Have manufacturing jobs have vanished to China, Mexico and South Korea?

[TrainTrac]

That is what we always seem to hear these days, but this author says otherwise-and cites empirical evidence to substantiate his opinion:

The Truth About U.S. Manufacturing

The average American factory worker today is responsible for more than $180,000 of annual output, triple the $60,000 in 1972.



By MARK J. PERRY

FEBRUARY 25, 2011



Is American manufacturing dead? You might think so reading most of the nation's editorial pages or watching the endless laments in the news that "nothing is made in America anymore," and that our manufacturing jobs have vanished to China, Mexico and South Korea.



Yet the empirical evidence tells a different storyof a thriving and growing U.S. manufacturing sector, and a country that remains by far the world's largest manufacturer.



This is a particularly sensitive topic in my hometown of Flint, Mich., where auto-plant closings have meant lost jobs and difficult transitions for the displaced. But while it's true that the U.S. has lost more than seven million manufacturing jobs since the late 1970s, our manufacturing output has continued to expand.



International data compiled by the United Nations on global output from 1970-2009 show this success story. Excluding recession-related decreases in 2001 and 2008-09, America's manufacturing output has continued to increase since 1970. In every year since 2004, manufacturing output has exceeded $2 trillion (in constant 2005 dollars), twice the output produced in America's factories in the early 1970s. Taken on its own, U.S. manufacturing would rank today as the sixth largest economy in the world, just behind France and ahead of the United Kingdom, Italy and Brazil.



In 2009, the most recent full year for which international data are available, our manufacturing output was $2.155 trillion (including mining and utilities). That's more than 45% higher than China's, the country we're supposedly losing ground to. Despite recent gains in China and elsewhere, the U.S. still produced more than 20% of global manufacturing output in 2009.



The truth is that America still makes a lot of stuff, and we're making more of it than ever before. We're merely able to do it with a fraction of the workers needed in the past.



Consider the incredible, increasing productivity of America's manufacturing workers: The average U.S. factory worker is responsible today for more than $180,000 of annual manufacturing output, triple the $60,000 in 1972.



These increases are a direct result of capital investments in productivity-enhancing technology, which last year helped boost output to record levels in industries like computers and semiconductors, medical equipment and supplies, pharmaceuticals and medicine, and oil and natural-gas equipment.



Critics view the production of more with less as a net negativefewer auto plant jobs mean fewer paychecks, they reason. Yet technological improvement is one of the main ingredients of economic growth. It means increasing wages and a higher standard of living for workers and consumers. Displaced workers learn new skill sets, and a new generation of workers finds its skills are put to more productive use.



Our world-class agriculture sector provides a great model for how to think about the evolution of U.S. manufacturing. The U.S. produces more agricultural output todaywith only 2.6% of our work force involved in farmingthan we did 100 years ago, when farming jobs represented almost 40% of the labor force. Likewise, we're able to produce twice as much manufacturing output today as in the 1970s, with about seven million fewer workers. That means yesterday's farmhands and plant workers can become today's computer engineers, medical doctors and financial managers.



I don't deny that the transition to this new economy can be a rough one for displaced workers. But turning back the clock to a less efficient economy is not the answer. Instead, let's retrain our work force to participate in this dynamic new economyan economy that still supports America's status as the world's leading manufacturer.



Mr. Perry, a professor of economics at the University of Michigan, Flint, is also a visiting scholar at the American Enterprise Institute.

 

[Kevin Lang]

That means yesterday's farmhands and plant workers can become today's computer engineers, medical doctors and financial managers.

And thank God for that. This article disputes the common perception that America has fallen as a manufacturer, but no one has disputed the perception that Americans (or more aptly, people in general) are indolent, lazy, and find it easier to bemoan the loss of a cushy menial job than to actually pursue education and obtain a job where thought is required.



