We make more electricity since 1920. We drill for more oil? Whoda thunk?
So, if you put a couple things that wildly up in a graph with something that has trended down what do you get? This.
Posted on 07/28/2016 5:37:52 AM PDT by expat_panama
Did you hear that U.S. manufacturing just had another big month? That output has risen about 20 percent in the past six years? That industrial capacity is actually expanding?
Probably not. At most times, and especially in election season, the talk surrounding U.S. manufacturing is one of relentless decline: a loss of jobs, the shutting down of factories, increased competition from foreign countries, a global war in which the U.S. seems to be on the losing end.
And of course, it’s true. At some level, manufacturing has declined dramatically — as a direct employer of American workers. According to the Bureau of Labor Statistics, 12.3 million Americans had payroll jobs in manufacturing in June. That’s down about 30,000 from June 2015, off nearly 1.9 million from June 2006, and down 4.9 million from 1996. In the past 20 years, in other words, America has shed 28 percent of its manufacturing jobs. In good times and bad, in recession and expansion, the manufacturing sector employs fewer people. It’s impossible to dismiss or talk around this trend.
But the decline of employment isn’t the whole story. Not by a long shot. In fact, in many significant ways, U.S. manufacturing is thriving. The point of manufacturing is to make stuff that people and companies will buy and use, not to employ people to make stuff. And by the former measure, U.S. manufacturing is actually doing quite well. (Note: Rex Nutting at Marketwatch made this point back in March.)
Take a look at this long-term chart of industrial production, courtesy of the U.S. Federal Reserve. Over the past 100 years, the index, which measures the value of the output of the manufacturing, mining, and utilities industries, has risen steadily. But the rise has generally continued in the last several decades — decades in which the narrative was that manufacturing has been in apparent decline.
What accounts for this disconnect between the rising dollar value of manufactured goods and falling employment? A few things. First, the production of less-expensive goods, like T-shirts, toys, and the like, has long since gone offshore. As a result, manufacturing in the U.S. is disproportionately a high-end activity: heavy machinery, tools, cars. I visited a General Electric plant in South Carolina a few years ago that made gas turbines for power plants — at US$90 million apiece. Boeing makes large airplanes in this country, which can cost about $200 million each. America may not make as many objects as it did 30 years ago, but the average value of an object made in the U.S. has risen sharply.
Second, there’s productivity. Manufacturing, from the outset, has been a pioneer in labor-saving technology. A century ago, Frederick Winslow Taylor walked around factories with stopwatches to time workers and suggest improvements. Henry Ford spend untold hours devising a hyper-efficient assembly line. Then came total quality management, Six Sigma, lean manufacturing, and all the other trends and practices. The overriding imperative driving these efforts has always been to figure out how to produce more (and faster) with fewer resources — raw materials, energy, effort, and, yes, labor.
In an often-overlooked phenomenon, quarter after quarter, year after year, companies have invested in and applied technology to the manufacturing process. Recent advances in computer technology have transformed efficiency efforts from an analog undertaking to a digital one.
The result is that factories today can actually be slightly eerie places, especially to someone accustomed to working in a densely populated newsroom or trading floor. Over the past several years, I’ve visited a range of factories: a steel fabrication plant in New York, a window manufacturer in Florida, car factories in Ohio, a frozen-French fry plant in North Dakota, a jet-engine plant in North Carolina, a producer of plastic coffee pods in Virginia, a jar manufacturer in Indiana, and a fishing-line producer in South Carolina. The common denominator in each: There just aren’t that many people in them. There are lots of whirring gizmos, belts that move goods through the stages of production, and machines that package and stack the finished products on pallets. But the people on the floor are mostly involved in tending to raw materials, quality control, maintenance, and oversight.
There’s a third point that is overlooked when we focus only on direct factory employment as a measure of manufacturing’s strength. Manufacturing has, to a large degree, unintegrated. That is to say, the activity you see on the factory floor is the culmination of all sorts of other activity that happened elsewhere. A rule of thumb in the gas-turbine or jet-engine business, for example, holds that for every job in the factory, there are eight in the supply chain.
And those aren’t just jobs at the manufactures of the components that are assembled in the factory. In fact, there are a lot of service jobs involved with manufacturing, many of which are done by people who don’t work directly at manufacturers. All the materials have to be moved — on trucks, trains, and planes. Marketing and sales professionals help goods find buyers. Factories wouldn’t be able to run without security, maintenance, landscaping, and food service.
Put another way, manufacturing may not simply be more robust than is commonly understood; it may support more employment than many people think.
Of course, it’s natural to discuss direct employment when determining the state of manufacturing in a given country. There’s an important human story behind every job that has been lost in manufacturing over the years. But when we’re trying to grasp the implications of complex economic phenomena and technological change, one data point doesn’t always tell the entire story.
Robotics will be good for some time. Automation tech, too. But, manufacturing engineering, automation technology, electrical engineering, mechanical engineering, etc. are not sexy college majors like law, medicine, finance or biotech. And as posted above, there’s a vast need for voc-ed provided skills. A blended high school + technical associates degree path would help. And a resurrection of apprenticships.
