Does American Manufacturing Really Matter?

The "Post-Industrial"Theory

It has recently become fashionable to talk about the U.S. as a "post-industrial" economy. The essential argument is that as national economies mature they move from making things (i.e. industrial economy) to designing things and providing the services necessary to support the making of things (i.e. post-industrial economy). Any pain felt in the older sectors of the economy, so the theory holds, is only temporary, as capital moves to newer economic sectors, and older workers are retrained and likewise moved into growth sectors. Under this theory, the economy's wealth never disappears, it just changes from one form into another (e.g. like energy).

Not All Economic Sectors Are Created Equal

Historical trends show that manufacturing is the economic engine. Since the advent of the first industrial revolution in the late 18th century, begun in England and driven largely by coal, the wealth of a nation has been determined by the vigor and competitiveness of its manufacturing sector. And since the time of the second industrial revolution, in the mid-19th century, driven largely by steam and other emerging energy technologies, the U.S. has been the leader in manufacturing technologies and production. History has clearly shown that nations which export manufactured products tend to generate higher rates of growth in GDP which supports higher individual incomes and produces the tax revenue necessary to produce a better quality of life for a nation's citizens.

Trends of American Manufacturing Under Fire

As a manufacturing engineer, I have come to discover that much of America's manufacturing sector has moved abroad to foreign markets. But I am not just talking about the making of products. I'm talking about the ability* to make products. Industrial equipment needed for manufacturing production, such as CNC Laser Cutters (used to process sheet metal) are now made in other countries and imported. What happens when America's economy depends on other nations for its manufacturing infrastructure? For starters, foreigners begin directing warnings to America's president, protesting Protectionist activities. They do not want America to "Buy American." They want America to buy European or Chinese products. That's because they know that the engine of an economy is manufacturing. And they want America's manufacturing sector to remain in their country rather than here.

Wealth Producing and Wealth Consuming Sectors

A national economy begins to decline as its wealth-producing sector shrinks. Wealth-producing sectors of the economy include manufacturing, agriculture, and mining. Manufacturing is traditionally defined as the process of transforming raw materials into new products by the application of physical, chemical, or mechanical processes, and includes many separate industries: aerospace, textile, computers, automobiles, pharmaceuticals, steel, printing, etc. When it comes to investing in the American economy, a distinction must be made between wealth-producing and wealth-consuming sectors of the economy, such as government, banking (yes, banking), information services, hospitality, education, insurance, health care, and consumer services. These sectors maintain and use physical wealth, but they do not create it. They depend on manufacturing and other wealth-producing sectors of the economy for their growth.[i]

Conclusion

American manufacturing is historically responsible for the relatively higher standard of living enjoyed by Americans compared to other countries, and a thriving manufacturing sector is necessary to allow that trend to continue. Manufacturing drives the engine of the US economy: this sector is responsible for 90% of new patent applications, annually. Manufacturing drives growth and innovation, investment in technology, new products and processes, and provides Americans with some of the best consumer products ever created.

If the manufacturing sector continues to move overseas, so also will the wealth previously enjoyed by Americans.

[i]. See David Friedman, "No Light at the End of the Tunnel, "Los Angeles Times, June 15, 2002; reprinted on New America Foundation web site.

Joel Barrett is a Manager and AutoCAD Engineer for a metal fabricating company in Buchanan, MI.
Berrien Metal Products, Inc.
Phone: 800-978-5300
Fax: 269-695-5300
Email: joel@metalfabrications.com
Website: http://www.metalfabrications.com

Green Manufacturing Brings Health Benefits

Poverty and environmental pollutants have a lot in common. Both contribute to adverse living conditions and ill health. The cure may be a prescription for green manufacturing jobs. There are no factories producing complete wind and solar systems in the USA. Major components for solar panels and wind turbines are assembled domestically but are manufactured oversees. In the wake of a job shortage and miles of rusting factories it seems logical for a national initiative to revive the domestic production of goods.

This requires a massive retooling project combined with powerful incentives for industry to come home to Uncle Sam. Our dear uncle seems to be on an oversees cruise at the moment. Ipods are produced in Malaysia, iPhones in China, many LCD TVs from Korea, and the list continues. The former technologies were pioneered in the USA and are manufactured overseas for domestic distribution. We've even lost our last Levi's jeans factory. Apple computer and Levi's jeans are about as apple pie as it gets! Yet, these companies cannot compete if they utilize domestic production. So, with a burgeoning industry of solar and wind energy production - why not push to have production at home?

Tax breaks and cheap loans are step number one. Current federal incentives often require mountains of bureaucratic paperwork for small and medium sized businesses to obtain loans. This is an important area that needs to be streamlined.

