In an interview with the Hoover Institution, Palmer Luckey, founder of Oculus VR and Anduril Industries, discussed what he sees as the underlying reasons China has been able to outmanufacture the United States and the broader gap in American manufacturing capacity.
He argued that the issue is not simply that China is taking American manufacturing jobs, but that it has a large pool of engineers working directly on understanding and building technology, while many U.S. engineers are trained almost solely in design functions. In other words, American engineers no longer get hands-on experience in actually making products function in practice.
He also noted that China’s is driven largely by extensive automation, which has made production significantly cheaper and more efficient.
Luckey's interview serves as a warning that the United States may need to better connect engineering design with hands-on manufacturing experience and rethink how it approaches automation, adding another layer of complexity to the already critical economic competition between the U.S. and China.
Palmer Luckey lays out a blunt warning about what America lost when it offshored manufacturing.Drawing on his experience building VR headsets in China,he argues that the real engineering, process innovation,and manufacturing intelligence now live where products are actually made. pic.twitter.com/4jNT29NclJ
— Omar Al Busaidy عمر البوسعيدي 🇦🇪 (@omaralbusaidy) June 1, 2026
"If you want to get stuff done and you want to build things, [China] is the place to be. And they don't get 50 percent more for their dollar. They get like 10x for their dollar. Things that here would take you a million dollars, you'd be there for $50,000, $100,000, like a development program," Luckey said.
And while most Americans would say that the massive difference in how much someone could get for a dollar in China, versus in the United States is because of cheap labor costs, Luckey said that the concept is an outdated one. China, he said, has simply automated "labor-intensive production."
"Labor is not even the cheap thing. That's an outdated concept. They think of China as just having really cheap labor. They automate most of these things. They automate most of the labor-intensive production," he said. "Their people are just genuinely extremely good. They have the world's best battery engineers. They have many of the world's best metallurgists, many of the world's best optical engineers."
"American companies have been hollowed out because our companies and our degrees, which feed these companies, because the companies feed these colleges a whole bill of goods on what they should be teaching people. Basically, we're not teaching engineers how to be engineers anymore," Luckey revealed. "We're not teaching designers how to actually design things to be manufactured. We're teaching them how to be high-level design shops that put together design packages that get sent to the real engineers in China, and they actually figure out how to do the work. This is true even with our mechanical engineering programs, even with our electrical engineering programs. People are turning into architecture astronauts. They pick components, and they put them in a nominal layout."
The real work, he said, actually figuring out how things work, how they go together, is typically left to the Chinese.
"If you don't control your raw materials, if you are dependent on your largest strategic adversary for everything that underpins your quality of life, you are fundamentally not in control of your own destiny," Luckey went on.
And so yes, controlling raw materials is important, and having a manufacturing base is important. But what isn't discussed in American political debates surrounding the issue is that manufacturing has been hollowed out, not necessarily by jobs leaving the United States, but by the types of jobs that remain.
Why not begin transitioning workers displaced by automation into more technical and engineering-adjacent roles, where they can help test, troubleshoot, and refine how designed products actually function in practice? And why not also rethink engineering education to place a stronger emphasis on hands-on manufacturing experience and real-world debugging?
This problem goes beyond simply losing manufacturing to other countries. It raises the question of whether we still have the capacity to effectively build and troubleshoot our own products once they are designed. While some may be confident that we do, it is at least worth discussing a more intentional approach to addressing the issue, one that we will ultimately have to confront at some point in the future.
