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Why The Manufacturing Jobs Are Not Coming Back
Zero Hedge ^

Posted on 12/21/2012 12:26:52 PM PST by Perdogg

There are a plethora of reasons underpinning the fact that manufacturing jobs are not coming back to the USA. Perhaps the simplest is purely economic. As McKinsey notes in a recent report, manufacturings' role in job creation shifts over time as manufacturing's share of output falls and as companies invest in technologies and process improvements that raise productivity.

A critical finding is that as manufacturing's share of national output falls, so does its share of employment - following the inverted 'U' curve below. Manufacturing job losses in advanced economies have been concentrated in labor-intensive and highly tradable (read globalizable) industries such as apparel and electronics assembly. Thanks to the increased productivity and a 'high' credit-enabled standard-of-living, the US has simply priced itself out of the global manufacturing business (and so is China as its GDP per capita rises). Unless Americans are willing to put the twinkie (and iPad) down, those jobs will continue to bleed overseas (to India based on the chart below) building the ever-more self-fulfilling vicious circle of a nation dependent on state-aid to survive as only the 'unlucky' few remain employed.



TOPICS: Business/Economy; Editorial
KEYWORDS:

1 posted on 12/21/2012 12:26:58 PM PST by Perdogg
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To: Cringing Negativism Network

ping


2 posted on 12/21/2012 12:29:39 PM PST by Perdogg (Mark Levin - It's called the Bill of Rights not Bill of Needs)
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To: Perdogg

The Great American Mismatch. Plenty of Manufacturing jobs, too few people with the necessary skills
http://www.freerepublic.com/focus/f-news/2963039/posts

Manufacturing In The US Is Making A Historic Comeback
http://www.freerepublic.com/focus/f-news/2969059/posts


3 posted on 12/21/2012 12:32:22 PM PST by 2ndDivisionVet (I'll raise $2million for Sarah Palin's presidential run. What'll you do?)
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To: Perdogg

It’s funny, watching the commie/fascist political/regulator class fall from its government income and government-linked incomes. The funniest part will be the spending cuts of teh real austerity measures phase. Then we’ll see who really riots (the socialist elite who only control the pile of debt for now).


4 posted on 12/21/2012 12:40:59 PM PST by familyop (We Baby Boomers are croaking in an avalanche of rotten politics smelled around the planet.)
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To: Perdogg

I bought a pair of New Balance shoes yesterday. The tag said “Made in the USA” and went on to say that they have five factories in the US that provide a third of all NB shoes to North America.


5 posted on 12/21/2012 12:46:42 PM PST by VeniVidiVici (Bathhouse Barry wants YOU to bend over for another four years)
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To: 2ndDivisionVet; Perdogg

Yeah, thanks for the GE link. There’s lots of reasons for thinking this the author at ZeroHedge is dead wrong.

For instance the revolution in the natural gas patch is bringing an extra 30 billion or so annually in industry investment back to the USA to take advantage of the lower natural gas prices.

The issues addressed by the GE article are just part of the picture.

There is a huge secular change in the way manufacturing takes place with smart robots and 3d printing. Which will make it cheaper to manufacture stuff closer to their markets so as to avoid transportation costs, lower man hours in production and enable better communication with customers.


6 posted on 12/21/2012 12:48:54 PM PST by ckilmer
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To: Perdogg

We manufacture twice as much in the US as we did in 1975. We just do it with many fewer workers.

http://mercatus.org/publication/us-manufacturing-output-vs-jobs-1975


7 posted on 12/21/2012 12:56:06 PM PST by riverdawg
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To: riverdawg

Look up “dark factories” on the Internet. There are factories which no one works except to repair the robots. The future will required trained personnel.


8 posted on 12/21/2012 1:03:20 PM PST by Citizen Tom Paine (An old sailor sends)
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To: riverdawg
The answer to the industrial employment question is "mechanization, automation, computerization, robotics and improved work methods'.

