US Manufacturing Needs a Makeover, Say Experts

With the economy in a slump, experts are calling for a “remodel” in the manufacturing industries, where people have been hit the hardest with job losses.

An engine part is displayed as GM workers demonstrate an assembly process of the Ecotec engine for news media at the General Motors Flint Engine Operations plant in Flint, Mich., in this file photo. Panelist participating in a Brookings Institution forum see U.S. manufacturing in need of a makeover. Bill Pugliano/Getty Images

WASHINGTON—When California-based telco Qualcomm was ready to go into production for its new display technology for mobile devices, it had to make a decision where to manufacture it. The technology required an expertise in glass products—could the United States do it or would it have to go offshore?

“We decided to build in Taiwan,” says Qualcomm founder Dr. Irwin Jacobs, citing two key reasons. First, the Taiwanese were knowledgeable about glass and had a whole “eco-structure” to service the industry.

Second: “Tax policy.” The capital saved can go back into investment but not back into the United States, Jacobs said. “If one brings capital back onshore you have to pay the difference between the tax rate paid offshore, which is much, much lower, and the U.S. tax rate, and so that is a disincentive to bring that cash back.”