US Manufacturing Extinct? Not Even Close

[GHook93]

I get uptight about the US manufacturing sector when I go to Toys-r-us or Walmart like everyone else. However, US manufacturing is dying it transforming! Did it take a hit during the Great Recession? Absolutely, but so did everything else, INCLUDING the manufacturing sector in 3rd world countries! This is not to say there aren't problems. Our trade deficits are way to hard, we need to start manufacturing in many of the sectors we lost and we need to make manufacturing in the US attractive again. But its well premature to say the American manufacturing sector is dead or dying!

See below.

What Accounts for the Decline in Manufacturing Employment?
The U.S. produces approximately 21% of the world's manufacturing output, a number which has remained unchanged for the last 40 years (peaked at 28% in 1987).

Manufacturing Surprise: The U.S. Still Leads In Making Things - CBS MoneyWatch.com
IHS Global Insight, an economics consulting firm, has published a ranking of the manufacturing output of the leading economies, and to my surprise, the U.S. still manufactures more stuff than anyone else — $1.7 trillion in manufacturing value added in 2009, compared to $1.3 trillion from China.

Still it’s a surprise to me that the U.S. manufacturing is so big — larger than Japan and Germany together

http://www.nytimes.com/2009/02/20/business/worldbusiness/20iht-wbmake.1.20332814.html
Is anything made in the U.S.A. anymore? You'd be surprised
By Stephen Manning

WASHINGTON — It seems as if the country that used to make everything is on the brink of making nothing. In January, 207,000 U.S. manufacturing jobs vanished in the largest one-month drop since October 1982. U.S. factory activity is hovering at a 28-year low. Even before the recession, plants were hemorrhaging work to foreign competitors with low-cost labor. And some companies were moving production overseas.

But manufacturing in the United States is not dead or even dying. It is moving upscale, following the biggest profits and becoming more efficient, just as Henry Ford did when he created the assembly line to make the Model T car.

The United States remains by far the world's leading manufacturer by value of goods produced. It hit a record $1.6 trillion in 2007 - nearly double the $811 billion of 1987. For every $1 of value produced in China factories, the United States generates $2.50.

So what is made in the U.S.A. these days?

The United States sold more than $200 billion worth of aircraft, missiles and space-related equipment in 2007, and $80 billion worth of autos and auto parts. Deere, best known for its bright green and yellow tractors, sold $16.5 billion worth of farming equipment last year, much of it to the rest of the world.

Then there are energy products like gas turbines for power plants made by General Electric, computer chips from Intel and fighter jets from Lockheed Martin. Household names like GE, General Motors, International Business Machines, Boeing and Hewlett-Packard are among the largest manufacturers by revenue.

Several trends have emerged over the decades:

The United States makes things that other countries cannot. Today, "Made in U.S.A." is more likely to be stamped on heavy equipment or the circuits that go inside other products than the televisions, toys, clothes and other items found on store shelves.

U.S. companies have shifted toward high-end manufacturing as the production of low-value goods has moved overseas. This has resulted in lower prices for shoppers and higher profits for companies.

When demand slumps, all types of manufacturing jobs are lost. Some higher-end jobs - but not all - return with good times. Workers who make goods produced less expensively overseas suffer.

Once this recession runs its course, surviving manufacturers will emerge more efficient and profitable, economists say. More valuable products will be made using fewer people. Products will be made where labor and other costs are less expensive. And manufacturers will focus on the most lucrative products.

Boeing announced last month that it was cutting about 10,000 jobs. At the same time, workers were streamlining the wing assembly for the 737, the company's best-selling commercial plane, said Richard McCabe, a mechanic for 10 years and former Machinists union shop steward.

He and his co-workers at the factory at Renton, Washington, were asked about three and one-half years ago to figure out how to switch from building wings in huge stationary jigs mounted vertically, "the way things have been done here forever," to "one-piece flow," assembling them horizontally on a moving line similar to the way automobiles are constructed. The new process is set to begin by the end of the year.

"I won't go to the wing," McCabe said. "The wing will come to me. It's going to save them millions in scrap and rework."

McCabe said there had been a lot of initial resistance on the shop floor, but Boeing's increased outsourcing - including the outsourcing of wing production for the new 787 to Japan - helped change workers' minds.

"I told the guys, it's development or die," McCabe said. "If we can get this done, it assures us the future."

About 12.7 million U.S. workers, or 8 percent of the labor force, still held manufacturing jobs as of last month. Fifty years ago, 14.6 million people, or 28 percent of all U.S. workers, were employed in factories. The numbers - though painful to those who lost jobs - show how companies are making more with less.

Still, the perception of decline is likely to grow as factories and jobs vanish and imports rise for most goods we buy at stores.

