Biosecurity is Everyone's Business (Part 1)

Part 1. The ecosystem is the enterprise

We live in a society increasingly reliant upon the fruits of nature. We consume those fruits directly, and we cultivate them as feedstocks for fuel, industrial materials, and the threads on our backs. As a measure of our dependence, revenues in the bioeconomy are rising rapidly, demonstrating a demand for biological products that is growing much faster than the global economy as a whole.

This demand represents an enormous market pull on technology development, commercialization, and, ultimately, natural resources that serve as feedstocks for biological production. Consequently, we must assess carefully the health and longevity of those resources. Unfortunately, it is becoming ever clearer that the natural systems serving to supply our demand are under severe stress. We have been assaulting nature for centuries, with the heaviest blows delivered most recently. Nature, in the most encompassing sense of the word, has been astonishingly resilient in the face of this assault. But the accumulated damage has cracked multiple holes in ecosystems around the globe. There are very clear economic costs to this damage -- costs that compound over time -- and the cumulative damage now poses a threat to the availability of the water, farmland, and organisms we rely on to feed ourselves and our economy.

I would like to clarify that I am not predicting collapse, nor that we will run out of resources; rather, I expect new technologies to continue increasing productivity and improving the human condition. Successfully developing and deploying those technologies will, obviously, further increase our economic dependency on nature. As part of that growing dependency, businesses that participate in the bioeconomy must understand and ensure the security of feedstocks, transportation links, and end use, often at a global scale. Consequently, it behooves us to thoroughly evaluate any vulnerabilities we are building into the system so that we can begin to prepare for inevitable contingencies.

Revisiting the definition of biosecurity: from national security to natural security, and beyond

Last year John Mecklin at Bulletin of the Atomic Scientists asked me to consider the security implications of the emerging conversation (or, perhaps, collision) between synthetic biology and conservation biology. This conversation started at a meeting last April at the University of Cambridge, and is summarized in a recent article in Oryx. What I came up with for BAS was an essay that cast very broadly the need to understand threats to all of the natural systems we depend on. Quantifying the economic benefit of those systems, and the risk inherent in our dependence upon them, led me directly to the concept of natural security.

Here I want to take a stab at expanding the conversation further. Rapidly rising revenues in the bioeconomy, and the rapidly expanding scope of application, must critically inform an evolving definition of biosecurity. In other words, because economic demand is driving technology proliferation, we must continually refine our understanding of what it is that we must secure and from where threats may arise.

Biosecurity has typically been interpreted as the physical security of individuals, institutions, and the food supply in the context of threats such as toxins and pathogens. These will, of course, continue to be important concerns: new influenza strains constantly emerge to cause human and animal health concerns; the (re?)emergent PEDS virus has killed an astonishing 10% of U.S. pigs this year alone; within the last few weeks there has been an alarming uptick in the number of human cases and deaths caused by MERS. Beyond these natural threats are pathogens created by state and non-state organizations, sometimes in the name of science and preparation for outbreaks, while sometimes escaping containment to cause harm. Yet, however important these events are, they are but pieces of a biosecurity puzzle that is becoming ever more complex.

Due to the large and growing contribution of the bioeconomy, no longer are governments concerned merely with the proverbial white powder produced in a state-sponsored lab, or even in a 'cave' in Afghanistan. Because economic security is now generally included in the definition of national security, the security of crops, drug production facilities, and industrial biotech will constitute an ever more important concern. Moreover, in the U.S., as made clear by the National Strategy for Countering Biological Threats(PDF), the government has established that encouraging the development and use of biological technologies in unconventional environments (i.e., "garages and basements") is central to national security. Consequently, the concept of biosecurity must comprise the entire value chain from academics and garage innovators, through production and use, to, more traditionally, the health of crops, farmanimals, and humans. We must endeavor to understand, and to buttress, fragility at every link in this chain.

