Manufacturing Bits On The Highway To Prosperity

Many Americans lament the loss of manufacturing jobs to China and elsewhere, fueling high U.S. unemployment and nothing for workers to do.

Robert Tercek, speaking at the METal breakfast on Saturday, laid out a scenario how the loss of some manufacturing may not be a disaster in the long run.

Robert Tercek; Photo by Cooper Bates Photography

Look at Foxconn Technology Group, the Taiwan-based maker of Apple products and the world’s largest employer outside government. Last month Foxconn announced plans to replace workers with robots. Foxconn, which has one million of its 1.2 million workers based in China, currently has 10,000 robots. That will increase to 300,000 next year and one million in three years.

“We are an Information Society, moving away from a manufacturing economy,” said Tercek, a respected veteran of 24 years in the digital media business with TV, online, mobile and music.

“People will be glad those jobs left the U.S. because those jobs can be done by robots,” he said.

As robots replace workers China will have lots of unemployed workers on its hands, “and China does not have the structure in place to deal with this,” he said.

The U.S., however, is moving in the right direction by focusing on creating and moving information electronically, instead of making physical goods.

It’s part of a tectonic shift Tercek calls the “Vanishing Point.” In the Information Society things are vanishing, like newspapers, book stores, video stores, CDs, DVDs, as well as car dealerships, travel agents and much more. This observation was perhaps first presented by MIT visionary Nicholas Negroponte in 1995 with a book titled “Being Digital.” He urged us to “Push bits, not atoms,” Tercek noted.

World trade has traditionally been about the exchange of atoms, or physical goods. Negroponte said the change from atoms to bits is “irrevocable and unstoppable,” which Tercek agrees with.

For example, people are holding meetings online rather than in person. People are meeting on dating sites, rather than pickup bars. People are shopping online, not at stores.

“The medium is the market, with virtual exchanges,” said Tercek. “It’s a massive change,” with much more to come.

At the METal breakfast; Photo by Cooper Bates Photography

“Books and DVD’s have been vaporized and turned into virtual goods,” he said. The shift to digital is also changing society, where people are moving from passive observers to active participants. Mass demonstrations and other forms of civic action are occurring spontaneously and shaking governments, through the use of social platforms like Twitter and cell phones that broadcast information far and wide.

This shift is also on the cusp of disrupting television as we know it. Tercek’s speech at the METal breakfast, hosted by Ken Rutkowski, was titled “What Happens After Television.” The digital disruption will engulf every information industry, he said.

With products and services such as Netflix, Hulu and YouTube, Google TV and Apple TV, and digital delivery devices such as Roku, PlayStation and Xbox, the broadcast industry is headed for big change. In time, Tercek thinks pay-TV cable subscribers will continue to cancel and replace that with on-demand viewing through platforms of their choice. Consumers will increasingly be the content creators as they continue to upload massive amounts of video to YouTube and elsewhere.

“All this will cause massive change and the cable companies are not thrilled,” he said.

It’s causing massive change in the advertising business and will further transform industries such as healthcare and education as well as governments.

The shift to all-digital, all the time is evident by cellphone trends. In 2001, there were 250 million Internet users and 500 million mobile phones, said Tercek. Today there are two billion Internet users and six billion mobile phones.

“Things are not slowing down, and the fastest growth is in mobile,” he said.

The phone wars between Apple and Google, which just bought the cell phone business of Motorola, will lead to more “creative destruction” that, ultimately, will weave its way into the world of TV and content delivery.

Tercek said that for a nation and businesses to be successful, they have to move to where the markets are headed. In today’s Information Society, the U.S. has the intellectual capital and a growing base of experience to be in the right place at the right time. Along the way there will be plenty of disruption, just as there was when the world moved from an agricultural society to an industrial one. But when the dust settles in the move to an Information Society we’ll be better off making and moving bits of information rather than building another iPhone, brought to you by Robot XYZ.

I previously wrote about Tercek, in March, which you can read here. You can learn more from Robert Tercek at his blog site here.

Let me know if you have another point of view.

Strength & honor,

Brian

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