“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
-
Boeing
PACCAR
Intermec
Fluke Corp.
Quinton Instru.
Micron
Physio Control
Tektronix
Microsoft
Columbia Machine
aerospace
trucks
bar-code equipment
measuring instr.
Medical eq.
chips/computers
medical electronics
electronic eq.
diversified CS
concrete block eq.
Location
Seattle area
Seattle area
Mt. Terrace
Everett
Seattle
Boise
Redmond
Portland area
Redmond
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. Fluke Hall on campus- UW
Center for Commercialization’s New Ventures
Facility & Washington Nanofabrication Facility)
• 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
Source: The Boeing Logbook
1970
1980
1990
Source:
The Boeing
Logbook
Source: The Boeing Logbook
1954
1952
1950
1948
1946
1944
1942
1940
1938
1936
1934
1932
1930
1928
1926
1924
1922
1920
1918
1916
Boeing Employment
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2013
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
1965
1963
1961
1959
1957
1955
Boeing Employment Fluctuations
Boeing Employment
120000
100000
80000
60000
40000
20000
0
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
9%
8%
% of Total Purchases
7%
6%
5%
Other WA Purchases
4%
Intra-aerospace
3%
2%
1%
0%
1963 1967 1972 1982 1987 1997 2002 2007
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?
120000
90
80
100000
70
80000
60
50
Boeing Employment
40
High Tech Startups
60000
40000
30
20
20000
10
0
19
58
19
61
19
64
19
67
19
70
19
73
19
76
19
79
19
82
19
85
19
88
19
91
0
Source on High - Tech Startups: Gary Schweikhardt
The Waning Influence of Boeing?
2000000
1800000
1600000
1400000
1200000
1000000
800000
600000
400000
200000
0
Boeing downturn
vs. other tech?
Much weaker
impact of
downturn
Aerospace
1998
1993
1988
1983
1978
1973
1968
1963
1958
Total Puget
Sound Jobs
Big Aerospace
Drop in Jobs
Source: Puget Sound Regional Council Step 2030 Database