(Insert TJR schtick here :bwahaha: )



I've seen other articles that assert that many American businesses which previously outsourced their manufacturing to China are bringing that manufacturing stateside. High transit costs, shoddy Chinese production quality, high turnaround time for product changes, & higher cost of materials play a part. With robotics & other technologies, as per the quoted article above, Americans can manufacture goods here in the US with better quality and comparable pricing to inferior Chinese goods.



I wish we still made ample amounts of steel in the US though. Seeing the all-but-abandoned sprawling steel complex outside of Baltimore, MD is depressing. That place is getting so overgrown in areas that it looks like the history channel's show "Life after People". Better materials, better QA, better manufacturing techniques, and robotics should have us as the steel king. But there are certain reasons conspiring against that. First and foremost a big one, which shares much with the first letter of USA. :angry:

 

[Richard L]

I believe we have lost jobs to China, Mexico, Korea, India, etc. and are probably still losing some. The fact that we are now taking some of them back, is good and smart, but I doubt that we will ever get them all back, and it may be a long time before we are again recognized as the manufacturing giant that we once were.



...Rich

 

[Kevin Lang]

I believe we have lost jobs to China, Mexico, Korea, India, etc. and are probably still losing some.

Richard L, the quoted article says that we have lost jobs, and are still loosing jobs.



However, it also says that even though we are loosing manufacturing jobs, we are gaining manufacturing capacity.

it may be a long time before we are again recognized as the manufacturing giant that we once were.

The whole point of the article is to say that we still are a manufacturing giant, and are actually making more now than we were in our "heyday".



As seen in this sentence:

In every year since 2004, manufacturing output has exceeded $2 trillion (in constant 2005 dollars), twice the output produced in America's factories in the early 1970s.

 

[Thomas Rogers]

This is what I have been saying for years. We are working smarter and more efficient in most industries due to technology. It started with agri, then manufacturing, now in business, medical, etc. We need fewer laborers, yet we produce more per worker. Likewise, we farm out much of the work that is not automated in a cost effective fashion... So yes, many jobs have gone offshore.



If you want to get paid a living wage to put tops on bottoms then you might want to move to China. If you want to stay here, then figure on doing something else.



There is my schtick.



TJR

 

[Don Pertz]

Now, maybe all you economic experts can explain why these US companies operating offshore are allowed to get away with paying no taxes. Lets start with GE. Paid no taxes on 5 billion in profits and has 9 billion more offshore, but won't bring it here because they would have to pay taxes.They will reinvest in another country but not here where their goods are sold. All a bunch of corrupt bullshit. They are not the only one.



You need to look at the big picture, not just the parts that make you feel good!



Feds try to stop Boeing from opening plant in right to work state.

GE to build locomotive plant in Texas. Who do you suppose will be working in that plant? Obama and Imelt doing the planning should tell you something about the future of immigration laws.

 

[Richard L]

KL,

Richard L, the quoted article says that we have lost jobs, and are still loosing jobs.

I said I beleived that ! What's the problem?

The whole point of the article is to say that we still are a manufacturing giant, and are actually making more now than we were in our "heyday".



As seen in this sentence:

In every year since 2004, manufacturing output has exceeded $2 trillion (in constant 2005 dollars), twice the output produced in America's factories in the early 1970s.

Making more what? Money?...The articles says were are making the same $2 Trillion as we did in the early 1970's but we now have more manufacturing capacity? In my opinion, the early 1970's were not they heyday of US manufacturing. That statement just tells me there is little or no growth in 40 years? And what does "Constant 2005 dollars" mean. Is that double-speakd for adjusting for inflation over the past 40 years.



I agree that the quality and capacity of manufacturing in the US has improved over what it was in the 1970's primarily because more robots/computerized manufacturing processes are being employed, which is a good thing since they produce more consistant quality products, faster, and usually at less cost.



The use of less humans in manufacturing is the way to go, since robots can do more dangerous jobs and don't require breaks, workmen's comp, OSHA, healthcare, vacations, don't strike, and they don't demand higher pay and retirement benefits. If we continue in that manner, we can become the manufacturing giant we once were...perhaps be number 1. This will not happen overnight as the other countries will start using more manufacturing technology, so the manufacturing recovery will drag on for many years.

