Thought this was interesting
Dear Don,
The average American rarely thinks about manufacturing, and if he or she thinks of it at all, he or she thinks that American manufacturing is dead or dying. They may think that we have transformed into the postindustrial society predicted by John Naisbitt in Megatrends, in which the Untied States was supposed to transform from dirty heavy industry into the clean bright world of services and high technology.
Many may wonder why we should expend any effort to save American manufacturing. What difference would it make to the United States if we lost virtually all of our domestic manufacturing? Is it too late to save American manufacturing? Can American manufacturing be saved or even revived into a new period of growth?
The truth is the so-called postindustrial society was a dream that failed to generate any new net jobs either in manufacturing or services. We've learned that it's even easier to outsource services, such as telemarketing and customer service, computer programming, and software design to India and other offshore countries than it is to outsource manufacturing.
Americans may be surprised to learn that the United States is still the world's number one manufacturer, accounting for 17 % of global manufacturing output, but down from 25 % in 2007 before the Great Recession.
For over sixty years, American manufacturing has dominated the globe. It was responsible for turning the tide for the Allies in World War II and defeating Nazi Germany and Japan. It helped rebuild Germany and Japan after the war and enabled the United States to win the Cold War against the Soviet empire, while meeting the material needs of the American people.
High-paying manufacturing jobs helped spur a robust and growing economy that had little dependence on foreign nations for manufactured goods. American families and communities depended on a strong manufacturing base to improve our quality of life.
Manufacturing is the foundation of the American economy and was responsible for the rise of the middle class in the 20th Century, in which the average daily wage rose from $2.50 per day to $96 per day.
American companies like General Motors, Ford, Boeing, IBM, and Levi Strauss became household names. American manufacturing became synonymous with quality and ingenuity. Now General Motors is recovering from bankruptcy thanks to American taxpayers through a government bailout. IBM sold their computer line to Chinese company Lenovo, and Levi jeans are made in China just like every other brand of jeans.
The U. S. manufacturing sector accounted for $1.7 trillion or 11.2% of the country's Gross Domestic Product (GDP) in 2010, up from $1.58 trillion in 2009. If this sector were a country, it would be the eighth largest economy in the world. Manufacturing output of the nation's factories in the United States today is at the highest level in history and continues to rise.
The five largest manufacturing industries today are: chemicals, food products, computers and electronic products, transportation (automobiles and aircraft), and fabricated metal products. Automobiles and auto parts dropped from third to fourth between 2002 and 2007, and fabricated metal products slipped from fourth to fifth in the same time period.
Manufacturing is the engine that drives American prosperity. It is central to our economic security and our national security. Federal Reserve Chair Ben Bernanke stated on February 28, 2007, "I would say that our economy needs machines and new factories and new buildings and so forth in order for us to have a strong and growing economy."
However, Franklin Vargo, vice president for international economic affairs of the National Association of Manufacturers, said, "If manufacturing production declines in the United States, at some point we will go below critical mass and then the center of innovation will shift outside the country and that will really begin a decline in our living standards." 3
In the 1970's, over 26 % of American workers were in manufacturing, but this number has decreased every year since 1990 until it dropped down to less than 11 % by the end of 2009.
In 1965, American manufacturing accounted for about 28 % of the U. S. Gross Domestic Product, but it dropped to only 9.5 % in 2009. According to Forbes magazine, we've lost 50,000 manufacturing jobs per month since 2001, adding up to over 5.5 million jobs by the end of 2010.
Manufacturing ensures that the U. S. has a strong industry base to support its national security objectives. American manufacturers supply the military with the essentials needed to defend our country, including tanks, fighter jets, submarines, and other high-tech equipment.
