“Footloose” or Hi-Tech Industry

“Footloose” or Hi
-
Tech Industry

•

Returning to Manufacturing Industry Orientation:

(1) resource
-

tr. costs
-

product < inputs


(2) market
-

tr. Costs
-

product > inputs


(3) “footloose”
-

two situations:



(a) transport costs are a small share of value



(b) they are balanced in product & inputs

•

Footloose at startup vs. later in firm life
-
cycle

•

High
-
tech as footloose industry

•

Alternative definitions of high
-
tech (coming)

“Industry” as a set of
equivalent

products versus
similar

products

Examples
-



Product

-


Location

Boeing



aerospace


Seattle area

PACCAR


trucks



Seattle area

Intermec


bar
-
code equipment

Mt. Terrace

Fluke Corp.


measuring instr.

Everett

Quinton Instru.

Medical eq.


Seattle

Micron


chips/computers

Boise

Physio Control

medical electronics

Redmond

Tektronix


electronic eq.


Portland area

Microsoft


diversified CS

Redmond

Columbia Machine

concrete block eq.

Vancouver

Attributes

•

Product Diversity

•

Most are small firms

•

Many are indigenous, but in Oregon there


is a significant FDI presence

•

Role of incubators
-

existing firms &



formal institutions (e.g. Washington


Institute of Technology here on campus)

•

Locational determinants
-

founders &


employee preferences

•

University linkages

Rapidly Changing Product Cycles

•

Frequently rapid changes in
product

and


process

technology

•

One result
-

mergers, acquisitions, deaths, and

new startups

–

Quintessential examples
-

Microsoft

•

Office Suite, WWW strategy, Alliances

–

Boeing

•

Airline models, acquisitions & divestitures over time.

•

A tendency towards continuous “reinvention”

of enterprises.


Developed by Heike Mayer, Ph.D. from Portland State

Boeing
: An Atypical Case Study

•
Early History

•
Product Innovation in the 1920’s and 1930’s

•
Catapulting the corporation in WW
-
II

•
Jet
-
liner technology: waves of development

•
Cycles in demand and structural shifts in
procurement patterns, and in manufacturing
technology

•
Role of Boeing in the regional economy


Source: The Boeing Logbook

1916

1929

1934

1940

1950

1960

1970

1980

1990

Source: The Boeing Logbook

Source:

The Boeing

Logbook

Source: The Boeing Logbook

Boeing Employment
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
1916
1918
1920
1922
1924
1926
1928
1930
1932
1934
1936
1938
1940
1942
1944
1946
1948
1950
1952
1954
Boeing Employment Fluctuations

Boeing Employment
0
20000
40000
60000
80000
100000
120000
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Boeing’s Long
-
Run Outsourcing Trend

Regional Purchases are about 7% of total, mostly services


Source: Washington State Input
-
Output Tables

History of Boeing Purchases in
Washington State

0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
1963
1967
1972
1982
1987
1997
2002
2007
% of Total Purchases
Other WA Purchases
Intra-aerospace
Boeing Employment Impact as a
Share of Total State Employment

Washington Aerospace Job Impacts

787 Production Components

787 Production System

Modified 747 to carry 787 parts

Does Boeing Spin Out New High Tech Firms?

0
20000
40000
60000
80000
100000
120000
1958
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
0
10
20
30
40
50
60
70
80
90
Boeing Employment
High Tech Startups
Source on High
-

Tech Startups: Gary Schweikhardt

The Waning Influence of Boeing?

0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
2000000
1958
1963
1968
1973
1978
1983
1988
1993
1998
Aerospace
Total Puget
Sound Jobs
Source: Puget Sound Regional Council Step 2030 Database

Much weaker

impact of

downturn

Big Aerospace

Drop in Jobs

Boeing downturn

vs. other tech?