A Silicon Valley Entrepreneur Tells The Real Reason He's Opening A Factory In Asia

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Photo: Kardigan via Flickr

High wages aren’t what’s driving manufacturing out of America; it’s government policy — from taxes to regulations.Former Sierra Club chairman Carl Pope draws this conclusion in a recent series of essays at Bloomberg (part one, part two and part three).

Pope includes this telling conversation with a Silicon Valley entrepreneur:

“I’d love to make this product in America. But I’m afraid I won’t be able to.”

My host, a NASA engineer turned Silicon Valley entrepreneur, has just conducted a fascinating tour of his new clean-energy bench-scale test facility. It’s one of the Valley’s hottest clean-technology startups. And he’s already thinking of going abroad.

“Wages?” I ask.

His dark eyebrows arch as if I were clueless, then he explains the reality of running a fab — an electronics fabrication factory. “Wages have nothing to do with it. The total wage burden in a fab is 10 per cent. When I move a fab to Asia, I might lose 10 per cent of my product just in theft.”

I’m startled. “So what is it?”

“Everything else. Taxes, infrastructure, workforce training, permits, health care. The last company that proposed a fab on Long Island went to Taiwan because they were told that in a drought their water supply would be in the queue after the golf courses.”

Read the rest of this essay at Bloomberg >
See also: 19 sad facts about the deindustrialization of America >

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