These 5 elements give us improved products at lower cost and free human beings from repetitive stress syndrome and industrial accidents!

BTW, the supervisory classes disappear along with the workers they used to supervise.

9 posted on 12/21/2012 1:19:03 PM PST by muawiyah
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To: Perdogg

I’ve been reading quite deeply about India’s economy.

I think it’s unlikely that a significant percentage of manufacturing jobs will “bleed” there, as the author suggests.

India’s infrastructure of roads, clean water, reliable electric power, etc., is currently not up to the job.

The barriers for foreign investment are quite serious.

And, even domestic manufacturers must negotiate a blizzard of paperwork, approvals, and ever changing regulations.

New industrial construction can literally take a decade to complete.

Corruption among low level government employees is ever present.

The currency, the rupee, has been unstable because of trade deficits, Central Bank policies, and ever changing regulations on gold purchases and foreign currency trading.

On the other hand, India’s stock market has performed very well in recent years, and very important nation wide economic reforms have been made over the last 20 years.

Bottom line...

India is still a developing nation, and the time table for that development is not clear.


10 posted on 12/21/2012 1:48:23 PM PST by zeestephen
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To: riverdawg

Re: “We manufacture twice as much in the US as we did in 1975.”

In “Purchase Parity” dollars, America was still the largest manufacturer in the world in 2011.

We beat China by about $20 billion.

And, China employs 8 times more industrial workers than the USA!


11 posted on 12/21/2012 1:58:30 PM PST by zeestephen
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To: Perdogg

They COST too much!

The high livers will ALWAYS outsource their menial stuff to others.

If it were ALL automatated, then it would STILL cost to much, for it’d take humans injected in the pipeline somewhere, and our Americans cannot live on what foreigners can.


12 posted on 12/21/2012 2:48:28 PM PST by Elsie (Heck is where people, who don't believe in Gosh, think they are not going...)
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To: VeniVidiVici

For how much?


13 posted on 12/21/2012 2:49:20 PM PST by Elsie (Heck is where people, who don't believe in Gosh, think they are not going...)
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To: riverdawg
We just do it with many fewer workers.

There ya go!

14 posted on 12/21/2012 2:50:08 PM PST by Elsie (Heck is where people, who don't believe in Gosh, think they are not going...)
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To: muawiyah
These 5 elements give us improved products at lower cost and free human beings from repetitive stress syndrome and industrial accidents!

But what does it 'free' them to DO?

Go back to school to get smarter?

HELLO!!

That's why they were factory workers to begin with!

15 posted on 12/21/2012 2:52:00 PM PST by Elsie (Heck is where people, who don't believe in Gosh, think they are not going...)
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To: muawiyah
BTW, the supervisory classes disappear along with the workers they used to supervise.

OOOoooh!

Unions won't like this!

16 posted on 12/21/2012 2:52:41 PM PST by Elsie (Heck is where people, who don't believe in Gosh, think they are not going...)
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To: zeestephen
India??

It sounds like USA to me in so many places!

17 posted on 12/21/2012 2:54:00 PM PST by Elsie (Heck is where people, who don't believe in Gosh, think they are not going...)
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To: zeestephen
And, China employs 8 times more industrial workers than the USA!

So would we if we quit paying people NOT to work!

Our inner cities SHOULD be the cleanest on Earth; but we have gutless politicians.

18 posted on 12/21/2012 2:55:38 PM PST by Elsie (Heck is where people, who don't believe in Gosh, think they are not going...)
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To: Perdogg
The author just wanted a hot button headline for clickthrough I guess, because “insourcing” has been a buzzword in certain circles for a few years.

There are low wage, economically depressed areas of the United States that can compete with offshore manufacturing, even in labor-intensive products that involve a lot of handwork.

A weak dollar makes such a proposition even more sensible.

Not every industry can be heavily automated because cost of goods requirements do not support such a large capital expenditure in order to introduce automation and robotics. Some industries require subjective assessments such as color, design and overall visual appeal that cannot be replicated by a machine.