The down side is less jobs...and that is what upsets the Unions. Unions will continue to attempt to stop or slow this growth.



So while I agree with most of what the article says, I think it implies that we have reached our manufacturing goals, when we have only just begun to see some results. There is a lot more work to do before we can claim to be the manufacturing giant we once were and that will still take a lot of time. Being sixth in the world behind Brazil, etc is not what I consider hitting the pinacle of manufacturing might. And I think the article agrees with me on that point.



...Rich

 

[Kevin Lang]

The fact that we are now taking some of them back, is good and smart, but I doubt that we will ever get them all back

This is not a fact, the article does not say that we are "taking back" any manufacturing jobs. If anything, one could infer that we're going to continue loosing manufacturing jobs by this article.

Being sixth in the world behind Brazil, etc is not what I consider hitting the pinacle of manufacturing might.

The article does not say that. Firstly, the article says that we are ahead of Brazil. The also article says that if we chopped out everything from our economy except for our manufacturing capability, our economy would still pummel Brazil's, and be the 6th largest in the world. So if we were to strip our of our service-based companies (huge companies like UPS) and our retail businesses (Amazon, Apple, Microsoft, & presumably Walmart), in essence tying our economic hands behind our backs, the US economy would still be in the top 10 of the world on manufacturing alone.

There is a lot more work to do before we can claim to be the manufacturing giant we once were and that will still take a lot of time.

The article explicitly says that we make more now than we did in the 1970s.

Here's a quote:

In every year since 2004, manufacturing output has exceeded $2 trillion (in constant 2005 dollars), twice the output produced in America's factories in the early 1970s.

Finally, you said this:

Making more what? Money?...The articles says were are making the same $2 Trillion as we did in the early 1970's

The article also does not say that. The article says that we were making at most 1 trillion in 1970, computed with year-2005 dollars.



I agree that organized labor is going to hold us back as it struggles for a reason to exist, fights to keep its political power, in a world that no longer needs them. I wonder what article you're reading though :grin: :haveabeer:

 

[H D]

The down side is less jobs...and that is what upsets the Unions. Unions will continue to attempt to stop or slow this growth.

I agree that organized labor is going to hold us back as it struggles for a reason to exist, fights to keep its political power, in a world that no longer needs them. I wonder what article you're reading though

Oh, no y'all didn't!



I'm just going to sit back and watch this one.:bwahaha:

 

[Thomas Rogers]

drpertz,



Let's take your points one at a time, shall we.

Now, maybe all you economic experts can explain why these US companies operating offshore are allowed to get away with paying no taxes.

Actually, not that it is a good excuse, offshore or not, most American companies pay little to no taxes. Essentially, a company pays taxes based on NEBT (net earnings before taxes). The reality is that many, many companies are run so that they show little to no net earnings. This isn't corrupt, and it isn't really wrong. It is what it is given our tax codes. If a company wishes to use all its earnings (revenue less costs) and essesentally run at very little profit, then it can and it is in its best interest to do so.



The biggest reason for offshoring is not to avoid paying taxes. That is simply a fallacy. The bigger reasons are to reduce cost of labor (the biggest reason, since for most all companies that is the single largest cost of goods and services), and another is to reduce or eliminate various regulations, oversight, (beauracracy, red tape).

Feds try to stop Boeing from opening plant in right to work state.

And, if the Feds succeed it will be just another reason for Boeing to look at offshored manufacturing.

GE to build locomotive plant in Texas. Who do you suppose will be working in that plant?

Not illegals, I am pretty certain. No international company would run the risk of getting pinched with illegals on the dole. Just not worth it.

Obama and Imelt doing the planning should tell you something about the future of immigration laws.

What exactly should it tell us?



TJR

 

[Kevin Lang]

Actually, not that it is a good excuse, offshore or not, most American companies pay little to no taxes.

Since taxes on corporations simply get passed onto the consumer, I'd be more than happy to see them go.



Assessing a penalty on a company for doing business...no good can come of that.



