
The US manufacturing base is surprisingly strong - MaysonL
http://www.voxeu.org/article/us-manufacturing-base-surprisingly-strong
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thrownaway2424
The only surprising thing is that anyone is surprised. It only takes a glance
at any relevant statistics to see that manufacturing in the USA is extremely
robust.

Propaganda about American weakness is typically dealt out by politicians
looking to get support from people who were laid off at the local Oldsmobile
plant. As a campaign tactic it works, but it's counterfactual.

~~~
adventured
A lot of the propaganda comes from the substantial reduction in jobs in
manufacturing. The propaganda point is that all of those jobs were "lost" to
China, when in fact most were eliminated by massive productivity gains.

Until about a year +/\- ago, the US was still the world's largest manufacturer
(not the largest exporter of course). A point few seem to realize, but
shouldn't be surprising in a $17 trillion economy.

~~~
_delirium
Some is from productivity gains, but some is significant shift in sectors,
towards less labor-intensive sectors where competition with low-wage countries
is less of a problem. For example the U.S. used to be a net exporter of steel,
but is now a large net importer. It's not that the U.S. steel mills got more
efficient through productivity gains and are still producing at high levels
but with fewer employees. Rather, they did indeed largely close and move
overseas. The U.S. now imports much of the steel it once produced
domestically, and U.S. manufacturing has moved into other sectors instead.

I suppose you can consider realignment of a country's industry mix towards
areas of competitive advantage to be a kind of productivity gain (at the macro
level it improves the ratio of output to labor inputs), but it isn't precisely
the same as productivity gains within a sector, caused by e.g. improved
processes or automation.

~~~
maxerickson
See my sister comment. U.S. steel production in 2011 and 2012 compares
reasonably to most of the 1980s.

Not all that much new capacity was created in the U.S. though, and the
population did grow almost 50%.

~~~
akgerber
My reading of those figures is that the US never recovered its steel
production after the steel collapse of 1982: [http://www.post-
gazette.com/business/businessnews/2012/12/23...](http://www.post-
gazette.com/business/businessnews/2012/12/23/In-desperate-1983-there-was-
nowhere-for-Pittsburgh-s-economy-to-go-but-up/stories/201212230258)

~~~
maxerickson
That's true. I was pointing more at the rise of China not disrupting the
industry.

I guess the rise of Japan and such had already done that.

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Zigurd
US manufacturing is propped up by military manufacturing:
[http://timemilitary.files.wordpress.com/2012/11/cschart1.png](http://timemilitary.files.wordpress.com/2012/11/cschart1.png)

~~~
adventured
No it's not. Your data goes conveniently to 2009. Gee, what happened in 2009
that would skew that chart, that wouldn't correlate properly to the last three
years or so?

In fact, with among the world's cheapest energy (thanks to vast supplies of
inexpensive natural gas), and with the cost to manufacture in China
skyrocketing due to very high wage inflation, American manufacturing is poised
to do extremely well in the coming decades. Most studies have indicated lately
it's now as cost effective for US companies to manufacture in the US as China,
and that will see the manufacturing ecosystem return gradually.

~~~
tsotha
I doubt it. China may become more expensive in the same way Japan did, but
there's always another source of low cost labor. Half the world is still
poking the ground with sharp sticks.

If it isn't China it'll be Vietnam, or Indonesia, or the Philippines, or
Brazil. When those sources of cheap labor become too expensive we'll always
have Africa.

I can envision a time when higher transportation costs coupled with growth-
induced global labor demand coupled with unacceptable infrastructure in the
last pockets of grinding poverty make low-tech manufacturing attractive in the
US, but I don't think any of us are going to live to see that time unless the
US economy collapses as catastrophically as the Soviet economy collapsed.

~~~
sien
Wages are far from the only cost in manufacturing. Indeed, they are becoming
less important as automation comes in more and more.

Infrastructure, in particular energy and transport are critical, as is secure
legal rights and access to markets. Also you need a population that has decent
high school level education.

There really isn't another China. Nothing of the size and with the
infrastructure is around.

Costs have reached a point where the US is competitive again for things that
15 years ago would have been made in China. Here are some articles discussing
it:

[http://www.businessweek.com/articles/2014-04-25/china-vs-
dot...](http://www.businessweek.com/articles/2014-04-25/china-vs-dot-the-u-
dot-s-dot-its-just-as-cheap-to-make-goods-in-the-u-dot-s-dot-a)

[http://www.economist.com/node/21549956](http://www.economist.com/node/21549956)

This is really a great thing for the world. Hundreds of millions of Chinese
people are now much wealthier than they were 20 years ago.