Trade policy destroyed domestic manufacturing in the south at least. It had nothing to do with unions as they were never unionized. Labor cost is not that large of a percentage of cost of goods.

The dirty secret is that the decision to offshore was driven not by competitive pressure but a desire to increase profit margin. Retail price certainly didn't decline. Large retailers expect margins in the 60 to 70 percent range in my industry.

We can do it with made in USA product. However, our own margin is higher and we can still offer better margins to large retailers by offshoring, given a dollar that is not weak. A depressed dollar or a dollar crash brings it right back to domestic plants.

19 posted on 12/21/2012 3:13:55 PM PST by RegulatorCountry
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To: Elsie

Believe it or not they were only $29.99 on Amazon.


20 posted on 12/21/2012 3:32:22 PM PST by VeniVidiVici (Bathhouse Barry wants YOU to bend over for another four years)
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To: Elsie

They could spend more time fasting and in prayer. Always a favorite back in Medieval times.


21 posted on 12/21/2012 3:34:20 PM PST by muawiyah
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To: riverdawg
What took 1000 Americans to manufacture in 1950 now takes less than 170.

www.chicagofed.org/digital_assets/others/people/research_resources/strauss_william/05_31_assessing_manufacturing.pdf

22 posted on 12/21/2012 3:45:22 PM PST by cynwoody
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To: Perdogg

Manufacturing jobs will NEVER return to our country for several basic reasons:

A legal system out of control. No tort reform.

The EPA.

OSHA.

Unions and the total support for them from our Congress.

The lack of employees who have the skills needed and the work ethic that will make them productive.

The fact that we have gone from a free country to a new social utopia controlled by Socialists, Communists, and Marxists.

There are many more reasons that manufacturing won’t be back but it all relates to the ability of the business to actually wade through all of the regulations, legal minefields, and fines and taxes to make a profit.


23 posted on 12/21/2012 5:05:10 PM PST by DH (Once the tainted finger of government touches anything the rot begins)
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To: cynwoody

Tell me why the Empire State Building took 11 months from start to absolute finish?

Why would it take 5 to 6 years today to do the same thing?


24 posted on 12/21/2012 5:07:33 PM PST by DH (Once the tainted finger of government touches anything the rot begins)
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To: Perdogg

Consumers buy “things”. Things are manufactured someplace.

It’s silly to turn ones back on those jobs, because that are literally thousands upon thousands of “things” to consume.


25 posted on 12/21/2012 5:41:18 PM PST by xzins (Retired Army Chaplain and Proud of It! True supporters of our troops pray for their victory!)
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To: Perdogg

Consumers buy “things”. Things are manufactured someplace.

It’s silly to turn ones back on those jobs, because there are literally thousands upon thousands of “things” to consume.


26 posted on 12/21/2012 5:41:37 PM PST by xzins (Retired Army Chaplain and Proud of It! True supporters of our troops pray for their victory!)
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To: Perdogg

So read the replies and not one put together all the reasons MFG is about to explode in the USA. MFG used to be labor and energy intensive. The robots now being deployed are removing the people from the MFG line. Unions are screwed, they have made sure they can not have a job. The new bots can thread a needle the first time every time. 3d printing is a major disruptive tech. Now here is the big deal, fracking. USA nat gas cost is about 1/7th of europe. Since energy is and will be even more of an important MFG input the USA’s energy advantage becomes huge.

And all of this has nothing to do with the eminent implosion of china’s economy.


27 posted on 12/21/2012 7:12:52 PM PST by waynesa98
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To: riverdawg

Yes the operation I retired from turns out more auto parts today with 1500 employees than it did in 1982 with 4000.


28 posted on 12/21/2012 7:18:24 PM PST by nascarnation (Baraq's economic policy: trickle up poverty)
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To: DH

On the contrary, mechanization, automation, computerization, robotics and improved work methods have much more influence on the need for workers than the inability of a company’s lawyers to read and understand government rules.


