A trend of industry over the last several decades has been to decouple innovation from manufacturing and move manufacturing to regions of the world that have lower labor costs. While this trend has raised the immediate cost competitiveness of those manufacturers, it has come at the cost of teaching future competitors manufacturing those products the technical art of doing so and removing from innovators a core source of learning on how to make superior solutions. Creating and building are often two sides of the same coin. Ultimately those who make product solutions are likely to gain the edge on how to make them better – i.e. to innovate – and it can make sense to keep those coupled together so that innovators can be intimately involved with how their creations are made.
A business should look beyond the base cost of manufacturing to include in its calculations how it might generate valuable IP from the experiences of actually making product solutions as well as in areas such as automation, which can offset the otherwise high appeal of finding low cost sources of labor elsewhere. Alternatively it can move innovation toward the low cost manufacturing centers. This later needs to be done, however, with eyes wide open that where the innovative core of a company lies, so ultimately does its identity as an enterprise of that region of the world either by name or within the names of new competitors built from the educated workers.