Statistics are still in the same category as “lies” and “damned lies”, are they not. Especially when the particular source is also telling us we have a mere 5 percent unemployment.
This is another weak attempt to try to convince people that US Manufacturing is alive and well. Just because output has grown over the past 30 years doesn’t mean anything, the question is, how does it compare with other data.
For instance, according to the chart in the article, since 1980, manufacturing output has grown about 95%. Sounds great right? The problem is, over that same period, consumption in this country has grown by about 250%.
This means all of that extra consumption is being supplied by stuff that’s made OUTSIDE the United States. There’s a big vacuum sound sucking our wealth away.
Excellent article.
I spent $2 million on new equipment last year and another $1 million this year. Doing so let me not replace six employees and more than doubled output for the products involved.
Why you ask? Keeps the company from having to deal with Ocare requirements and other things like OSHA.
Read the article. It has quite a good explanation for that issue.
Because those are low margin, labor intensive products which are more cheaply made overseas in places like Asia. And that is why, regardless of what Trump says, you're not going to see that kind of manufacturing returning to the U.S.
LOL. Excellent book. Great guy.
Developed countries tend to have around 25% of their GDP in manufacturing but only 20% of their employees in manufacturing.
The number of employees per unit of manufacturing has been dropping for years.
One take:
http://www.bloomberg.com/news/articles/2014-04-28/why-factory-jobs-are-shrinking-everywhere
So if you don't trust government statistics and you have none of your own to provide in rebuttal then what are you going on for your decision? Gut feel?
Own company that sells to the industry. Most companies do not have enough confidence to buy new equipment. New equipment sales off 18%. Automotive ok. Other sectors flat. Mexico up big. Defense spending is primarily the big boondoggles (F35 etc) pay to play defense elites. Implementing the Lesbian, Gay, Bisexual, Transgender, Queer or Questioning, and Asexual or Ally is the priority under this military hating administration. If Crooked Hitlary is elected we have a plan in place to lay off everyone and close the business. Not going to work 7 days a week to support the takers and have to deal with the government regulations and BS.
Production and output doesn’t necessarily translate to jobs. Modern plants rely on automation. The problem is theses plants are moving outside our borders.
I’ve seen the Samsung plant in Mexico. It’s the size of a medium city. It employs tens of thousands of people. They plan on doubling in size. They are in the process of building FOUR gas turbine generators to power it.
The town that it is located in has 3 Korean language TV stations, none in English.
Where do you think the appliances made at this factory are sold? Wouldn’t it have been nice if Samsung had located this factory in Texas?
Shipping and fuel use statistics show a year over year decline—how can more be produced and not require delivery?
I agree. All the engineers I know are employed.
We make more electricity since 1920. We drill for more oil? Whoda thunk?
So, if you put a couple things that wildly up in a graph with something that has trended down what do you get? This.
So all the product shipped form China that used to be Made in the USA is a mirage? Who knew? The 55,000 factories closed since 2001 that is just a lie?
My bet is that it will be doing a lot of manufacturing while the place that sells you the robots will be doing a lot of employing.
U.S. Cutting Tool YTD Consumption down 9.1% in May
May U.S. cutting tool consumption totaled $165.68 million according to the U.S. Cutting Tool Institute (USCTI) and AMT – The Association For Manufacturing Technology. This total, as reported by companies participating in the Cutting Tool Market Report (CTMR) collaboration, was down 4.6% from April’s $173.64 million and down 4.1% when compared with the total of $172.81million reported for May 2015. With a year-to-date total of $855.45 million, 2016 was down 9.1% when compared with 2015.
These numbers and all data in this report are based on the totals reported by the companies participating in the CTMR program. The totals here represent the majority of the U.S. market for cutting tools.
Brad Lawton, chairman of AMT’s Cutting Tool Product Group said “The cutting tool industry continues to show negative results for month to month and year to date sales performance, which reflects the anxiety in the nation’s manufacturing industry. This condition will more than likely continue through the end of 2016.”
“While cutting tool orders contracted for the 13th month in a row, the rate of contraction has slowed down in recent months. In fact, the annual rate of change appears to have peaked and should contract at a slower rate in upcoming months.” said Steve Kline, Director of Market Intelligence at Gardner Business Media. “The trend of decelerating contraction is likely to continue as interest rates remain low and durable goods new orders have grown in recent months.”
The Cutting Tool Market Report is jointly compiled by AMT and USCTI, two trade associations representing the development, production and distribution of cutting tool technology and products. It provides a monthly statement on U.S. manufacturers’ consumption of the primary consumable in the manufacturing process – the cutting tool. Analysis of cutting tool consumption is a leading indicator of both upturns and downturns in U.S. manufacturing activity, as it is a true measure of actual production levels.
Historical data for the Cutting Tool Market Report is available dating back to January 2012. This collaboration of AMT and USCTI is the first step in the two associations working together to promote and support U.S.-based manufacturers of cutting tool technology.
"Big ticket items" sound like jets, cars, and trucks. Americans use those.
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