debacles and a gushing oil well at the bottom of the Gulf of Mexico that no one knows how to stop. Everyone is throwing caution to the wind without fully understanding the possible negative results of their decision-making.

I understand that we live in an age when it makes sense to manufacture certain things overseas. I'm not interested in paying $50 for a shovel. However, I'm fearful when I learn that the leaders of the U.S. economy aren't taking steps to foster this country's manufacturing base. I get mad when I think how those people simply dismiss U.S.-based manufacturing without fully exploring potential opportunities.

Chiang and A123 plan to have two factories up and running by the end of next year in the Detroit area. The facilities will employ 400 and possibly up to 2,000 if demand for the company's battery technology takes off.

Interestingly, GM turned down an opportunity to work with A123 in favor of a South Korean company, which was further along in terms of commercializing its battery technology. So a U.S. government-owned entity elected to work with a foreign company instead of a U.S.-based company that has been supported by U.S. government grants?

My head hurts. I'm going to raise my Chinese-made U.S. flag, sit down in my Chinese-made lawn chair, and drink my Mexican beer. Have a good weekend.