Beyond the security of specific links in the bioeconomy value chain we must examine the explicit and implicit connections between them, because through our behavior we connect them. We transport organisms around the world; we actively breed plants, animals, and microbes; we create new objects with flaws; we emit waste into the world. It's really not that complicated. However, we often choose to ignore these connections because acknowledging them would require us to respect them, and consequently to behave differently. But that change in behavior must be the future of biosecurity. 

From an enterprise perspective, as we rely ever more heavily on biology in our economy, so must we comprehensively define 'biosecurity' to adequately encompass relevant systems. Vulnerabilities in those systems may be introduced intentionally or accidentally. An accidental vulnerability may lie undiscovered for years, as in the case of the recently disclosed Heartbleed hole in the OpenSSL internet security protocol, until it is identified, when it becomes a threat. The risk, even in open source software, is that the vulnerability may be identified by organizations which then exploit it before it becomes widely known. This is reported to be true of the NSA's understanding and exploitation of Heartbleed at least two years in advance of its recent public announcement. Our biosecurity challenge is to carefully, and constantly, assess how the world is changing and address shortcomings as we find them. It will be a transition every bit as painful as the one we are now experiencing for hardware and software security

(Here is Part 2.)

The most important paragraph of The Gene Factory

The most important paragraph of Michael Specter's story about BGI:

"In the United States and in the West, you have a certain way," [BGI President Jian Wang] continued, smiling and waving his arms merrily. "You feel you are advanced and you are the best. Blah, blah, blah. You follow all these rules and have all these protocols and laws and regulations. You need somebody to change it. To blow it up. For the last five hundred years, you have been leading the way with innovation. We are no longer interested in following."

Piracy, Food Security, and Global Supply Lines

I've just landed in Washington DC for a biosecurity meeting -- a chat about how not to get caught with our pants down.  Catching up on the news in my hotel room, I notice that over at Danger Room Adam Rawnsley is reporting that the Chinese are talking tough about "crashing" the land bases of pirates in Africa.

With regards to biosecurity, and its extension into other security matters -- food security, in this case -- I've been expecting China to get more aggressive on pirates.  And this is just the beginning.  China's food demand is skyrocketing as incomes rise, and much of that food is going to come from overseas (see my previous post "More on China's Economy, Food Production, and Food Demand").  The Economist recently estimated that of the approximately 80 million hectares of land deals in developing countries in the last decade -- "more than the area of farmland of Britain, France, Germany and Italy combined" -- two-thirds were by Chinese companies.  A very good guess is that a substantial fraction of the other one-third were made by countries or companies who hope to sell to the Chinese.

The motivation for this land rush is simple: despite plans by the Chinese government, it is highly unlikely that the country will be able to maintain "food independence" -- the ability to feed its population with domestic supplies.  So China's critical supply lines for food and other raw materials are going global, and those shipping lines often pass through waters off eastern Africa -- prime pirate waters.  Chinese shipping is also at threat in the Straight of Malacca.

It is thus no surprise that China is getting serious about piracy.  The U.S. should expect the Chinese Navy to be more active around the world, and we should expect more investment by the Chinese government in the ability to protect global supply lines.  We should also not overreact to this situation.  We know that it is coming, and everyone should be paying attention, in part so that there are no misunderstandings.  The U.S. Navy, among others, should get its ducks (and, admirals, and carriers, etc) in a row now in the form of real engagement with the Chinese Navy.  This is an opportunity for more cooperation.

Increasing demand for food will create more situations like this in coming years.  The security of all countries depends on getting this right, and not getting caught with our pants down.

A Few Thoughts on Water

Years ago, I frequently commuted between Los Angeles and Seattle by air.  The contrast between the two cities was always a bit jarring, particularly in July and August -- high summer on the west coast of North America -- when the lawns in Seattle are brown while all the residential yards in Los Angeles are a beautiful emerald green.  Summer rainfall in Seattle is usually about 1.8 inches spread over those two months, while Los Angeles is essentially dry.

