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How California, New York and Texas Can Recapture Consumer Electronics Manufacturing From Asia

January 23, 2011

Much has been written about the trade imbalance between the U.S. and China. Over the last twenty-five years, manufacturing of most consumer electronics has migrated to Asia. The top U.S. companies creating popular consumer electronic devices (Apple, Dell, Vizio, HP, IBM, Google and Amazon) rely primarily on Chinese manufacturing. By some estimates, five to ten million jobs exist in China, dedicated to manufacturing for the companies identified above. These jobs endure because it costs less to manufacture in China.

Could something be done to recapture these jobs and turn around our economy? The answer is yes. I spent several years in Asia and toured many Chinese manufacturing facilities. While it is true that the cost of labor is less in China, there are other reasons why workers are productive. Besides wages, many Chinese factories include attractive benefits for workers, such as housing, meals, transportation, health care and clothing.

I believe we can recapture millions of manufacturing jobs and turn around the economy if we do two things:

First, enact a ten-year prospective federal and state tax holiday for companies that move a minimum number of consumer electronics jobs from Asia to the United States. These companies will not pay any federal or state taxes if they move the required number of jobs back to the U.S.

Second, adopt the Chinese approach of lower wages plus attractive benefits for workers.

The states best suited for this transition are California, New York and Texas, because of population and existing infrastructure. This is not to say that other states should not participate, but these three states have the best likelihood of facilitating this transition and moving quickly.

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