SAN JOSE, Calif. — Etched into the base of Google’s wireless Nexus Q home media player, introduced Wednesday, is its most intriguing feature.
On the underside of the Magic-8-ball-shaped device reads a simple laser-etched inscription: “Designed and Manufactured in the U.S.A.”
The Google executives and engineers who decided to build the Nexus Q here are not yet heralding the return of U.S. manufacturing. Indeed, they are not saying a lot about its domestic manufacturing, refusing to even reveal where the factory is in Silicon Valley. But they have been able to source a large number of the parts in the United States.
Andy Rubin, the Google executive who leads the company’s Android mobile business, said the Mountain View, Calif., company is engaged in an experiment and not a crusade.
“We’ve been absent for so long, we decided why don’t we try it and see what happens?” Rubin said.
The project will be closely watched by other electronics companies. It has become accepted wisdom that consumer electronics products can no longer be made in the United States. During the past decade, low-cost labor and looser environmental regulations in China have virtually erased what was once a vibrant U.S. industry. Since the 1990s, U.S. companies including Hewlett-Packard, Dell and Apple have become design and marketing shells, with huge workforces deployed at contract manufacturers in Shenzhen and elsewhere in China.
Now that trend is showing early signs of reversing.
It’s a trickle, but U.S. companies are again making products in the United States. While many of the companies that have come back have been small, like ET Water Systems, there have also been some highly visible moves by the country’s largest consumer and industrial manufacturers. General Electric and Caterpillar, for example, have both moved assembly operations back to the United States in the past year. Analysts have speculated that Apple may be planning to follow suit, but a company spokesman denied the rumors.
Why make it here?
There is no single reason for the return. Rising labor and energy costs have made manufacturing in China significantly more expensive; transportation costs have risen; companies have become increasingly aware of the risks of the theft of intellectual property when products are manufactured in China; and in a business where time-to-market is a competitive advantage, it is easier for engineers to drive 10 minutes down the freeway to the factory than to fly for 16 hours.
That was true for a ET Water Systems, a California company.
“You need a collaboration that is real time,” said Pat McIntyre, chief executive of the maker of irrigation management systems that recently moved its manufacturing operation from Dalian, China, to Silicon Valley. “We prefer local, frankly, because sending one of our people to China for two weeks at a time is challenging.”
Harold Sirkin, a managing director at Boston Consulting Group, said, “At 58 cents an hour, bringing manufacturing back was impossible, but at $3 to $6 an hour, where wages are today in coastal China, all of a sudden the equation changes.”
The firm reported in April that one-third of U.S. companies with revenue above $1 billion were either planning or considering manufacturing moves back to the United States. Boston Consulting predicted that the reversal could bring 2 to 3 million jobs back to this country.
“The companies who are investing in technology in the U.S.A. are more nimble and agile,” said Drew Greenblatt, president and owner of Marlin Steel Wire Products in Baltimore, which continues to manufacture in the United States by relying on automation technologies. “Parts are made quicker, and the quality is better.”
Other factors are playing a role as well, said Mitch Free, chief executive and founder of Mfg.com, an electronic marketplace for manufacturing firms. He pointed to trends including distributed manufacturing and customization as playing an important role in the “reshoring” of manufacturing to the United States.
The Nexus Q
Google’s Nexus Q, which links a TV or home sound system to the Internet cloud to play downloaded video and audio content, contains almost all U.S.-made parts. The engineers who led the effort to build the device, which is based on the same microprocessor used in Android smartphones and which contains seven printed circuit boards, found the maker of the zinc metal base in the Midwest and a supplier for the molded plastic components in Southern California. Semiconductor chips are more of a challenge. In some cases, the chips are made in the United States and shipped to Asia to be packaged with other electronic components.
Google did not take the easy route and encase the Q in a black box. The dome of the case is the volume control — you twist it — a feature that required painstaking engineering and a prolonged hunt for just the right bearing, said Matt Hershenson, an engineer who is a member of a small team of consumer product designers that have also worked together at companies like Apple, General Magic, Philips and WebTV.
At $299, the wireless home controller costs significantly more than competing systems from companies like Apple and Roku. Google is hoping that consumers will be willing to pay more, although it is unlikely that the “Made in America” lineage will be part of any marketing campaign.
Last week the Q was being assembled in a large factory a 15-minute drive from Google headquarters. It’s the kind of building that was once common across Silicon Valley during the 1980s and even the 1990s. More recently, former semiconductor fabrication and assembly factories have given way to large office campuses that house the programmers who design software and support Internet websites. Google’s engineers repeatedly stressed that it was a significant advantage to have design close to manufacturing.
“For us it’s really great that we can be at our desk in the morning, have meetings with hardware and software people and then a subset of that team can be in the factory in the afternoon,” Hershenson said. “The time it takes from being in the assembly process to being in the living room of a product tester we can measure in hours and not days.”