A couple of weeks ago I flew into LAX from the east coast and got another perspective on water use there.  My first glimpse of the basin was the smog lapping up against the rim of the San Gabriel Mountains. I managed to snap a quick photo after we had flown over the ridge (the smog is on the lower left, though the contrast was more impressive when we were looking from the east side).

IMG_0477.JPGEven in May it looks a little dry 'round those parts.

A few minutes later, I noticed large green patches covering the sides (usually the west side) of hills.  This continued all the way to downtown LA, and we were high enough for most of that time that I couldn't figure out why the locals were spending so much of their precious water keeping the sunset sides of hills green.  Then, finally, we passed over one low enough that the purpose jumped out at me.


Even in death, Los Angelinos maintain their homage to William Mulholland by keeping him eternally damp.  And in death, Los Angelinos continue to contribute to the smog shown above -- the grass covering the land of the dead is trimmed quite short.  Many, many square miles of it.  A cushy life, have those dead people.  And to be fair to Los Angeles (which, admittedly, is hard for me), Seattle, too, uses a great deal of water and hydrocarbons to keep our decaying ancestors covered with a trim layer of green.  It happens everywhere here.  Welcome to America.

Even the way the US irrigates land to feed the living represents a profligate use of water.  According to the USDA, 80% of the water consumed in this country goes to agriculture. (Note that "use" and "consumption" are often confused.  Agriculture and thermoelectric power generation both "use" about 40% of the nation's freshwater, but while almost 100% of the water used for power generation is returned to where it was taken from -- albeit somewhat warmer than when it was taken -- much of the of water put on crops is does not reach the roots or is evaporated and lost to the atmosphere.)  Notice that I did not use the word "waste", because some of the leakage winds up back in groundwater, or otherwise finds its way into the environment in a way that might be classified as "beneficial".

And pondering water use here in the US, and the impact on our economy, my thoughts turn to water use in Asia.  Much ado was made in the last couple of years about the IPCC report of anomalous melting of Asian glaciers, followed by the discovery that there was no actual data behind the assertion.

A recent paper in Science adds some much needed analysis to the story.  Walter Immerzeel and colleagues set out to understand the relative importance of meltwater and rainwater to river flows in Asia.  It is interesting to me that this sort of analysis wasn't done before now: "Earlier studies have addressed the importance of glacial and snow melt and the potential effects of climate change on downstream hydrology, but these are mostly qualitative or local in nature."

For five large river basins the authors used a combination of precipitation data, snow melt models, and evaporation rates, to calculate the Normalized Melt Index (NMI).  The NMI is the ratio of snow and glacier discharge to downstream discharge.  If all the water in a river downstream is from melting, then this ratio is obviously one; if the ratio is less than one, rainfall contributes more than meltwater, and if it larger than one, more water is lost through evaporation or other processes (like agriculture) and meltwater is more important for total flow.

Here are the results.  For each of the rivers, the authors calculated the percentage of the total discharge generated by snow and glacial melt:











In other words, water supplies in the Indus river valley are largely dependent on meltwater, whereas the large river systems in China appear to be less dependent on meltwater.  That is a very interesting result, because the story told by lots of people (including myself) about the future of water in China is that they are in big trouble due to glacial melting in the Himalayas.  Assuming this result holds up, China may be better off in a warmer world that I had anticipated.

The authors also used various projections of snow and rainfall to estimate what water supplies would look like in these rivers in 2050.  As you might expect, a warmer world leads to less snowfall, more melting, and lower river flows.  But as the warmer world brings increased rainfall, the impact is smaller than has been widely assumed.  I am not going to bother putting any of the numbers in here, because, as the authors note, "Results should be treated with caution, because most climate models have difficulty simulating mean monsoon and the interannual precipitation variation, despite recent progress in improving the resolution of anticipated spatial and temporal changes in precipitation."