Tax breaks are not enough. The government needs to work with industry to immediately build enterprise zones filled with factories to produce solar panels and wind turbine components. This, coupled with a program to put a solar panel on every sunny roof and wind farms in every state, creates the demand for these products. Current subsidies bring the cost of installing solar in the home down 50% in many areas. Nonetheless, most people will have a hard time coming up with the net cost of approximately $15,000 for a solar system. The federal government and state governments need to bring this price into the $5,000 range to make solar a realistic investment for home owners.

This is an investment and not an entitlement. Rebuilding the domestic manufacturing base creates wealth. If we plant a seed and grow corn we have created wealth. The government can incentivize industry to plant those seeds in domestic energy production to create wealth in our society. US steel and carbon fiber combined with American ingenuity can be tapped to create a wealth of green products needed to revive this economy, fight poverty, and provide for a healthier and self-sufficient society. The return on investment includes a reduction in healthcare costs associated with poverty and environmental pollutants. Another advantage to encouraging local solar energy production is solar's independence from our aging national grid of power lines.

The power grid issue prevents wind farms from reaching their full potential. Many wind farms are hampered in their ability to transmit power because they will overload the power grid if they activate 100% of their wind turbines. Additionally, the fragility of the grid weakens our national defense by putting local, state, and federal agencies at risk and destabilizes the ability of our communities to function after disasters such as earthquakes, hurricanes, floods, fires, and tornadoes. The power grid needs shovels in the ground now. It seems that the government has an opportunity for job creation that will yield quick dividends.

Domestic manufacturing seems impossible in the face of cheap oversees wages in many factories without restraint from human rights protections and environmental & safety standards. Conversely, some countries provide healthcare coverage for workers unlike US industry which is bootstrapped to health insurance costs. It is reasonable to only allow imports from factories meeting the same standards as the demands placed on their US competitors.

The concept of federally mandating insurance coverage to employers is a well-intentioned yet unfunded mandate that has the potential to hurt the US production of goods. The disconnect with this approach is that jobs are tied to healthcare coverage. Healthcare costs often contribute to an industry moving oversees thereby reducing domestic jobs. Why do we want to burden the manufacturing base with healthcare costs if this may push jobs offshore? No jobs? This leads to poverty, malnutrition, and poor health.

Extending Medicare coverage to all US citizens is one fix. Industry will be freed from healthcare costs. If big government seems too scary with the fears of outrageous tax hikes associated with national healthcare coverage then perhaps the addition of competition may help bring down the costs associated with healthcare. This requires the federal government to repeal anti-trust protections from insurance companies and to provide a public option with competitive pricing. Looking to Congress for a streamlined and efficient healthcare package? On this one, the lobbyists have scored the first touchdown. Right, left, center, whatever the political solution may be... until we, as a nation, pull together and provide some kind of comprehensive healthcare coverage to all US citizens without forcing the burden onto the manufacturing base - we will not see the type of job creation needed to move this economy forward.

Green manufacturing is a great way to test our economic fortitude. The US must combine the knowledge base of US industry and universities with efficient financial structures to support the rebuilding of domestic factories for this to work. Are we to replace foreign oil with foreign wind turbines and solar panels? A sound domestic energy policy is one wherein the US can provide for its own power. Job creation, a cleaner environment, and a healthier populace are the rewards for this effort.

Adam White, L.Ac., Dipl.Ac. is an Acupuncture Continuing Education provider with the Healthcare Medicine Institute (HealthCMI). To learn more about medical news and medical continuing education visit http://www.healthcmi.com.

Improving the American Manufacturing Sector Through Socialization

The manufacturing industry is a very important blood line to the American economy. It has been the foundation for our success and growth since the days of the industrial revolution, which alone established the United States as an economic superpower. Manufacturing, in my opinion, is still the backbone of this country. The question to ask is what is happening to the industry right now? Some people say that American manufacturing is little by little dying or ending, which if you look at employment, it is in that regard. According to economists, we've been losing 250,000 or more manufacturing jobs every year on average since the 1974. However, if you look at output, probably the more relevant indicator of growth, we're still seeing nominal increases, but why? Of course, this analysis puts the latest recession starting in 2009 to the wayside. In that period the U.S went from a 3% decrease of output in 2008 to a12% decrease in 2009 alone. However, the total share of GDP for manufacturing still hovers around 15%.