In a keynote address "Lessons for a Rapidly Changing World" at the CA World 2003, Dr. Henry Kissinger, former U. S. Secretary of State, said "The question really is whether America can remain a great power or a dominant power if it becomes primarily a service economy, and I doubt that. I think that a country has to have a major industrial base in order to play a significant role in the world. "
The reality is that the supply chain of goods upon which our military and defense industry rely is weakening. The U. S. printed circuit board industry has shrunk by 74 % since 2000, and the communication equipment industry has lost 47 % of its jobs. The U. S. machine tool industry consumption fell by 78 % in 2008 and another 60 % in 2009. There is only one steel plant left that can product the high quality steel needed by the U. S. military. Even more serious is that China is now the #1 supplier of components for defense systems.
The five states with the largest manufacturing workforces are: California, Texas, Ohio, Illinois, and Pennsylvania. California's manufacturing workforce of more than 1.5 million is almost the size of the Texas and Illinois manufacturing workforce combined.
Jobs paying $20 per hour that have historically enabled American wage earners to support a middle-class standard of living are leaving the U. S. Only 16 % of today's workers earn the $20 per hour baseline wage, down 60 % since 1979.
Manufacturing wages and benefits are approximately 25 - 50% higher than non-manufacturing jobs. Manufacturing compensation averages more than $65,000, compared to an average of $53,000 in the remainder of the economy.
Another important point is that the decline in the higher manufacturing jobs produces less tax revenue making the Federal budget deficit worse. This becomes serious when you realize that nearly half of federal revenue comes from income taxes on individuals. Decent-paying, entry-level jobs offering a future are replaced by menial, dead-end jobs.
There is a multiplier effect of manufacturing jobs that reflects linkages that run deep in the economy. Manufacturing jobs create three to four supporting jobs, while service jobs create only one to two other jobs. However, steel product manufacturing creates 10.3 indirect jobs, and automotive manufacturing creates 8.6 indirect jobs.
Automation has helped keep American manufacturers not only competitive but the most productive in the world. Manufacturing has long led U. S. industries in productivity growth. Gains in productivity raise a country's standard of living. In the past 20 years, productivity -output per hour -) has more than doubled - actually 2.5 times - that of other economic sectors.
American manufacturers are responsible for more than two-thirds of all private sector R&D, which ultimately benefits other manufacturing and non-manufacturing activities. More than 90 % of new patents derive from the manufacturing sector and the closely integrated engineering and technology-intensive services.
America's manufacturing innovation process leads to investments in equipment and people, to productivity gains, the spreading of beneficial technology to other sectors, and to new and improved products and processes. It is an intricate process that begins with R&D for new goods and improvements in existing products. As products are improved in speed, accuracy, ease of use, and quality, new manufacturing processes are utilized to increase productivity. Education and training of employees is required to reap the benefits of such improvements in manufacturing processes. Substantial R&D is required to keep the ball rolling to ensure more successes than failures. Co-location of R&D and manufacturing is critical because you have to know how to make a product to be able to know how to make it better for the next generation of the product.
Inside the modern U. S. manufacturing facilities, you will see the most productive, highly skilled labor force in the world applying the latest in information, innovation, and technology. Contrary to popular opinion, the industrial age is not over. We are on the edge of incredible advances in manufacturing - nanotechnology, lasers, biotechnology, biomimicry, rapid prototyping, and electro forming.
In summary, manufacturing is the foundation of the U. S. national economy and the foundation of the country's large middle class. Losing the critical mass of the manufacturing base would result in larger state and federal budget deficits and a decline in U. S. living standards. This, in turn, would result in the loss of a large portion of our middle class, which depends on manufacturing jobs. America's national defense would be in danger, and it would be difficult, if not impossible to maintain the country's position as the world's super power.
The next article will look at what trends are occurring now and how various choices that we could make as a nation, company, and/or individual will affect the future of American manufacturing.
Thank you for taking the time to read this article. I know you are probably as busy as I am. If you found it informative, please, forward it to people you know.
