Yet America remains by far the No. 1 manufacturing country. It out-produces No. 2 China by more than 40 percent. U.S. manufacturers cranked out nearly $1.7 trillion in goods in 2009, according to the United Nations.The story of American factories essentially boils down to this: They've managed to make more goods with fewer workers.
The United States has lost nearly 8 million factory jobs since manufacturing employment peaked at 19.6 million in mid-1979. U.S. manufacturers have placed near the top of world rankings in productivity gains over the past three decades.
That higher productivity has meant a leaner manufacturing force that's capitalized on efficiency.
"You can add more capability, but it doesn't mean you necessarily have to hire hundreds of people," says James Vitak, a spokesman for specialty chemical maker Ashland Inc.
This is a very important point to make. The internet is full of chatter about how the U.S. is always falling behind in manufacturing. Yet, we're still the world's largest manufacturer. As we've pointed out here on several occasions, the issue is productivity: the U.S. manufacturing is in fact incredibly efficient.
Here's the chart from the article:
3 comments:
The perception of US manufacturing has a lot to do with two factors:
1) Declining manufacturing employment - we are doing more with less, but we also need less people
2) Most consumer goods are being made outside the US
If you look around your house at all of the electronic gadgets, odds are they are made somewhere in Asia or maybe Germany. Sure the US is making a lot of stuff too, but not as much of it gets into the consumers on a day to day basis.
People think manufacturing here is dead because retail goods are almost entirely made overseas these days -- on equipment made in the U.S. Most U.S. manufacturing is business goods. For example, the garage door in your typical suburban house is likely to be made in China. A garage door made in the U.S. is typically installed in a loading dock with much harsher requirements and higher cost. The typical Chinese good is worth several dollars. The typical U.S. good is worth tens of thousands of dollars. Some of this is skewed by supply and demand; even considering the gap in material costs, the world wants more t-shirts than t-shirt machines.
That said, there's a trend in U.S. industry to move toward "low-cost" equipment that the last recession and deflation made much, much worse. Your cell phone charger is one thing, but nowadays I'm seeing medical equipment use "low-cost" suppliers. Rather terrifying.
(The data could also be thrown off by products ASSEMBLED in the U.S. from parts manufactured elsewhere, as there's a wide gap between the value added by the U.S. worker vs. the total value of the product.)
Misleading post. Manufacturers which remain in the US fall into several categories:
Protected industries, enjoying legal, diplomatic, and/or get orders from the government. These are BIG ticket items like B2 bombers and Abrahms tanks, or automakers, which enjoy trade protections through treaties.
Guerilla oufits making specialized small-run, custom instruments, like portable blood analyzers. These are small businesses I'm very familiar with, as I worked in, and sold into this market for decades. These are small ticket items, but there are LOTS of them. (btw, lots of the fabrication in these industries has gone overseas, leaving many of these firms effectively sales-rep companies which do some assembly. My next-to-last startup is an example of this).
As usual, I offer the worm's eye view here. The days of vertical integration are over while Richard Fisher bemoans the fact the the US doesn't have enough port capacity on the west coast to import more goods from China. (FOMC meeting transcript, Dec 2005).
Consider that California's third largest export is waste paper.
I like the trend in manufacturing, however, we need an industrial policy.
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