“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 productsExamples - Product - LocationBoeing 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. 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

19161929 1934

1940 1950 1960 1970 1980 1990

Source: The Boeing Logbook

Source:The BoeingLogbook

Source: The Boeing Logbook

Boeing Employment

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,00019

16

1918

1920

1922

1924

1926

1928

1930

1932

1934

1936

1938

1940

1942

1944

1946

1948

1950

1952

1954

Boeing Employment FluctuationsBoeing 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

2013

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

% o

f Tot

al P

urch

ases

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

400000600000

800000

1000000

1200000

14000001600000

1800000

2000000

19

58

19

63

19

68

19

73

19

78

19

83

19

88

19

93

19

98

Aerospace

Total PugetSound Jobs

Source: Puget Sound Regional Council Step 2030 Database

Much weakerimpact of downturn

Big AerospaceDrop in Jobs

Boeing downturnvs. other tech?