February 7, 2011
U.S. Manufacturing Leads the World (Still)
I mentioned a few days ago that U.S. manufacturing continues on an upward trend. Jeff Jacoby makes the point that, despite what we hear and feel, U.S. manufacturing still leads the world by a wide margin:
Americans make more “stuff’’ than any other nation on earth, and by a wide margin. According to the United Nations’ comprehensive database of international economic data, America’s manufacturing output in 2009 (expressed in constant 2005 dollars) was $2.15 trillion. That surpassed China’s output of $1.48 trillion by nearly 46 percent. China’s industries may be booming, but the United States still accounted for 20 percent of the world’s manufacturing output in 2009 — only a hair below its 1990 share of 21 percent.The answer is that American workers are more productive than ever and we don't require thousands on the factory floor doing piecework to produce stuff. Jacoby:“The decline, demise, and death of America’s manufacturing sector has been greatly exaggerated,’’ says economist Mark Perry, a visiting scholar at the American Enterprise Institute in Washington. “America still makes a ton of stuff, and we make more of it now than ever before in history.’’ In fact, Americans manufactured more goods in 2009 than the Japanese, Germans, British, and Italians — combined.
American manufacturing output hits a new high almost every year. US industries are powerhouses of production: Measured in constant dollars, America’s manufacturing output today is more than double what it was in the early 1970s.
So why do so many Americans fear that the Chinese are eating our lunch?
Consequently, even as America’s manufacturing sector out-produces every other country on earth, millions of young Americans can aspire to become not factory hands or assembly workers, but doctors and lawyers, architects and engineers.Of course, to maintain our position, we need to continue educating our work force to be competitive in the future.Perceptions also feed the gloom and doom. In its story on Americans’ economic anxiety, National Journal quotes a Florida teacher who says, “It seems like everything I pick up says ‘Made in China’ on it.’’ To someone shopping for toys, shoes, or sporting equipment, it often can seem that way. But that’s because Chinese factories tend to specialize in low-tech, labor-intensive goods — items that typically don’t require the more advanced and sophisticated manufacturing capabilities of modern American plants.
A vast amount of “stuff’’ is still made in the USA, albeit not the inexpensive consumer goods that fill the shelves in Target or Walgreens. American factories make fighter jets and air conditioners, automobiles and pharmaceuticals, industrial lathes and semiconductors. Not the sort of things on your weekly shopping list? Maybe not. But that doesn’t change economic reality.
Bear in mind that this is all second hand.
A couple of years ago a friend went to China to see about jewelry boxes (the kind watches, pins, etc. come in).
He was amazed by the number of workers and lack of machinery. Treading softly because it is a communist country, he made inquiry. It seems the government finances the factory, sets the wages and tells the owners how many people they have to employ. This does not "incentivize" automation.
I think that most Americans have become so remote from manufacturing that they do not realize the revolution created by the chain making machine (that is an example from the jewelry business).
Posted by: Warrington Faust at February 7, 2011 12:45 PMBear in mind that this is all second hand.
A couple of years ago a friend went to China to see about jewelry boxes (the kind watches, pins, etc. come in).
He was amazed by the number of workers and lack of machinery. Treading softly because it is a communist country, he made inquiry. It seems the government finances the factory, sets the wages and tells the owners how many people they have to employ. This does not "incentivize" automation.
I think that most Americans have become so remote from manufacturing that they do not realize the revolution created by the chain making machine (that is an example from the jewelry business).
Posted by: Warrington Faust at February 7, 2011 12:45 PM"millions of young Americans can aspire to become not factory hands or assembly workers, but doctors and lawyers, architects and engineers."
First, we can't all attend medical school, and don't all have the ability to understand advanced engineering math or physics, especially given the poor education that our horrendous, union-hack controlled public school system provided to us when we were growing up. Some of us need those factory-type jobs. A low-paying factory job is better than no job at all. And law as a profession? Aren't there more than enough lawyers in this country already?
"American factories make fighter jets and air conditioners, automobiles and pharmaceuticals, industrial lathes and semiconductors."
