Why The Manufacturing Jobs Are Not Coming Back

Zero Hedge ^

[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.

[Perdogg]

ping

[2ndDivisionVet]

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

[familyop]

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).

[VeniVidiVici]

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.

[ckilmer]

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.

[riverdawg]

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

[Citizen Tom Paine]

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.

[muawiyah]

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.

[zeestephen]

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.

[zeestephen]

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!

[Elsie]

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.

[Elsie]

For how much?

[Elsie]

We just do it with many fewer workers.

There ya go!

[Elsie]

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!

[Elsie]

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

OOOoooh!

Unions won't like this!

[Elsie]

India??

It sounds like USA to me in so many places!

[Elsie]

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.

[RegulatorCountry]

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.

[VeniVidiVici]

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