But they went one step further and tried to estimate the effects of potential decreased water supply on local food supplies.  Couched in terms of crop yields, etc., Immerzeel et al estimate that the Brahmaputra will support about 35 million fewer people, the Indus will support about 26 million fewer people -- that's food for 60 million fewer people in India and Pakistan, if you are counting -- and the Yellow about 3 million more people.  Finishing up, they write:

We conclude that Asia's water towers are threatened by climate change, but that the effects of climate change on water availability and food security in Asia differ substantially among basins and cannot be generalized. The effects in the Indus and Brahmaputra basins are likely to be severe owing to the large population and the high dependence on irrigated agriculture and meltwater. In the Yellow River, climate change may even yield a positive effect as the dependence on meltwater is low and a projected increased upstream precipitation, when retained in reservoirs, would enhance water availability for irrigated agriculture and food security.

I am perplexed by the take on these results over at Nature News by Richard Lovett.  His piece carries the title, "Global warming's impact on Asia's rivers overblown".  I'll give Lovett the out that he may not have written the actual headline (Editors!), but nonetheless he sets up the Immerzeel paper as a big blow to some unnamed group of doomsayers.  Perhaps he imagines that Immerzeel completely undermines the IPCC report?  This is hardly the case.  As I wrote last January, sorting out the mistake over Himalayan melting rates is an example of science working through a blunder.  Instead overturning some sort of vague conspiracy, as best I can tell Immerzeel is simply the first real effort to make quantitative assessments of something to which much more attention should have been paid, much earlier than it was.

And even Lovett appears to acknowledge that reducing the human carrying capacity of the Brahmaputra and Indus river valleys by 60 million people is something to be concerned about.  From Lovett: 

The findings are important for policy-makers, says Jeffrey Kargel, a glaciologist at the University of Arizona in Tucson. "This paper adds to mounting evidence that the Indus Basin [between India and Pakistan] is particularly vulnerable to climate change," says Kargel. "This is a matter that obviously concerns India and Pakistan very much."

Indeed.  As they should concern us all.

A Few Notes on China

  • China Daily recently carried an Op--Ed asserting that "Giant leap" in education spurs nasty slump in academics.  (Oddly, the piece appears to be badged as an article, but the URL suggests it is an opinion piece.)  The piece asserts that "According to the education bureau, the number of university applicants in Beijing this year has decreased by 20%, and Shanghai has failed to meet its recruitment demand for three consecutive years."  Those are numbers I will have to dig into.  Another story from China Daily reports that, due to reduced enrollments and accumulated debt, "Universities face bankruptcy".
  • Slashdot has a brief blurb on how "China's Research Ambitions Hurt By Faked Results".  For those who haven't been following this story, while China has been climbing the world rankings of published scientific papers, so has the number of fraudulent papers.  I have to wonder what the real numbers are, though.  The Slashdot story links to a specific example of 70 crystal structures shown last year to be completely fabricated, but other accounts are mostly "just so" stories.
  • China's economic growth jumped to 11.9% in the first quarter of 2010.  The NYT also reports that Beijing raised fuel prices to help keep inflation in check.  Exports rose 46% in March, year on year, while imports rose 45%.
  • According to the NYT, China's Premier Wen Jiabao recently said that "China would pour money into strategic industries, boosting research and development and infrastructure spending to "capture the economic, scientific and technological high ground." Among the areas he singled out were biomedicine, energy conservation, information technology and high-end manufacturing."
  • Earlier this year, for the first time, Chinese oil imports from Saudi Arabia surpassed US imports.  As a result, China ran a trade deficit in March for the first time in years, and is buying up oil production in Canada.  Re-reporting a story from the China Securities Journal, China Daily asserts the sudden drop in the trade deficit is "a result of China's strive for a trade balance by taking measures to encourage imports and stabilize exports".
  • Here is the full text of China's recently published "Report on the Implementation of the 2009 Plan for National Economic and Social Development and on the 2010 Draft Plan for National Economic and Social Development" (via Xinhua).
  • Xinhua asserts that "China's trade surplus with US misread".  Among other revelations, it is apparently all our fault for refusing to export high tech items to China.
  • China has been blocking release of monetary data to the IMF since 2007, which makes it hard for the international organization to make any judgements about currency manipulation: "China allowed the release of its reports until the monetary fund's executive board decided in June 2007 that reports should pay more attention to currency policies. China has quietly blocked release of reports on its policies ever since, without providing its specific reasons to the I.M.F.