29 posted on 12/21/2012 7:22:25 PM PST by muawiyah
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To: Perdogg

Belated “pong”.


30 posted on 12/21/2012 7:28:34 PM PST by Cringing Negativism Network
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To: DH
Today's tall buildings take longer to build for several reasons ~ least of all government regulation. First off they use less metal, less concrete, less stone, more glass, more lightweight ceramics, more aluminum, etc.

They are designed to closer tolerances to minimize structural members, and to better control stresses.

They are of higher quality, cost less, and will last far longer ~ even though they'll be easier to dismantle if need be.

Planners and Architects know these things.

Oh, and the need for architects is down ~ really down! Even design engineers ~ computerization has really hurt that profession.

Then there's the need for tall buildings ~ 2 stories, tops, and there's plenty of land for that, plus the employees get enormous parking lots so they can drive to work and avoid erratic bus service.

31 posted on 12/21/2012 7:29:32 PM PST by muawiyah
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To: waynesa98; Perdogg
Further mechanization, automation, computerization, robotics and improved work methods will almost guarantee that the United States becomes the world's lowest cost producer of everything it wishes to produce.

We will also have a great deal of difficulty with our unemployment rate ~ and will be looking back at today's functional 20% rate as being a Golden Age of workers!

We could probably become a nation of OWNERS ~ do that as an occupation.

32 posted on 12/21/2012 7:33:09 PM PST by muawiyah
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To: DH
Tell me why the Empire State Building took 11 months from start to absolute finish?

Why would it take 5 to 6 years today to do the same thing?

And the Pentagon took sixteen months (1941-09-11 to 1943-01-15). When do you suppose DHS's new $3.4b HQ, ground broken September 2009 and situated on the grounds of the former Government Hospital for the Insane, will get finished?

It comes down to government regulation gumming up the works. And to unions standing in the way of improvement.

You may have heard, the Chinese build 30-story hotels in 15 days. They work smart. They manufacture the building off-site, and then they assemble the prefabricated modules onsite.

en.wikipedia.org/wiki/Broad_Sustainable_Building
www.broad.com:8089/english/down/en_kj.pdf

33 posted on 12/21/2012 10:03:41 PM PST by cynwoody
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To: VeniVidiVici

Good!

Are they NON-union?


34 posted on 12/22/2012 7:13:12 PM PST by Elsie (Heck is where people, who don't believe in Gosh, think they are not going...)
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To: nascarnation
High volume production cost justifies expensive robots and human programmers.

I wonder what the breakeven point is between robots and humans?

35 posted on 12/22/2012 7:15:57 PM PST by Elsie (Heck is where people, who don't believe in Gosh, think they are not going...)
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To: muawiyah
...computerization has really hurt that profession.

Hurt?


36 posted on 12/22/2012 7:18:03 PM PST by Elsie (Heck is where people, who don't believe in Gosh, think they are not going...)
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To: muawiyah

The major influence on MFG is energy. Assuming the corruptocrats lose and we can exploit our coal natgas & oil were poised to f**k the ME especially the saudis. We’re exporting fracked LNG to the EU @ $16 vs $1.6-2.4 non liquefied us consumption.

So going forward, educating for industry requirements means jettisoning the government education model for something like a communal /home school/ Kahn Academy model hybrid. On an interesting note this will also kill the commie monopoly on higher ed as fewer students attend “Harvard” vs harvard-online.edu for minimal to free. An interesting dynamic going on is the ivy embrace of low cost to free online ed. What the corrupticrats don’t get is the value of attending “harvard” will be proven to be networking, much like the Japanese college system, not the info imparted on the heads full of mush. This intern as, the economy becomes more info/knowledge based, will make, the old boys club less relevant. This will get “skills” not relationship, back to the income equation. Because libs want wealth taxed, they will ensure the less productive capital rich are forced out of the USA thus losing the ability to fund the corrupicrats, and influence policy.


37 posted on 12/23/2012 5:30:26 PM PST by waynesa98
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