Innovation and Manufacturing in the USA
We often lament the relocation of manufacturing from the United States to other countries. But in spite of bad publicity, many manufacturers continue to do it so they can take advantage of lower labor costs and lower tax rates. To take full advantage of what those savings might be, the technology has to be mature enough to be a large scale production phase. There needs to be significant labor costs built in and the process has to be beyond the innovation and development cycle. In most cases, countries that have cheap manufacturing labor do not have a highly developed technical work force that can create, develop and improve innovative technologies.
At times we have helped build plants outside the US. This can be justified when the end clients for the products are also in the other countries. There has been a smaller trend in more recent years to repatriate some portions of manufacturing back to the United States.
At Optimation Technology, our passion is to help rebuild the manufacturing base in the United States. Our goal is to build manufacturing plants closer to home. Our corporate headquarters and primary fabrication center are located in Rochester, NY. Because of this, many of our clients are located in this area. New York State, under the leadership of Governor Cuomo, has made a strong push to grow the manufacturing base and create new manufacturing jobs. There have been adjustments in the tax laws, investment tax credits and grants provided to those who choose New York as the place they manufacture. Manufacturers no longer pay income tax on their profits. Billions of dollars of investment funds have been made available.
In the Rochester area, several industrial sites have been and are being built. One of these is Eastman Business Park, former home of the Eastman Kodak Company. Dozens of companies have taken up residence there making effective use of the existing facilities. It is interesting to look for patterns among those companies that are opening there. The majority of these are startup companies who are developing and introducing new technologies, creating or using new IP or constructing pilot plants to scale up the processes they have developed.
Rochester had long been a hot bed of innovation, and for years it had the highest number of patents per capita in the country. Historically, this was because of companies like Xerox, Bausch and Lomb and Kodak that had large research budgets and large research staffs. This is no longer true. Kodak has been downsizing its research department. Recently they again cut staffing by about 30 percent and have only about 100 employees developing new technologies.
Research and development have been the hallmark of the US economy. There is nothing around the world that compares with Yankee ingenuity. It is sad to see the end of an era of a company like Kodak, that has cut back on research. We can be heartened, however, to see dozens of small entrepreneurs filling the gap with their own money and sweat equity.
We can all be thankful to Governor Cuomo and his team that they believe in the past enough to try to recreate it in the future and are helping to fund these new technology developments. But most of all, we are thankful to those who still believe in American know-how to get it done. With their spirit, drive and determination we can believe there will be a future for our children.