    A person who has seen copies of the most recent report last summer said that the monetary fund staff concluded the renminbi was "substantially undervalued."

    The monetary fund regards a currency as substantially undervalued if it is more than 20 percent below its fair market value."

  • Genetically Modified rice has been given a safety certificate by the Chinese Ministry of Agriculture, but the strain has to clear further hurdles before hitting the shelves.  Here are some interesting numbers: "China now yields around 500 million tons of grain annually. With the population expected to increase to 1.6 billion by 2020, 630 million tons of grain will be needed, experts said."  Wow -- that's a 25% increase in 10 years.
  • China has announced "A big plan to wipe out overcapacity".  According to China Daily, "The China Banking Regulatory Commission, China's watchdog on banks, has asked banks to retain strict controls on loans to industries with high energy consumption, high emissions or overcapacity. For instance, no loans are now allowed for any new projects in six industries with overcapacity and ship making unless these projects have approval from the National Development and Reform Commission, China's top economic planner. The six industries are steel and iron, cement, glass sheet, chemical processing of coal, polysilicon and wind power equipment."  Hmmm...the government of a centrally-planned economy proclaiming a drive for efficiency.  Best of luck with that.

China Buys More of Canada

China Daily is reporting that Sinopec is buying ConocoPhillips' stake in Syncrude for $4.65 billion.  This on top of purchases last year by Sinopec of a piece of Total's oil sands project, and by PetroChina of the Athabasca Oil Sands Corp.

This is interesting in light of last month's Chinese trade deficit of ~$7.2 billion (Xinhua), attributed to the cost of commodity imports (including oil).  A report late last month put Chinese petroleum use growth at about 5% for the next five years.  More deficits to come, perhaps.

Chinese Real Estate Bubble Confusion (Or "On The Frailty of Selective Information")

(Updated to include the overall local-national GDP discrepancy of at least ~2.5%.)

We often see headlines loudly proclaiming certain things to be true about China.  They are taking over!  No, wait, they are collapsing!  It's raining!  No, it's a drought!  How is one supposed to make sense of any of this?

One small part of the answer is that even the Chinese don't have a great idea of what is going on.  As a result, last Thursday (March 11), based on Chinese government data, the Financial Times and the Wall Street Journal carried stories on the state of the Chinese real-estate market that came to completely opposite conclusions.  Here's the WSJ headline: "China's Real-Estate Boom Appears to Cool."  And here is the FT: "Fears grow over China property bubble despite efforts at cooling."  Both stories cite identical statistics about price increases over the last year, though the WSJ leans on reduced sales volumes reported by the Government and by a consultancy that tracks sales.  (Imagine this, if you can -- a reduction from 50% to 37% in the annual increase in sales is seen as a "cooling" of the market!)

The main problem with this reporting is that there is very little reason to believe the underlying data is accurate.  See, for example, this story from Xinhua a few weeks ago: "China statistics chief admits errors in property data calculation".

Dueto staff shortages, housing price data mainly stemmed from reports by real estate developers, said [Ma Jiantang, director of the National Bureau of Statistics (NBS)], who cited Beijing as an example where only one or two officials were responsible for collecting data from hundreds of real estate companies.

"Under the circumstance, we have to rely on the employees of property companies after giving them short-term training," Ma said. "And some of the employees lack professionalism and a sense of responsibility."

And of course the real-estate developers have every reason to want the government (and the public) to conclude that prices are not out of control.  Beijing is attempting to put the breaks on a housing bubble, but the developers are making out like bandits.  There does not appear to by any reason for them to report accurately on pricing and volume.

