(09/10/09) Prestowitz in BusinessWeek

Can the Future Be Built in America?

The manufacturing exodus from the U.S. is accelerating, but smarter tax policies, low-cost loans, and industrial zones may help keep factories at home

By Pete Engardio

From its headquarters in a modest office park outside Sunnyvale, Calif., Bridgelux is hoping to spark a revolution in light fixtures for homes and offices across the U.S. It's ready to ramp up production of tiny light-emitting chips that blaze as bright as some incandescent bulbs but consume a fraction of the energy. To meet surging orders for its chips, it's prepared to spend $250 million over three years on gleaming cleanrooms. The question is, where should it put its plants?

For a host of strategic reasons, Bridgelux would like to keep manufacturing in the U.S., but financial realities point to Asia. Not only are taxes far lower and government incentives more generous in such nations as Malaysia, China, and Singapore, but it's easier to raise cheap funding offshore than in the U.S., where private investors frown on manufacturing and bank lending is nearly frozen. CEO Mark Swoboda calls the decision "the toughest challenge facing our company."

Not that long ago it didn't seem to matter where such companies made their stuff. After all, America has been inventing industries and losing them to Asia for decades, from color TVs to memory chips, personal computers, and liquid-crystal displays. While the Japanese, Koreans, Taiwanese, and Chinese plowed billions into megaplants to churn out commodity products, America steamed ahead in more lucrative pursuits, such as software, life sciences, and financial services. As for companies such as Dell (DELL) and Apple (AAPL), they could still reap high profits by focusing on marketing and design while letting offshore contractors handle the grunge work.


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