Latest news with #creativeDestruction
New York Times
15 hours ago
- Business
- New York Times
Manufacturing Jobs Are Never Coming Back
For more than 60 years, my family owned a small paint factory in Long Island City, Queens, in the shadow of the neon Pepsi-Cola sign just across the East River from Manhattan. That factory and the Pepsi-Cola bottling plant are long gone — two of the hundreds of industrial facilities that once existed throughout the city. What has replaced some of them are gleaming towers of condominiums, many with seven-figure price tags. Trendy restaurants have supplanted blue-collar diners. In a few decades, New York's industrial base was extinguished, yet today, the city has never been more populous or more prosperous, a winner in the process that the economist Joseph Schumpeter called 'creative destruction.' President Trump — who is persisting with his incoherent effort to increase American manufacturing — shows little sign of grasping this key concept. Just as New York prospered as a postindustrial economy, so can the United States flourish without attempting a wholesale rebuilding of lost industrial prowess. I understand that the relaxation of trade barriers, particularly since China was admitted to the World Trade Organization in 2001, helped accelerate the disappearance of manufacturing jobs. In retrospect, we should have been less lackadaisical about the loss of an estimated one million manufacturing jobs to China in the 2000s. At a minimum, we should have done more to help displaced workers adjust. But that doesn't mean we should try to bring those jobs back. In the heyday of American manufacturing, such workers enjoyed far higher wages than those in services. No longer. That advantage has been shriveling for decades and, by some measures, has disappeared entirely. And manufacturing work is often unpleasant. Assembling iPhones is the definition of tedium — long hours performing repetitive tasks, like inserting the same small component over and over, for pay well below our minimum wage. Little wonder many Americans — particularly younger ones — view classic factory work as unappealing. Today, there are nearly 500,000 unfilled manufacturing jobs. Want all of The Times? Subscribe.
South China Morning Post
6 days ago
- Business
- South China Morning Post
Why China's problem of cutthroat competition demands the world's attention
When Joseph Schumpeter coined the term 'creative destruction', he might not have realised just how destructive unrestrained competition could be. That is the paradox at the heart of China's recent economic success. Advertisement On Monday, People's Daily ran an editorial , calling for neijuan or involution – a self-defeating cycle of excessive competition – to be nipped in the bud. For China's Communist Party mouthpiece to publicly acknowledge the issue signals its severity. Involution has become an economic undercurrent shaping what we are seeing, from industrial strategy to global trade dynamics. For example, around the time the People's Daily article was published, BYD slashed prices on 22 vehicle models by up to 34 per cent, with its Seagull model now selling for just 55,800 yuan (US$7,750). Other competitors are likely to follow suit shortly. Headlines largely focused on the stock price of carmakers. However, the real story is that BYD could have just priced an entire cohort of Japanese, Korean and European cars out of relevance. Let's not forget the knock-on effects: foreign carmakers facing shrinking margins and slowing innovation budgets could end up withdrawing from electric vehicle (EV) battles they cannot win. Then there are Meituan and , both stepping up subsidies, fighting for user growth in an already saturated food delivery market. This is not because demand has collapsed but because competition has become pathological. Businesses are stuck in a race to the bottom. Advertisement Classical economic theory suggests profits will converge to a normal level in the long run, but such intense competition means supernormal profit plunges quickly while subnormal profit takes much longer to converge upwards. Margins get relentlessly compressed. Incentives trigger an excessive response. Everyone chases the same opportunity – often recklessly.
Forbes
20-05-2025
- Business
- Forbes
AI Helps Fuel New Wave Of Creative Destruction
Will AI wipe away cobwebs from business thinking? In the late 1990s-early-2000s timeframe, the term 'creative destruction' came into vogue, as digital-native businesses swept away cobwebs in their respective markets, spurring an ensuing wave of re-invention across established companies. Now, some say artificial intelligence is ushering in a new era of creative destruction – but what exactly is being creatively destroyed, and what's replacing it? And is it on the level of the digital and e-commerce wave of the 1990s and early 2000s? We are entering a new period of creative destruction, claim the authors of a recent study of 2,000 business leaders by the IBM Institute for Business Value. As AI proliferates, 'it's burning away outdated habits that suffocate growth,' they noted. 'While it's unclear what exactly will emerge from the ashes, this reset makes room for fresh ideas to flourish.' Tellingly, 68% of leaders say AI changes aspects of their business that they consider 'core,' the survey finds. As a result, leaders are rethinking everything—"from the products and services they offer to how they run their business. And this creative destruction is redefining entire markets," the IBM authors stated. 'Manufacturers aren't just making things anymore,' they explained. "They're retooling their operations to become software companies – developing AI-powered predictive maintenance solutions that optimize product performance and customer outcomes. Retailers aren't just selling products. They're asking their teams to sell experiences—making AI-enabled immersive and personalized engagement essential." A number of industry leaders aren't just concurring with the IBM report's conclusions – they are living them. Jim McCullen, chief technology officer at Century Supply Chain Solutions, for example, is seeing a shift away from an emphasis on AI productivity and toward autonomous decision-making, negotiation, and self-evolving logistics ecosystems across trading networks. Imagine, for example, self-reconfiguring supply chains that can reroute around global trouble spots, tariff zones, or weather events. "Instead of tweaking existing logistics networks, AI could design entirely new trade routes, distribution hubs, and manufacturing locations based on real-time market shifts, bypassing traditional constraints,' McCullen predicted. Another example of creative destruction is autonomous negotiation systems, McCullen continued. 'AI-powered agents could handle contract negotiations between shippers, carriers, and suppliers without human intervention. Freight rates, capacity planning, and even trade agreements could be optimized dynamically, shifting logistics from a reactive to a predictive model.' There will likely be three distinct stages of the AI-driven creative destruction process that will extend over the next decade, said Amir Barsoum, founder and managing partner at InVitro Capital, an AI-focused venture studio: At the same time, much of the creative destruction ahead may not be loud and attention-grabbing --rather, it may take the form of a more 'quiet evolution,' said Bryan Sapot, vice president of smart factory at Nulogy. Make sure there is a well-designed replacement before tearing down older technology and processes, he urged. "AI is overhyped and due for a reset in which manufacturers recognize it isn't a magic solution,' he said. 'AI isn't going to design your ERP from scratch and it isn't going to take over factories,' Sapot continued. 'But it can quietly make individual processes -- maintenance, quality, diagnostics -- smarter and faster.' This takes the right data, and building a supportive framework is going to take a number of years, he added. Business leaders in the IBM report also signaled caution before leaping into AI transformation, with only 25% of AI initiatives having delivered expected ROI over the last few years. A majority, 64%, acknowledge that the risk of falling behind drives investment in some technologies before they have a clear understanding of the value they bring to the organization. Only 37% say it's better to be 'fast and wrong' than 'right and slow' when it comes to adoption. The IBM report's authors urged leaders of even the most established organizations to think like start-ups. 'Be willing to break with the past. Lean into what you want your business to look like in three years – even if it seems impossible today.' Part of this involves taking a product development approach to transformation, "encouraging teams to quickly adopt new strategies, measure their success, and then iterate based on what they've learned to avoid executing on outdated long-term plans."