Thirty years ago, U.S. producers made 80 percent of what the country consumed, according to the Manufacturers Alliance/MAPI, an industry trade group. Now it is about 65 percent.

U.S. factories still provide much of the processed food that U.S. households consume, everything from frozen fish sticks to cans of beer. And U.S. companies make a considerable share of the personal hygiene products like soap and shampoo, cleaning supplies and prescription drugs that are sold in pharmacies. But many other consumer goods now come from outside the United States.

In the 1960s, the United States made 98 percent of its shoes. It now imports more than 90 percent of its footwear. The iconic red Radio Flyer wagons for children are now made in China. Even the Apple iPod comes in a box that says it was made in China but "designed in California."

"Some people lament the loss of manufacturing jobs we could have had making iPods - so what?" said Daniel Ikenson, associate director of the Center for Trade Policy Studies at the libertarian-leaning Cato Institute. "The imports of iPods support U.S. jobs," including engineers, marketers and advertisers

 

[loosecannon]

The reason why the US leads the world in manufacturing output is because that out put is measured in dollars. It costs more to manufacture in the US so we charge more to do it. It costs less to manufacture in China and they charge a whole lot less for it.

China manufactures far more goods than we do, but they do it cheaper. So fewer dollars/unit are credited to their total output.

 

[GHook93]

The reason why the US leads the world in manufacturing output is because that out put is measured in dollars. It costs more to manufacture in the US so we charge more to do it. It costs less to manufacture in China and they charge a whole lot less for it.

China manufactures far more goods than we do, but they do it cheaper. So fewer dollars/unit are credited to their total output.

I guess you read none of the above before you responded! Bravo!

 

[Mr. Sauerkraut]

if i had the money, i would found a new enterprise around jeans pants producing. Original american jeans, made from american patriots. I think that could work.

 

[william the wie]

Old news but accurate. Computation of the market value of the Yuan and input price differentials could make it closer but accurate in order of magnitude.

 

[uscitizen]

Not extinct, However...

$2,362,250,001,704
American Companies Sold To Foreign Interests
The "Great American Sell Off" ticker is an up-to-date projection of the amount of money that foreign companies spend to acquire U.S. companies. The ticker is a projection based on the average amount of money spent per second on acquisitions in the 2007 fiscal year, which was $4,087.85 per second. Use the acquisition index below to see the most current data available on foreign acquisitions.

List Of American Companies Sold To Foreign Interests

 

[william the wie]

Not extinct, However...

$2,362,250,001,704
American Companies Sold To Foreign Interests
The "Great American Sell Off" ticker is an up-to-date projection of the amount of money that foreign companies spend to acquire U.S. companies. The ticker is a projection based on the average amount of money spent per second on acquisitions in the 2007 fiscal year, which was $4,087.85 per second. Use the acquisition index below to see the most current data available on foreign acquisitions.

List Of American Companies Sold To Foreign Interests

And it will get bigger. Higher productivity American workers are more valuable than Far Eastern or European workers.

 

[loosecannon]

The reason why the US leads the world in manufacturing output is because that out put is measured in dollars. It costs more to manufacture in the US so we charge more to do it. It costs less to manufacture in China and they charge a whole lot less for it.

China manufactures far more goods than we do, but they do it cheaper. So fewer dollars/unit are credited to their total output.

I guess you read none of the above before you responded! Bravo!

I read it and understood it

If we manufactured a 1/2" diameter HSS double ended 2 flute end mill we would be credited with $7 for it's manufacture.

If China manufactured an identical end mill they would be credited 70 cents for the very same tool.

 

[Neubarth]

We are still doing fine with the exception that we are not replacing lost jobs. We gotta work on that.

 

[uscitizen]

Who needs jobs, we can all just make our living off of the stock market.
We don't need to actually produce anything.

 

[JBeukema]

*turn over stapler*


*looks at computer*


*looks on American flag bought at army-navy store*



.....


sorry, guys, I'm joining the winning team

*defects to China*

 

[Mr. Sauerkraut]

i watched last week a report on tv where a chinese worker was shown, working in an american motor manufactory for race equipment. he said that he earns around 300$ a month. If he really lives wasting his money for going to restaurants or cinema, he could even then save around 150 US$.

what does that mean to us?

On the first hand: The chinese are going away from their work bench slave status and are becoming a growing weight as consumers

on the second hand: the payment difference is fading slow but sure.

Perhaps the worsest times are behind us.

 

[william the wie]

i watched last week a report on tv where a chinese worker was shown, working in an american motor manufactory for race equipment. he said that he earns around 300$ a month. If he really lives wasting his money for going to restaurants or cinema, he could even then save around 150 US$.

what does that mean to us?