Beyond the real estate market, even assessing the overall economic activity of the country is somewhat opaque for Beijing.  See this recent story from Xinhua, "China mulls unified GDP calculation":

China's top economic planning body has confirmed that China is considering bring local GDP under unified calculation in an effort to prevent local officials from cooking economic growth figures for political benefits.

...In the first half of 2009, the sum of provincial GDP figures was 1.4 trillion yuan more than the national figure, calculated by the NBS independently. Almost half of the provincial governments reported a double-digit GDP growth whereas the national growth figure was only 7.1 percent.

Leaving aside the cumulative difference in growth rate, that 1.4 trillion yuan imbalance amounts to an absolute yearly discrepancy of ~2.5% just for the first six months of 2009, which would severely complicate sorting out domestic economic policy.  It would also make strategic judgments by other countries rather problematic.
For what it is worth, my man on the ground is an architect who has been working in China for more than a decade now, building everything from government offices, to residential towers, to subdivisions, and beyond.  His latest big project under construction is a kilometer-long building containing housing, offices, performing arts spaces, sports fields along the "ridgeline" on top, and an interior train running the length of the entire structure.  It sounds like a fantasy land.  Perhaps it is.

In other news, the architect reports his firm just completely sold out a mid-range 40 story condo tower to individual purchasers in two days, as fast as the paperwork could get signed.  When asked if he thought this indicated a healthy market and real economy: "No way!" 

Shame On You, Portland!

What Happened to March?  I got on a plane this morning headed for New York, but somehow arrived on April 1st.  It's the only explanation for this:

Portland hurts Tibetans
(China Daily)
Updated: 2010-03-11 07:51

While many in the international community are watching with anxiety to see if Washington moves to repair its ties with Beijing, a reckless decision by an American city is rubbing salt into the unhealed wound of the world's most important bilateral relations.

The city of Portland, Oregon, proclaimed Wednesday, March 10, their "Tibet Awareness Day" despite strong opposition from the Chinese government.

While most people and most countries in the world recognize Tibet as part of China, the decision by the American city interferes in China's internal affairs and is an open defiance of China's state sovereignty.

It could have an adverse effect on Sino-US relations, which has yet to recover from major deterioration following Washington's $6.4-billion arms sale to Taiwan and US President Barack Obama's meeting with the Dalai Lama.

The designation of the "Tibet Awareness Day" was apparently orchestrated by the Dalai Lama clique, which has been engaged in activities aimed to separate China and undermine Tibet's stability in the guise of religion.

It is still beyond our belief that politicians in Portland have chosen to celebrate a handful of fanatics trumpeting Tibet independence while turning a blind eye to either history or the status quo of present-day Tibet. History has told us that Tibet has always been a part of China, and there is ample evidence proving the fact that Tibetan people now enjoy a much better life and enjoy the full freedom of religion.

Americans are well-known for putting individual freedom above everything. While the city of Portland entertains a few Tibet separatists, has it ever occurred to its decision-makers that their move are infringing on the interest of 2.8-million Tibetans here in China?

Bits, Atoms, and the Future of Manufacturing

(Updated 9 Feb 2010 with new estimates of value captured by Chinese manufacturers.)
(Updated 12 Feb 2010 with cost estimates for the iPad.)

Wired's cover story this month proclaims that "In theNext Industrial Revolution, Atoms Are the New Bits".  As I address this "revolution" in the last chapter of my book, and as we are thinking hard about manufacturing issues as the LavaAmp moves forward, I have a few observations about the topic.

Chris Anderson, the Editor of Wired and author of the piece, asserts as the core of his story that

The tools of factory production, from electronics assembly to 3-D printing, are now available to individuals, in batches as small as a single unit. Anybody with an idea and a little expertise can set assembly lines in China into motion with nothing more than some keystrokes on their laptop. A few days later, a prototype will be at their door, and once it all checks out, they can push a few more buttons and be in full production, making hundreds, thousands, or more. They can become a virtual micro-factory, able to design and sell goods without any infrastructure or even inventory; products can be assembled and drop-shipped by contractors who serve hundreds of such customers simultaneously.