Sincerely,
Michele Nash-Hoff
President
ElectroFab Sales
Author, Can American Manufacturing be Saved? Why we should and how we can
Available at www.savingusmanufacturing.com or www.amazon.com
Dear Don,
The average American rarely thinks about manufacturing, and if he or she thinks of it at all, he or she thinks that American manufacturing is dead or dying. They may think that we have transformed into the postindustrial society predicted by John Naisbitt in Megatrends, in which the Untied States was supposed to transform from dirty heavy industry into the clean bright world of services and high technology.
Many may wonder why we should expend any effort to save American manufacturing. What difference would it make to the United States if we lost virtually all of our domestic manufacturing? Is it too late to save American manufacturing? Can American manufacturing be saved or even revived into a new period of growth?
The truth is the so-called postindustrial society was a dream that failed to generate any new net jobs either in manufacturing or services. We've learned that it's even easier to outsource services, such as telemarketing and customer service, computer programming, and software design to India and other offshore countries than it is to outsource manufacturing.
Americans may be surprised to learn that the United States is still the world's number one manufacturer, accounting for 17 % of global manufacturing output, but down from 25 % in 2007 before the Great Recession.
For over sixty years, American manufacturing has dominated the globe. It was responsible for turning the tide for the Allies in World War II and defeating Nazi Germany and Japan. It helped rebuild Germany and Japan after the war and enabled the United States to win the Cold War against the Soviet empire, while meeting the material needs of the American people.
High-paying manufacturing jobs helped spur a robust and growing economy that had little dependence on foreign nations for manufactured goods. American families and communities depended on a strong manufacturing base to improve our quality of life.
Manufacturing is the foundation of the American economy and was responsible for the rise of the middle class in the 20th Century, in which the average daily wage rose from $2.50 per day to $96 per day.
American companies like General Motors, Ford, Boeing, IBM, and Levi Strauss became household names. American manufacturing became synonymous with quality and ingenuity. Now General Motors is recovering from bankruptcy thanks to American taxpayers through a government bailout. IBM sold their computer line to Chinese company Lenovo, and Levi jeans are made in China just like every other brand of jeans.
The U. S. manufacturing sector accounted for $1.7 trillion or 11.2% of the country's Gross Domestic Product (GDP) in 2010, up from $1.58 trillion in 2009. If this sector were a country, it would be the eighth largest economy in the world. Manufacturing output of the nation's factories in the United States today is at the highest level in history and continues to rise.
The five largest manufacturing industries today are: chemicals, food products, computers and electronic products, transportation (automobiles and aircraft), and fabricated metal products. Automobiles and auto parts dropped from third to fourth between 2002 and 2007, and fabricated metal products slipped from fourth to fifth in the same time period.
Manufacturing is the engine that drives American prosperity. It is central to our economic security and our national security. Federal Reserve Chair Ben Bernanke stated on February 28, 2007, "I would say that our economy needs machines and new factories and new buildings and so forth in order for us to have a strong and growing economy."
However, Franklin Vargo, vice president for international economic affairs of the National Association of Manufacturers, said, "If manufacturing production declines in the United States, at some point we will go below critical mass and then the center of innovation will shift outside the country and that will really begin a decline in our living standards." 3
In the 1970's, over 26 % of American workers were in manufacturing, but this number has decreased every year since 1990 until it dropped down to less than 11 % by the end of 2009.
In 1965, American manufacturing accounted for about 28 % of the U. S. Gross Domestic Product, but it dropped to only 9.5 % in 2009. According to Forbes magazine, we've lost 50,000 manufacturing jobs per month since 2001, adding up to over 5.5 million jobs by the end of 2010.
Manufacturing ensures that the U. S. has a strong industry base to support its national security objectives. American manufacturers supply the military with the essentials needed to defend our country, including tanks, fighter jets, submarines, and other high-tech equipment.
