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the U.S. involve product architecture where you need senior engineers, hardware and software engineers generally, and mechanical engineers and industrial design people.” The other said, “The core of the design process is in the United States. We define the product—how it looks, how it will be assembled, materials used, features and technologies to incorporate. We determine the mechanical and electrical architecture.”

R&D, which depends on high-level researchers with advanced degrees, often Ph.D.s, is also less vulnerable to offshoring. Other reasons for keeping R&D in this country are the strategic importance of some R&D projects and the need to protect intellectual property. Unlike product development, R&D and manufacturing are not necessarily interdependent. Thus R&D jobs have not been “pulled” offshore by manufacturing.

R&D requires highly specific skills, and the key to success is finding people with those skills. If they happen to be offshore, firms are more likely to bring them to the United States, or to hire foreign graduates of U.S. universities, than to move the R&D offshore. One component maker, for instance, has 150 researchers at its R&D lab in the United States, about half of whom are from outside the United States. Unlike companies in other industry segments, such as Intel and IBM, which have R&D labs outside the United States, the U.S. PC industry has kept its R&D in this country.

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