:back2topic:

 

[Robert Thomas]

No international company would run the risk of getting pinched with illegals on the dole.

TJR



I don't think you can offer this up as fact since you can't say this with 100% certanity.



Consiider changing "no" to; "possibally no" "more than likely no" or "most".

 

[Gavin Allan]

The U.S. produces more agricultural output todaywith only 2.6% of our work force involved in farmingthan we did 100 years ago, when farming jobs represented almost 40% of the labor force.

Funny that the largest federal agency is still the US Dept of Agriculture, both in terms of # of employees and amount of square feet of office space.



Also funny how Agriculture Education is still the largest vocational education program in nearly every state, with the highest numbers of students and receiving the most funding.

 

[Richard L]

KL,

You are correct. I did misread that the US was producing "Twice" what it did in the early 1970's. However, my point was more about measuring production in $$$s is that it may not be the best way to accurately define improvement. Consider that we have improved by $1 Trillion in 40 years, yet we are ranked sixth, and only have 20% of the market. I think it would be beneficial to know, What was are standing in the world in 1970, and what percentage of the market did we have then?



I also got my mind and my fingers crossed when I meant to say that "US rank 6th behind France" but better than GB, Italy and Brazil?..but beating Brazil is not saying much.



If the article had given the US ranking and percentage prior to the early 1970's we might have a better perspective as to how much we have fallen, and how much we have gotten back, and further we have to go to get back to where we were.



I also am not completely convinced that mining $$$ should be considered part of the manufacturing $$$, and and feel even less convinced that Utilites $$$ should be included as part of the manufacturing $$$. I wonder if the Mining and Utilities $$$ were included in the early 1970's manufacturing $$$ ? That was not mentioned in the article, so I am a bit suspicous that we may not be comparing apples to apples?



Again, I agreed with most of what the article says, I just think it's a little premature to be doing victory dances or to imply that we have reached the Manufacturing Giant status that we once were.



...Rich

 

[Thomas Rogers]

Redfish,



Agreed. I wasn't so bold as to add " - That's a fact" to that statement, and I surely didn't intend for it to be read as such. Nor, now that I have typed in as I did try to present it as a fact.



I erred. I should have said: "I doubt that any...", instead of "No...".



That is really where my head was at when I was typing it.



TJR

 

[Robert Thomas]

If I may be so bold to suggest. In the future we should all just say. " fax's instead of "facts". That way we can always say we have a fax to that effect.

 

[Kevin Lang]

Richard L, I read the article as saying that on equal comparisons, we are beating France.



The article says that our manufacturing economy alone looses to France's entire economy. However, our entire economy beats France's by far.



From that, I infer that our manufacturing capabilities beat France's, that if we were to compare US manufacturing $ to France's manufacturing $, we'd win.



Something the article doesn't mention explicitly, is that only approximately 1/6th of our GDP comes from manufacturing goods.



The US GDP (still the best single nation in the world) was 14,657,800 million USD. The article says that our manufacturing economy would be below France's whole economy, yet above the UK's & Brazil. France's GDP was 2,582,527 million USD. The GDP of the UK (since they're ahead of Brazil) was 2,247,455 million USD.



So the US manufacturing economy's GDP would be between 2.582 & 2.247 million-million USD. Let's go with halfway between, or 2.414 million-million. That's ~16.4% of our economy.



So while we may still have the best manufacturing economy in the world, the US economy as a whole isn't dependent upon manufacturing--if we lost the GDP of the manufacturing economy, we'd still be FAR ahead of China's GDP.



I find that a bit sad, though not as sad as how poorly Brazil is doing. Brazil is a resource-rich country with cheap plentiful labor, and Brazil is larger than the 48 contiguous US states. Nor is it as sad as the fact that the CAD is worth more than the USD, despite the fact that both the CIA & the IMF rank the US economy as #1 and the Canadian economy as #9. Our GDP is over nine times greater than Canada's, yet their Loonie is worth more than good ole George :cry: That makes it very hard for me to actually go to Canada this year.