On the first hand: The chinese are going away from their work bench slave status and are becoming a growing weight as consumers

on the second hand: the payment difference is fading slow but sure.

Perhaps the worsest times are behind us.

Probably true but there are several wildcards that could turn out to be important.

China is a very old country that has had a population density equal to or greater than that of 1800 Germany for 2000+ years. It is very hard to build foundations there that do not rest on ruins, land fills or garbage dumps. If the foundation is crap above ground quality of construction is irrelevant so a literal and widespread collapse of the real estate boom is somewhat to highly likely.

Chinese naval investment has not dealt with the fact that the Malacca Strait was declared a war zone years ago. China needs lots of anti-piracy vessels to make the strait safe for their commerce but they do not have them. Anti-piracy craft are small, fast, relatively low tech and not sexy at all. The money needed has been frittered away on prestige ships that cannot be used for this vital task. It is not an especially Chinese problem as the Horn of Africa makes clear but China has a MUCH bigger problem and MUCH fewer resources to deal with it than NATO uses in the Horn, which is why it is expensive to get insurance for going near Horn but not impossible as with the Strait.

The Chinese labor shortage caused by the one child policy kicked in the last quarter of last year. This could cause systemic problems.


So it is likely that a catastrophic collapse could temporarily set China way back.

 

[Toro]

I've posted about this before.

http://www.usmessageboard.com/econo...obs-is-a-mistake.html?highlight=Manufacturing
http://www.usmessageboard.com/econo...atly-exaggerated.html?highlight=Manufacturing
http://www.usmessageboard.com/econo...uring-in-america.html?highlight=Manufacturing

 

[GHook93]

Very true in 1830 China actually was the largest producer of the world's goods. The Chinese always new how to produce shit!

Probably true but there are several wildcards that could turn out to be important.

China is a very old country that has had a population density equal to or greater than that of 1800 Germany for 2000+ years. It is very hard to build foundations there that do not rest on ruins, land fills or garbage dumps. If the foundation is crap above ground quality of construction is irrelevant so a literal and widespread collapse of the real estate boom is somewhat to highly likely.

Chinese naval investment has not dealt with the fact that the Malacca Strait was declared a war zone years ago. China needs lots of anti-piracy vessels to make the strait safe for their commerce but they do not have them. Anti-piracy craft are small, fast, relatively low tech and not sexy at all. The money needed has been frittered away on prestige ships that cannot be used for this vital task. It is not an especially Chinese problem as the Horn of Africa makes clear but China has a MUCH bigger problem and MUCH fewer resources to deal with it than NATO uses in the Horn, which is why it is expensive to get insurance for going near Horn but not impossible as with the Strait.

The Chinese labor shortage caused by the one child policy kicked in the last quarter of last year. This could cause systemic problems.


So it is likely that a catastrophic collapse could temporarily set China way back.

 

[uscitizen]

i watched last week a report on tv where a chinese worker was shown, working in an american motor manufactory for race equipment. he said that he earns around 300$ a month. If he really lives wasting his money for going to restaurants or cinema, he could even then save around 150 US$.

what does that mean to us?

On the first hand: The chinese are going away from their work bench slave status and are becoming a growing weight as consumers

on the second hand: the payment difference is fading slow but sure.

Perhaps the worsest times are behind us.

Naah we have not hit bottom yet. We also have India and other countries such as Vietnam to consider.

 

[GHook93]

Good stuff Toro, its called the Walmart Effect! I fall victim to it myself and I know its illogical. You walk into Walmart (Target, Toy-R-Us etc) and see everything made from China and then you walk out of the store depressed thinking America makes nothing anymore! Yet we produce the things that aren't building into the end products. We produce the machines that make these products. So American consumers don't see what we produce!

I've posted about this before.

http://www.usmessageboard.com/econo...obs-is-a-mistake.html?highlight=Manufacturing
http://www.usmessageboard.com/econo...atly-exaggerated.html?highlight=Manufacturing
http://www.usmessageboard.com/econo...uring-in-america.html?highlight=Manufacturing

 

[loosecannon]

You walk into Walmart (Target, Toy-R-Us etc) and see everything made from China and then you walk out of the store depressed thinking America makes nothing anymore! Yet we produce the things that aren't building into the end products. We produce the machines that make these products. So American consumers don't see what we produce!

No we don't. China builds almost all of their own robotic machinery and sells more robotic machinery to us than we make ourselves.

 

[Mr. H.]

I'd like to know why Facebook is valued at $50 billion. What a joke.

 

[Norman]

US has shed manufacturing jobs pretty much every month now.

The trade deficit looks pretty bad when it comes to manufacturing (overall it looks bad too).



Maybe some day it will come back, if china stops subsidizing the dollar. Most probably don't want that day ever to come though (most americans).