In a keynote address "Lessons for a Rapidly Changing World" at the CA World 2003, Dr. Henry Kissinger, former U. S. Secretary of State, said "The question really is whether America can remain a great power or a dominant power if it becomes primarily a service economy, and I doubt that. I think that a country has to have a major industrial base in order to play a significant role in the world. "
The reality is that the supply chain of goods upon which our military and defense industry rely is weakening. The U. S. printed circuit board industry has shrunk by 74 % since 2000, and the communication equipment industry has lost 47 % of its jobs. The U. S. machine tool industry consumption fell by 78 % in 2008 and another 60 % in 2009. There is only one steel plant left that can product the high quality steel needed by the U. S. military. Even more serious is that China is now the #1 supplier of components for defense systems.
The five states with the largest manufacturing workforces are: California, Texas, Ohio, Illinois, and Pennsylvania. California's manufacturing workforce of more than 1.5 million is almost the size of the Texas and Illinois manufacturing workforce combined.
Jobs paying $20 per hour that have historically enabled American wage earners to support a middle-class standard of living are leaving the U. S. Only 16 % of today's workers earn the $20 per hour baseline wage, down 60 % since 1979.
Manufacturing wages and benefits are approximately 25 - 50% higher than non-manufacturing jobs. Manufacturing compensation averages more than $65,000, compared to an average of $53,000 in the remainder of the economy.
Another important point is that the decline in the higher manufacturing jobs produces less tax revenue making the Federal budget deficit worse. This becomes serious when you realize that nearly half of federal revenue comes from income taxes on individuals. Decent-paying, entry-level jobs offering a future are replaced by menial, dead-end jobs.
There is a multiplier effect of manufacturing jobs that reflects linkages that run deep in the economy. Manufacturing jobs create three to four supporting jobs, while service jobs create only one to two other jobs. However, steel product manufacturing creates 10.3 indirect jobs, and automotive manufacturing creates 8.6 indirect jobs.
Automation has helped keep American manufacturers not only competitive but the most productive in the world. Manufacturing has long led U. S. industries in productivity growth. Gains in productivity raise a country's standard of living. In the past 20 years, productivity -output per hour -) has more than doubled - actually 2.5 times - that of other economic sectors.
American manufacturers are responsible for more than two-thirds of all private sector R&D, which ultimately benefits other manufacturing and non-manufacturing activities. More than 90 % of new patents derive from the manufacturing sector and the closely integrated engineering and technology-intensive services.
America's manufacturing innovation process leads to investments in equipment and people, to productivity gains, the spreading of beneficial technology to other sectors, and to new and improved products and processes. It is an intricate process that begins with R&D for new goods and improvements in existing products. As products are improved in speed, accuracy, ease of use, and quality, new manufacturing processes are utilized to increase productivity. Education and training of employees is required to reap the benefits of such improvements in manufacturing processes. Substantial R&D is required to keep the ball rolling to ensure more successes than failures. Co-location of R&D and manufacturing is critical because you have to know how to make a product to be able to know how to make it better for the next generation of the product.
Inside the modern U. S. manufacturing facilities, you will see the most productive, highly skilled labor force in the world applying the latest in information, innovation, and technology. Contrary to popular opinion, the industrial age is not over. We are on the edge of incredible advances in manufacturing - nanotechnology, lasers, biotechnology, biomimicry, rapid prototyping, and electro forming.
In summary, manufacturing is the foundation of the U. S. national economy and the foundation of the country's large middle class. Losing the critical mass of the manufacturing base would result in larger state and federal budget deficits and a decline in U. S. living standards. This, in turn, would result in the loss of a large portion of our middle class, which depends on manufacturing jobs. America's national defense would be in danger, and it would be difficult, if not impossible to maintain the country's position as the world's super power.
The next article will look at what trends are occurring now and how various choices that we could make as a nation, company, and/or individual will affect the future of American manufacturing.
Thank you for taking the time to read this article. I know you are probably as busy as I am. If you found it informative, please, forward it to people you know.
Sincerely,
Michele Nash-Hoff
President
ElectroFab Sales
Author, Can American Manufacturing be Saved? Why we should and how we can
Available at www.savingusmanufacturing.com or www.amazon.com