To summarize (and oversimplify) Anderson's article, the future is about innovators -- individuals, really -- having access to manufacturing for small runs that can be scaled up as needed.  Design will be digital, and as the appropriate machinery continues to increase in capability and fall in price, manufacturing will increasingly be digital too.

In a full snark-on mode response at Gizmodo is Joel Johnson, with a blog post entitled "Atoms Are Not Bits; Wired Is Not A Business Magazine".  The snark distracts from some otherwise interesting analysis, which you can read and which I will get to below.  The comments on the post are unusually perceptive and many were made by people who are clearly plugged in at a professional level to the atoms-and-bits manufacturing story.

The summary of Johnson's argument is that small production runs equal small money, prototyping is not manufacturing, labor is cheap in China -- so what?, and some/all of the small production available now may be the result of oversupply due to the recession.  Many of these points are probably cogent.

But even when it comes to demonstrably successful examples of bootstrapping from rapid prototyping to international sales, Johnson is skeptical.  Wired's Anderson points to Aliph, makers of the Jawbone line of headsets, as an example of a virtualized business (ie heavy on creativity and IP, but with minimal capital infrastructure) that supports his case.  Johnson shoots back with this:

It's great that hobbyists can make ever more complex items, sell them on the internet, and have a small business. But the same process used by Aliph to manufacturer Bluetooth headsets (and bear in mind it takes 80 people just to coordinate this!) is exactly the same outsourcing process used by Apple to make iPhones.

Here Johnson makes a very interesting point, but is so full of kvetch that he trips over it and misses the significance of his observation.  Of the 80 or so people working at Aliph, only 8-10 will be actually working directly on engineering or manufacturing.  At least half the full count will be in sales, marketing, and customer service, with the rest distributed in IT, administration, and support, and finally with a few (probably 5-8) executives atop the whole thing.  The interesting bit is that those 8-10 people are able to coordinate the same sort of production infrastructure used by Apple and its many hundreds (thousands?) of staff in engineering and manufacturing.  

When it comes to manufacturing labor and cost, there are a few other observations that are worth pulling into this discussion.

  • First up is an article from The Economist last week about the results of recent teardowns on smartphones.  The numbers from iSuppli are interesting: of the four leading phones they took apart, the cost of components falls in a very narrow range of $170-180.
  • Next is a blog post from Slashdot a couple of months ago pointing to stories about the value breakdown on the retail sale price for consumer electronics.  The post refers to some analysis by Edmund Conway at The Telegraph suggesting the value added for an iPod assembled in China is only "a couple of dollars".  On a ~$200 widget that, let's call that $2, or 1%.  That number should hold for anything resembling a smartphone, which means assembly labor plus overhead (and local profit) adds only about $2 to the phone, too.  (Update 2: iSuppli evidently already has done a teardown on the iPad, and "manufacturing costs" are about 5% of the total component costs.)
  • Minimum wages in China range from ~$.4 to ~$.7 per hour, so that $2 in labor would pay for several hours total time.  This has to be an overestimate, by a long way.  I'll bet the assembly doesn't require more than a few minutes of labor per unit, with the rest going to overhead and profit.  Another issue is that Apple is probably paying Foxconn and its employees above minimum wage in order to retain trained labor, keep IP inside the company, and keep down the "fair day's wage" complaints from shareholders and critics in the US.  But that is just a guess, of course.  (Update 1: In a February 8th column at the NYT, Roger Cohen reports that a watch manufacturer in Dongguan is pulling down 5-8% of the retail price of various brands.  Wages are running $150-200 per month in that part of China.  I don't think this changes the numbers I've used above and below.)
  • With so little labor involved in the assembly, what other options are available to manufacturers today?  At the US minimum wage, spending that same few minutes assembling a doodad in the States would add a few more dollars to the cost -- not so much.  I'd pay that difference to know something was made here in the States.  The overhead on the factory is another matter, though.  It could be that paying for the real estate and the rest of the capital equipment makes assembly in the US uncompetitive.  (Though it would be the construction of the factor and the initial installation of the equipment that made the difference in cost -- the material cost of the building and the equipment would be roughly the same in China.)
  • That said, there is plenty of industrial land in Detroit laying fallow at the moment.  Tax breaks to build assembly plants in depressed US cities could probably bring a lot of those jobs home.  Yes, they would be minimum wage, but there are a lot of people here waiting for any job.

