Posted on 02/03/2006 9:44:17 AM PST by Willie Green
For education and discussion only. Not for commercial use.
Downward trends in U.S. manufacturing are threatening the nation's long-term economic growth and living standards, according to a new report from two industrial trade groups.
Leadership and innovation also are at risk as fewer young people choose manufacturing for a career, says the report from the National Association of Manufacturers and the Council of Manufacturing Associations, based in Washington, D.C.
"Our nation cannot afford to lose its manufacturing innovation edge and the wealth it generates," said Jerry Jasinowski, president of the Manufacturing Institute, the research arm of the NAM.
Industrial output has not rebounded from the last recession as it did in earlier economic recoveries, according to the report released Wednesday. The 15% growth, for example, is only half the pace averaged in recoveries of the past 50 years.
Plant capacity remains underutilized, slowing investments in new plants and equipment. Capacity has grown at less than 1% annually, compared with 5% in the 1990s.
The U.S. share of global trade in manufactured products has shrunk, from 13% in the 1990s to 10% in 2004. The U.S. now runs a trade deficit in advanced technology products, according to the report.
America's long-standing leadership in research and development has been challenged. While the U.S. continues to spend more than any other country on research and development, the growth in that area has averaged only about 1% per year since 2000.
If product innovation continues to move offshore, a decline in U.S. economic growth is certain, said Joel Popkin, the report's author and an economist.
Manufacturing work can pay well
Wisconsin lost more than 10% of its manufacturing employment between 2001 and 2004, according to the report. But for the factory workers who kept their jobs, manufacturing continues to be one of the state's better-paying industries.
"The middle class was built on manufacturing jobs," said Richard Wilkey, owner of Fisher-Barton Inc., a Watertown company whose products include lawnmower blades.
Wilkey has testified before the U.S. House of Representatives on manufacturing issues. His company lost business to China, giving him a view of international trade from the front lines.
Wilkey agrees with the report's finding that manufacturing and innovation are intertwined.
"You need to constantly innovate and constantly change your materials and equipment in order to stay up with the competition," he said. "And it's not rocket science to understand that, without manufacturing, we are going to lose innovation. It comes from making stuff. When you sit at a machine and run it night and day, you start thinking of ways to do things better."
The results of manufacturing's research and development adds to labor productivity, according to the report. But as factories have become more productive, they need fewer employees.
At 14.3 million workers, employment in U.S. manufacturing is at its lowest point since 1950. A dismal job outlook is one reason why manufacturers are having difficulties recruiting skilled workers, according to the report.
Service jobs to the rescue?
Traditionally, manufacturing has led the way in economic expansions, providing momentum to other business sectors. But that hasn't happened as much in the latest expansion, the study notes.
Growth has been strongest in the computer, semiconductor and communications equipment sectors. If those industries are taken out of the picture, then traditional manufacturing production has increased only about 9% since the trough of the recession.
Much of the recovery has been based on service industries.
There are plenty of people who think the economy can survive on selling services, said Don Nichols, an economist and director of the La Follette School of Public Affairs at University of Wisconsin- Madison.
Just because the U.S. is losing factories, doesn't mean the nation will lose innovation, Nichols said.
But even service companies struggle when manufacturers move offshore. It's a constant fight to retain the business, said Bob Menard, branch manager of Motion Industries, a Milwaukee industrial equipment supplier that's been here more than 70 years.
Only about 10% of factories that move offshore keep their supply- chain ties here, Menard said.
A large percentage of today's manufactured products will be obsolete within a few years, the report notes, so that product innovation is essential in order to maintain status quo. The report recommends the adoption of government policies that encourage things such as technology development and a level international playing field.
Alarmed over the soaring trade imbalance with China, the National Association of Manufacturers has told the U.S. government it can't wait for the Chinese to crack down on unfair trade practices, such as undervalued currency and theft of intellectual property rights.
The service sector alone won't support the economy, said Gary Huss, president of Hudapack Metal Treating Companies, based in Elkhorn with a plant in Franklin.
"I find it difficult to believe that we can just shuffle paper back and forth and make everybody have a good wage," he said. "We have got to get back to manufacturing that helped make the United States a world leader."
Gee Willie. Why is the average hourly wage up $2.50 to 17.53? Why is the Average Serive wage $2.00 an hour HIGHER then Manufacturing average wage? Could it be all the Economic Isolationist nonsense pushed by the Buchannanites since the 1980s is just pure BS????
Better get educated.
Manufacturing is like soooo 20th century.
Because WalMart is generous employer?
25,000 apply for 325 Walmart jobs...
</sarcasm>
Make the entire US a "right to work" state, some of those jobs might come back, or less would leave.
Make the entire US a "right to work" state, some of those jobs might come back, or less would leave
None of those jobs would come back and the same number would leave. The difference in wages between the U.S. and China/India is simply too great.
True. Can't manufacture robots if you're stupid.
People who write these articles are promoting the idea that "manufacturing" is when untrained people screw thingies together on an assembly line. That's no longer the case. I'm in "manufacturing", because I write embedded software that controls vehicles better than humans can. We then manufacture those boxes and send them around the world.
The true motivation for these articles is actually union organizing, not any real worry that the economy is in trouble. The last 30 years has demonstrated that we can lose the "blue collar" workers, and become even more rich.
"None of those jobs would come back and the same number would leave. The difference in wages between the U.S. and China/India is simply too great."
So..Your idea is to do nothing?, or is it to cut wages to the China level?
Unless you're an illegal alien.
I have no solution that makes any sense. But China hasn't even gotten warmed up yet. $49 DVD players are a drop in the bucket. They're looking at introducing a car for under $10,000 in the U.S. The only thing that seems a likely to halt it is if China quits lending us money to buy their stuff.
. . .
Industrial output has not rebounded from the last recession as it did in earlier economic recoveries, according to the report released Wednesday. The 15% growth, for example, is only half the pace averaged in recoveries of the past 50 years.
Here's my dumb question of the day. How does a 15% growth in industrial output translate into a "downward trend"??
1) Average is a whole lot telling than median
2) The effects of losing an industiral base can take some time to catch up (see spain)
Robots (manufactured in the US) I could deal with. Its benefits for companies to offshore jobs that gets me...
And why would the robots be manufactured here?
Or if we impose tariffs..
They are fighting to have US poultry slaughtered over here and sent to china to be packaged and then sent back! if for some reason that makes sense why would any kind of non biological process make any less?
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