Edit:Link below to the wiki synopsis page I used for my figures. All figures from the IMF data, unless otherwise stated.

 

[Richard L]

KL,

My point deals with comparing manufacturing in different countries based an a monitary amount, especially if they are going to include Mining, and Utilities? If they include Mining, does that include Oil production? That would certainly move some middle eastern countries like Saudia Arabia much higher on the list? Also, some contries like Japan have very few mining and natural resources, but have a very high ranking in manufacturing.



The other part of my objection to basing manufacturing power stictly on a monitary value is because of the quality and market for the end products. ie: China makes a lot of cheap crap, but it also sells for much less than an Amercan made products...most of that is based on China's cheaper labor. So if the USA can make an item for $100 and China can do it for $50, then if they both produced the same amount of $$$, China would have twice the manufacturing capacity for that item since they had to make twice as many items to reach the same monitary amount as the US.



So, If these other countries have lower labor costs and produce products at a lower cost, does that mean they have more or less manufacturing power?



My question is what is the article is measuring and comparing to? I don't think that money is the only indicator.



What was the USA's manufacturing ranking back in 1970? If we were number 1 or 2, we may have doubled our manufacturing $$$, but so has the rest of the world and 4 or 5 countries are now better than us. And just how much of that amount is due to the higher cost of US Union labor, which must be considered if we are to compare apples to apples?



Again, I agree with much of the article in as much as we have improved our manufacturing process with more automation, etc and we are climbing back up. But I don't think $$$ neccessarily equates to increased manufacturing power or that we are neccessarily the manufacturing giant that were once were.



...Rich

 

[Kevin Lang]

If we were number 1 or 2, we may have doubled our manufacturing $$$, but so has the rest of the world and 4 or 5 countries are now better than us.

What 4 or 5 countries are manufacture more than us? Where is proof that we're no longer #1? Sure everyone says it (as the article laments), but I for one have never seen an official "The US has fallen from manufacturing grace" sort of announcement. The article even opens by stating that we are still #1.

And just how much of that amount is due to the higher cost of US Union labor, which must be considered if we are to compare apples to apples?

My question is what is the article is measuring and comparing to? I don't think that money is the only indicator.

Slight tangent on this, we can't forget how organized labor also cripples our service industries. The Teamsters have UPS wrapped around their finger, and I know you are all too familiar with the outrageous prices UPS can charge, especially to the small-volume shipper. When I see smoke, I call fire. (Though I see how much trouble that can raise in the other thread going on here. :banghead



On topic, it seems like you're trying to poke holes in the GDP measurement of an economy's "power". Now I can't resist the juvenile urge to use your own argument here, so I'll give in to pettiness and ask: Your questions about the computation seem pretty basic, so wouldn't the great economists and bankers who created the GDP measurement system, have already designed the measurement to compensate for them? :grin::bwahaha::bwahaha:



Also, what is a better indicator than money? Jobs in manufacturing aren't, per the article. Your argument rules out number of products produced, not that it could be considered anyhow as without a relationship to money spent to make the products, number of products made is meaningless, and you've shot down using money as a comparison. Again, the great economic minds probably came up with monetary comparisons here because in their infinite wisdom they saw it was the best way :grin:



Ultimately I agree that we need to get robots in, and unions out. If your job is lost to a robot, come up with a design designing robots, or things for robots to build (or be in a trade that can't easily loose its jobs to robotics.) If that's too much work for that person to do, that's their own fault & the country (and the business) shouldn't suffer for it. TJR's oft-typed schtick about what could be described as "social Darwinism in the workplace" is what I'm getting at here, and should he deign to interject, he'll say it better than I. :grin:

 

[H D]

Money can be the only comparison. The goal of manufacturing is to obtain money. To determine the leading manufacturer, you must determine who is obtaining the most money through manufacturing.



I am completely on board with the "survival of the fittest" in the workplace. That's not popular, though, because, to some, it doesn't seem fair. We must remember that fairness is the New American Way. Hard work and innovation have long since lost their political favor.