I don't know about General Dynamics and their guaranteed military contracts, but one of my former employers once ran a (semiconductor) wafer fab right here in Rhode Island for almost thirty years. It isn't here anymore. Half of the jobs and equipment went to Eastern Europe, and the other half to China.
It would be interesting to encourage a system that required products to list the extent (perhaps a percentage) of the extent they are (1) designed in the USA, (2) manufactured in the USA, and, perhaps, (3) assembled in the USA (if not manufactured here). Some rules along this line exist (e.g., new cars disclose something along these lines), but its expansion might create greater awareness and inspire a preference for US-based goods.
Posted by: Bill at February 7, 2011 2:59 PMPosted by Chris:
"First, we can't all attend medical school, and don't all have the ability to understand advanced engineering math or physics, especially given the poor education that our horrendous, union-hack controlled public school system provided to us when we were growing up."
I hope I don't get scalded for this, but while "average intelligence" is not "median intelligence", there are still a lot of people "below average". They can't all be City workers. We need to provide employment which will allow them to be productive and provide a decent wage. By breaking down the process to relatively simple, repetitive tasks, manufacturing did this. We have to find a replacement.
Posted by: Warrington Faust at February 7, 2011 4:13 PMWarrington, I'll throw two good ideas for getting something to replace manufacturing for the 'below average'.
First would be to live in a country where the middle class is unburdened a bit so they can afford more things like home repair and renovation. My 'household' income is just barely in the top quintile, but it's still not enough for me to hire people to come paint rooms, build shelves, or fix doors. My life looks and feels very much 'lower middle class', even though technically I'm in the top 20%. There's something wrong there, and I'm not entirely sure how to fix it. Tax relief would help, but my 'real' federal tax rate is really only about 9%, adding in Social Security, Medicare (I'll retire and medicate myself, thankyouverymuch), local taxes, and fees add up to about a 28% tax burden on me, which is way too high for someone who can't afford anything better than a beat-up Ford Focus and bunny-ears for television.
The second would be to drastically change the way the social safety net works, Justin touched on that a few days ago. Right now there's a -lot- of work to be done, both 'hard' and 'soft'. Governments should be contracting to have hordes of folks on unemployment transcribe medical records over the internet (from scanned paper to digital records). They could sell contracts to doctors and hospitals who need the work done, but won't do it because they don't want to embark on the costs of 'manning up' for such a task or developing the tools to do it properly. At least then folks who wanted to collect unemployment for extended periods would have to do -something-, the literate could transcribe records, the illiterate could feed the scanners, and the highly-qualified would manage the dispatching of workloads. This would both familiarize a lot of folks with basic computing tasks, but would create HUGE demand for good-paying Information Technology jobs.
Also, we could implement things that save lots of money and make the world a better place, preferably through contracts to private organizations... Single-stream waste separation, municipal composting, local trash patrols (reduce landfill use, boost recycling and energy costs, help farmers, and raise property values, respectively.). Sure, it's make-work for the unemployed, but at least it does society some good. When the job market pics up again, open up the ranks to the outside world.
Posted by: mangeek at February 7, 2011 4:48 PMMangeek
Your points are well taken, but there are things that have to be thought about. As a government program, it would doubtless encounter the usual boondoggles and fantastic costs.
There is a need for "guy things" that transcription and collating doesn't fill. Things like banging nails, working in a steel mill, assembling trains, moving great weights, basically "making something".
To some extent "unemployment" will take care of itself as the economy expands.
Although many in the manufacturing sector will never find employment. For instance, I have a guy helping me rebuild my barn. He is an unemployed tool and die maker. He is a smart guy, he can discuss trigonometry to the extent it applies to his trade, and he is invested in ADR's. But, his unemployment seems permanent. His trade disappeared when we decided to chase out the "smoke stack" industries (although we are now begging them to come back). At 61, he is not prepared to move away from his family, although he might listen to a really good offer. CNC does not effect him, because CNC cannot produce small quantities, or "one offs", efficiently. CNC only really effects "production" work. CNC and CAD will probably improve, then he will be obsolete.
Posted by: Warrington Faust at February 7, 2011 6:26 PM