If you add the value of the software to the cost (say ~$30 on an iPhone), then you dilute the value of the assembly labor even more.  Thus even more of the value of the object is in bits rather than atoms and their arrangement, and the difference in wages between China and the US is diluted further still.  Even the arrangement of the atoms is really about bits, since all the sub-components of an iPhone roll off of manufacturing lines with minimal labor involved.

Around the office, we have been pondering many of these issues as they relate to biological technologies and the LavaAmp in particular.

We continue to refine the hardware design of the LavaAmp, and it looks like we have the production hardware down to 5 or 6 components, 4 of which are injection molded plastic.  The labor will only be in assembly of the final box, as all sub-assemblies should all come off automated fab lines of one kind or another.  All the real cost is in the design and tooling -- once we get up and running the per unit costs should be quite reasonable.

The reason that this is worth a larger discussion is that Biodesic is exploiting all of the trends and resources that Anderson writes about, however we are building not a consumer electronics widget but rather a tool that will facilitate the manipulation of biological systems.  As the boundary between bits and atoms blurs in one area (consumer electronics), the resulting improvements in design and manufacturing capabilities create opportunities for further blurring the boundary between bits and atoms in biology.  The LavaAmp should enable many more people to query DNA in their environment, and possibly even to play with PCR assembly of genes and genetic circuits, which is an experiment I am keen to try.  Trends like this will continue to put technologies into the hands of an ever wider range of people around the planet.

If you work with this sort of technology on a daily basis, what I wrote above comes as no surprise.  But that describes a very small minority of hardware and wetware hackers.  Many more people will come to realize it soon.  New manufacturing realities and the resulting new tools are about to contribute substantial change to our economy.

A "Noxious Cocktail" in China's Air

Yesterday's New York Times carries a story by Andrew Jacobs on a new UN study that describes the effects of industrial pollution on China's health, environment, and economy.  The article contains some slightly different estimates than my earlier posts on this issue, The Future of China's Economy, and More on China's Economy, Food Production, and Food Demand.

Here is the press release about the report from UNEP, and here is the report itself, "Atmospheric Brown Clouds: Regionalassessment report with focus on Asia".

Here are a couple of tidbits about China from the Times story:

Although their overall impact is not entirely understood, Professor Veerabhadran Ramanathan, a professor of climate and ocean sciences at the University of California, San Diego, said ...some studies suggest that the plumes of soot that blot out the sun have led to a 5 percent decline in the growth rate of rice harvests across Asia since the 1960s.

...Henning Rodhe, a professor of chemical meteorology at Stockholm University, says... “The impacts on health alone is a reason to reduce these brown clouds,” adding that in China, about 3.6 percent of the nation’s annual gross domestic product, or $82 billion, is lost to the health effects of pollution.

In addition to the general effects of warming that reduce agricultural yields in Asia, farmers are evidently facing a reduction due to decreased insolation.  As long as our energy production is "carbon-positive", this is going to be a problem.

The health impact estimate above is on the high end of those I have found, but I don't see any reason to discount it relative to the others.  I wonder how long it will be before Asian pollution starts to have a measureable effect on health here on the West coast of the U.S.  Is anybody looking for this explicitly?  A positive correlation would have very interesting consequences in our international political economy.