Economy
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Title: The Myth of America’s Manufacturing Renaissance: The Real State of U.S. Manufacturing
Source:
Information Technology and Innovation Foundation
URL Source: http://www.itif.org/publications/my ... ce-real-state-us-manufacturing
Published: Jan 13, 2015
Author: Adams Nager & Robert D. Atkinson
Post Date: 2015-01-13 13:05:17 by Hondo68
Keywords: None
Views: 1675
Comments: 4
To listen to most pundits and commentators, U.S. manufacturing has turned a corner and is roaring back after the precipitous decline during the 2000s. Long gone are the dismal days when manufacturing jobs and output were lost due to foreign competition. Higher foreign labor costs, cheap oil and gas here at home and automation are combining to make America the new global manufacturing hub: at least according the now dominant narrative. Indeed, the term “manufacturing renaissance” is used to describe this new state of affairs. However, as a new ITIF report shows, the data do not support such a rosy scenario. In fact, at the end of 2013 (the most recent year available) real manufacturing value added (the best measure of the health of U.S. manufacturing) was still 3.2 percent below 2007 levels, despite GDP growth of 5.6 percent. Moreover, there are still two million fewer jobs and 15,000 fewer manufacturing establishments than there were in 2007. Much of the growth since 2010 appears to be caused by a cyclical recovery as demand, particularly for motor vehicles and other durable goods, returns. In fact, 72 percent of jobs gained and 187 percent of the heralded real value added growth in manufacturing between 2010 and 2013 came from transportation sector or primary and fabricated metals. It is true that some jobs are being brought back to the United States. However, reshoring numbers are modest and the manufacturing sector is also still sending jobs overseas, roughly at the same rate. While this new equilibrium between companies coming and going is certainly an improvement over rapid off-shoring, it is hardly indicative of a renaissance. At the end of the day, much of the renaissance story is based around several misconceptions about U.S. cost advantages, including incorrect assumptions surrounding Chinese wage growth and productivity, global shipping costs, the role of the U.S. dollar, the importance of the shale gas-driven energy boom, and American productivity growth. The pervasive belief that these factors will drive production back to the United States with little real assistance constrains the possibility of real legislative action to support American manufacturing. The report addresses and refutes the following misconceptions: Myth: China’s rising labor costs will soon match U.S. wage Fact: Chinese wages, while rising rapidly, are still estimated to be just 12 percent of average U.S. wages in 2015. Chinese labor productivity growth and its infrastructure push to open the interior for production reduce the impact of Chinese wage growth. Myth: Global shipping costs are unusually high, making it easier for the United States to produce more for U.S. and European markets. Fact: Undersupply led to skyrocketing global shipping costs in 2008. However, today shipping costs are back to normal after falling by 93 percent in a six month period in 2009. Myth: The Shale Gas boom gives U.S. manufacturing a substantial advantage Fact: Reduced costs for shale energy has had an impact only on energy intensive industries, and then only a minor one. For 90 percent of the manufacturing sector, energy costs are lower than 5 percent of shipment value. The benefits are largely restricted to the petrochemical sector and drilling operations. Myth: Currency fluctuations will fix the trade deficit Fact: In the long-term, macroeconomic theory states that currency valuation should fix trade deficits. However, the United States has been running a trade deficit since 1975, and the trade imbalance is wider than ever. The dollar is currently at a comparable level to where it was during the 2000s, when job losses accelerated, and has proven unable to fix the United States’ persistent trade deficit. Myth: Superior U.S. productivity growth will restore jobs Fact: U.S. productivity is not increasing faster than that of other industrialized countries, and is growing much slower than China and South Korea. In summary, to realistically assess U.S. manufacturing, it is important to have a clear idea of where we are. The debate on U.S. manufacturing should not be informed by anecdotal evidence, promotional consulting reports, or reports from think tanks with an agenda of keeping bad news from dampening support for further global integration. From an in depth analysis of available data on U.S. manufacturing workforce, value added, and productivity, U.S. manufacturing is shown to be in state of moderate, cyclical growth and not experiencing a renaissance. Poster Comment: More... The Guardian: The US 'manufacturing renaissance' doesn't exist, says new report
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#1. To: hondo68 (#0)
A lot of the returning manufacturing had to do with shipping costs being too expensive to bother making overseas and importing. One of those cases is a children's plastic toy company. If fuel costs go down and stay down expect those American jobs (at least for low cost production) to reverse out again. http://www.abc12.com/story/24074752/made-in-michigan-american-plastic-toys
The past year I was hit by thieves in the research laboratory I'm building. They hit me for thousands of dollars worth of equipment. I plan to do work in physics. I am an instrument level machinist who makes his own apparatus. So far I have done something in physics that has never been done before and am planning classical experiments in Einsteinian mechanics, health permitting. I went to a warehouse that offers an extremely wide range of Chinese tooling to see about recovering my loss. It covers at least two acres. The diversity and quality of goods offered was like dieing and going to heaven for a machinist. The Chinese make stuff that Americans never think about. I bought a one ton crane to unload heavy equipment from my truck. An American one comparable is not produced. I purchased an 8,500 watt electrical generator that puts out 120 and 220 that will will run a bumble bee or TIG welding system --or a small apartmet house. An acquaintance has one at a smaller wattage he has been using for two years to run hand tools. I can't find one comparable made in America. Almost thirty years ago I used to go to an American shop that furnished R&D tooling for the multitude of beltway bandits conducting research in the Washington, D. C. area. I was astounded to find a floor model lathe with digital readout suitable for working metals for $6,800. I know the bearings in it are good because the Japanese trained the Chinese in machining when they invaded manchuria during the second world war and the Chinese have improved on the manufacturing process. A preponderance of roller and ball bearings used in this country are made in China. We are falling behind in motivation, in engineering creativity, in production, and in sales of American domestic products. In many cases we're slapping an American name on Chinese products. Americans are falling asleep at the switch and it costing us millions of jobs.
You forgot one---- 3d and 4d Printing technology will bring manufacturing back to the USA.
I'm skeptical of this printing jive. Government taxes and over-regulation can kill any golden goose.
#2. To: hondo68 (#0)
#3. To: hondo68 (#0)
#4. To: TEA Party Reveler (#3)
3d and 4d Printing technology will bring manufacturing back to the USA.
The D&R terrorists hate us because we're free, to vote second party
"We (government) need to do a lot less, a lot sooner" ~Ron Paul
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