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| Credit: Boston Consulting Group |
I think this is business and the media chasing "hot trends", as opposed to looking at the long-term picture. [I've made a ten-year dinner bet with an old high school classmate about the share of US manufacturing as a percentage of US GDP. He says it's going to be higher in 2022 than in 2012; I say it's going to be lower.]
So a couple of new-ish things to comment on:
- There is a lot of talk about the an American manufacturing renaissance due to hydraulic fracturing, all the natural gas/oil that is going to be produced and the cheap energy that's going to result. I think that's really real and why serious federal regulation of either 1) hydraulic fracturing or 2) carbon emissions will not happen during President Obama's 2nd term. There are just too many oxen to gore.
- Also, Ben Bernanke has just announced that the Fed will keep rates low for the foreseeable future until unemployment falls below 6.5% to inflation goes above 2.5%. This is a pretty bold step* and shows their commitment to lowering unemployment as much as possible. So it won't be hard for companies to borrow money for the foreseeable future.
I don't see it at all, but I'd be interested in hearing a contrarian opinion. Readers?
UPDATE: The ever-awesome Rich Apodaca has some thoughts on how it could happen.
*and a big screw-you to net savers. That part is frustrating, if understandable.
** That's probably driven by hydraulic fracturing more than anything else.
Maybe not traditional MedChem R&D, but Codexis recently re-shored its pharma R&D from Singapore (~40 positions). Of course, they laid off 130+ in the States simultaneously, but I suppose it would have been 170+ otherwise...
ReplyDeleteMy first thought - ten years is a long time. A lot can happen, including Black Swans.
ReplyDeleteStill, if reshoring of pharma positions were to happen, it's interesting to speculate about what the driver might be.
I recently read an article suggesting that factors unrelated to production costs might be worth considering - specifically the way that outsourcing tends to rapidly transfer know-how and expertise outside of an organization, and in the process create terrifying entities known as "competitors":
http://www.asymco.com/2012/12/07/the-real-threat-that-samsung-poses-to-apple/
Note that the damage being done has nothing to do with ripping off intellectual property. Rather, it has to do with the outsourcee replicating its benefactor's business process.
According to this line of thought, Pharma's recent outsourcing frenzy is nursing to health the very companies that will eat their lunch at some later point. Say, in ten years time?
One would have to imagine that more than one or two folks in decision-making capacities would see this starting to happen and take action to reverse course.
That might be one scenario for how reshorting could start to happen within the next ten years, but I've seen no evidence for it yet.
Ummm, do BCG people advise their clients to bring business home?
ReplyDeleteReshoring MedChem research is already being done...it's called organic grad school/postdoc.
ReplyDeleteLilly has been replacing overseas contractors with 'in-sourced' medicinal chemistry contractors on-site in US and UK for the last couple of years.
ReplyDelete@Anon 9:12AM -
ReplyDeleteLilly has been demoting some of their few current US employees to contractor status with lower pay.
There fixed that for ya.