If you look at the trending data, it has actually been relatively steady over the last 30 years, but there is a negative relationship in employment, which is something that really concerns me. Like everyone else, I know who to blame for this. Companies were quick to off shore to countries in Asia like China which take the jobs and produce nearly everything that is imported into the U.S. However, you would assume that all of the output would be reflected in those numbers, but it really isn't. We do see that there is an ever growing trade deficit between the U.S and China, but all data points to the fact that the heart of American manufacturing is still beating and is not 'dead' in any regard. If we have the output and the growth, then the jobs producing it need to be stabilized here. It is important to add that with the societal value changes and costs that domestic firms are seeing, some of those jobs are starting to trickle back to our shores.

In retrospect, there are those that argue that the powerhouse we were 40 years ago is an age that we will never see again. But what I think they meant to say is that we won't ever have the number of jobs we once had in that sector. I think the U.S government has realized some of the mistakes they've made handling trade deficits by caving to those with alternative agendas. In fact, I think the issue became more pressing when the latest recession hit in 2009. People were infuriated over job losses, yet we had been experiencing some of these losses for more than 40 years. I think this was the boiling point for many because they realized how fragile the economy is, and we now have younger generations that didn't know what the Great Depression was like. Therefore, I think this really hit home with many as their first hard economic downturn. With that in mind, people pressed for job creation, and continue to do so. I'm hoping that because we're starting to move out of the recession that employers and government officials will still keep employment at the top of their agenda.

Socialization is developing a goodwill relationship with people who can develop and grow an economy. Putting this it into perspective, the American manufacturing industry can develop ties and bonds with countries that have the necessary materials needed in the manufacturing industry. This could be accomplished easily with fair trade initiatives and green practices. That way when it comes to relations with the working population of other countries as suppliers, we can foster a bond that results in a stronger supply chain and likely higher quality raw materials. I firmly believe that the boost in U.S manufacturing extends far beyond our borders, and most importantly, our people. It extends to the people of other nations, and I think there is mutual growth that can be accomplished with supplying countries. There are many companies that have came under the scrutiny of the public eye concerning child labor laws, unfair pricing, and environmental practices. This type of behavior doesn't boast well for growth and long term relationships, nor doesn't it represent well when other companies are prospecting international location.

Another way of boosting it through socialization is by enacting the 'scratch my back, I scratch yours system' to put it loosely. For example, American manufacturers, alongside governing bodies, can strike deals with 3rd world countries and others that are suppliers. The terms would include allowing better flow of raw materials, if American companies can invest with tax breaks in order to develop areas of those countries that are suffering. Not only would this ensure that companies obtain the materials they need, it would ensure that the supplying nation wouldn't be left in the dust.

Devin Glenn Pringle is the author of this article on Screw machine products.
Find more information on Precision cnc machining here.

Top Manufacturing Country: The USA Is Still The Number One Manufacturing Country On Earth, By Far!

What a shock, isn't it?

"All the manufacturing jobs are going overseas" is the common cry. The truth is, manufacturing is growing in the USA. There is some confusion in this. It might pay to know what you're talking about. In a few minutes you'll have a much more clear picture of global manufacturing.

The USA currently produces about 22% of all manufactured goods on the planet. The USA reached it's all-time manufacturing peak as expressed as a percentage of world production in 2006!

The USA reached a peak dollar volume of manufacturing, and peak profits in (you guessed it) 2006.
The USA's manufacturing output is about 2.5 China's output.
In world ranking for size of economy, the USA is number one, Japan is a distant second, and China is third.

So, what is all the scary talk about?

Well, when expressed as a percentage of our over-all economy, manufacturing is shrinking. In other words, after World War ll about 28% of OUR economy was manufacturing. That percentage is now about 11% and falling.

And we are losing manufacturing jobs at a fast rate. Part of this is because we are the most efficient workers on earth! What that mean is, that for every hour an American worker works, more goods or services are produced than by any workers from any other country on earth. Why? Because we are hard workers and driven people, and we apply technology which allows one person to do the work of many.

Why are we driven?

Think about it: The USA was originally populated by immigrants from around the globe, and we still allow huge immigration numbers. What kind of people give up their family history and everything they are comfortable with to travel thousands of miles to a completely strange land? I'll tell who does this: people with guts, gumption, energy, and the entrepreneurial spirit, that's who! The meek and mild mannered stayed home.

What you end up with is a country full of winners.

Combine this with freedom and limited government, and you have the makings of a world-leading nation. America is far from "over." And manufacturing in America is far from over. For example, pipe welding is in high demand, yet the USA is short about 200,000 welders. Only about 5% of all welders can weld pipe. We are once again building nuclear plants, pipe lines, and all sorts of projects that require welding here, in America. Pipe welders typically earn between $60,000 and $100,000.

What should you do now?

"The $100K Welder" is about YOU learning to weld pipe in 8 weeks or less, even if you have never welded before! Check it out: http://100kwelder.com