How U.S. Cities Lost the Economic Development Plot

Industrial capability emerges from messy, recombinant activity among firms of different sizes connected through competitive yet shared labor markets, suppliers, and informal knowledge transfer. Process knowledge is tacit, embodied understanding of how to manufacture, accumulated through years of practice, failure, and iteration. This knowledge cannot be fully captured in manuals or intellectual property filings because it lives in people. When production shifts away, process knowledge atrophies and is eventually lost. Success in one generation of technology builds foundational skills for the next generation. Offshoring manufacturing while retaining design and IP is challenged because improving products and developing next-generation manufacturing processes depends on production itself. Design without manufacturing weakens ecosystems supported by small and midsize firms, contributing to productivity stagnation.

"New work emerges from the messy, recombinant activity of many firms of varying sizes, linked by competitive yet shared labor markets, suppliers, and the kind of informal knowledge transfer that happens when a machinist and an engineer and a product designer are all working within proximity of one another."

"Wang calls it "process knowledge": the tacit, embodied understanding of how to manufacture things, which accumulates in workforces through years of practice, failure, and iteration. Process knowledge cannot be written down in a manual or captured in intellectual property filings. It lives in people. And when production moves, that knowledge atrophies and is eventually lost."

"Wang's argument challenges a consensus that took hold in American business and policy circles in the 1970s and '80s but really accelerated in the 1990s: that the U.S. could offshore manufacturing and retain high-value design, branding, and intellectual property work. But the ability to improve a material product-to solve the production challenges that only emerge at scale and to develop the next generation of manufacturing processes-is inseparable from production itself."

"Design without manufacturing ultimately weakens innovation ecosystems that were largely made up of small and midsize firms that pay middle-class wages, not out of virtue, but because they create value by inventing new products and birthing new firms. A case in point is the stagnation of productivity in the U.S."

Read at Nextcity