July on Warpcast

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July pfp

I do lament the destruction of manufacturing, or at the very least the lack of innovation and investment in manufacturing in the United States in the recent past. A lot of it has to do with because labor has become so expensive. There is a ofc - a future where robotics, and embodied AI helps with manufacturing and increased abundant production at lower costs (a story for another time); but the reality is it’s not going to happen immediately, or at least let’s say in the next 3-5 years. But I think one of the main reasons is businesses in general have prioritized gains (because of the way the public equities and returns work) in focusing on gutting manufacturing (i.e. business that can be done for cheaper somewhere else) overseas for the past 2~3 decades is because multiples on software, financial engineering and knowledge work in general have better returns investment wise, so these underlying businesses have been generally cut or just go unsupported or over regulated (or regulatory captured)

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Ofc we all want short term gains, but there is reason to innovate in the long term game partially because all of the foundations of software for example are on the hardware side. And because technology itself is a knowledge business (you need people who know how to do these things) by gutting manufacturing- we’re forgetting how to build hardware incredibly so - and therefore it will be even harder to regain the knowledge of doing this once again at scale I’d like to see this trend reversed

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And if you keep digging on why labour is so expensive, you'll quickly find out its because of all the high costs of rents that people have to pay, (mortgage/rent, healthcare, insurance, etc), to these monopolies in the US. Any president who's actually serious about bringing manufacturing "back home" is going to have to go up against wall street and their various cartels.

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It’s the opportunity cost of manufacturing investment, yeah In theory, you might expect that manufacturing wages can be justified by the value of manufacturing labour, in that expert manufacturing could produce unique products that others could not But the US has little history in really incrementally high skilled manufacturing labour, and these wages in any event have been pushed up by the immense value created from technology companies, and this money flows throughout the economy raising the wage level everywhere

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This doesn't control for declines in manufacturing workforces, but increasing robot density could be a material pick up for the US.

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maybe if people take the research on learning curves more seriously, american firms will realize there are benefits to their long term growth if they stay close to their own factories

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Taylor Sizemore

@taylorsizemore.eth

Interesting reading these perspectives. I see a lot of opportunity in manufacturing. But it has to be more than just manufacturing. IMO the real opportunity is in designing products in tandem with manufacturing systems. Outsourced manufacturing has masked inefficient processes and practices. If manufacturing is done in house the losses become very clear but are hard to avoid when you are producing a product that never considered the manufacturing process as part of the design.

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My pet theory I roughly believe that Jack Welch created an adverse network effect by cutting costs (mostly labor) which raised his stock price. When other CEOs followed, we “reset” to a new norm in labor costs (particularly wages) as a % of their financial statements

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I have seen scrappier operators in the $100M - $1B in sales/yr side begin bringing back those expertise to the US. While not all of it is end-to-end, some of the more proprietary pieces and the last mile personalization finishes are being done in the US It’s a start

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marv 🎙️ pfp

Emissions from manufacturing haven't been mentioned, and it's crucial. Nobody wants a factory spewing out toxins in their town, the health downsides will cancel out any potential economic prosperity

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