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Archive for Tuesday, February 17, 2009

‘Made in the USA’ still meaningful

A U.S. flag hangs above the Boeing 747 line at Boeing Co.’s airplane assembly plant in Everett, Wash. Today, “Made in USA” is more likely to be stamped on airplanes, silicon chips, medical equipment and other goods bought by companies than on TVs, toys, clothes and items you’d find on store shelves.

A U.S. flag hangs above the Boeing 747 line at Boeing Co.’s airplane assembly plant in Everett, Wash. Today, “Made in USA” is more likely to be stamped on airplanes, silicon chips, medical equipment and other goods bought by companies than on TVs, toys, clothes and items you’d find on store shelves.

February 17, 2009

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— It may seem like the country that used to make everything is on the brink of making nothing.

In January, 207,000 U.S. manufacturing jobs vanished in the largest one-month drop since October 1982. Factory activity is hovering at a 28-year low. Even before the recession, plants were hemorrhaging work to foreign competitors with cheap labor. And some companies were moving production overseas.

But manufacturing in the United States isn’t dead or even dying. It’s moving upscale, following the biggest profits, and becoming more efficient, just like Henry Ford did when he created the assembly line to make the Model T.

The U.S. by far remains the world’s leading manufacturer by value of goods produced. It hit a record $1.6 trillion in 2007 — nearly double the $811 billion in 1987. For every $1 of value produced in China’s factories, America generates $2.50.

So what’s made in the USA these days? The U.S. sold more than $200 billion worth of aircraft, missiles and space-related equipment in 2007. And $80 billion worth of autos and auto parts. Deere & Co., best known for its bright green and yellow tractors, sold $16.5 billion worth of farming equipment last year, much of it to the rest of the world. Then there’s energy products like gas turbines for power plants made by General Electric, computer chips from Intel and fighter jets from Lockheed Martin. Household names like GE, General Motors, IBM, Boeing, Hewlett-Packard are among the largest manufacturers by revenue.

Emerging trends

Several trends have emerged over the decades:

• America makes things that other countries can’t. Today, “Made in USA” is more likely to be stamped on heavy equipment or the circuits that go inside other products than the TVs, toys, clothes and other items found on store shelves.

• U.S. companies have shifted toward high-end manufacturing as the production of low-value goods moves overseas. This has resulted in lower prices for shoppers and higher profits for companies.

• When demand slumps, all types of manufacturing jobs are lost. Some higher-end jobs — but not all — return with good times. Workers who make goods more cheaply produced overseas suffer.

Once this recession runs its course, surviving manufacturers will emerge more efficient and profitable, economists say. More valuable products will be made using fewer people. Products will be made where labor and other costs are cheaper. And manufacturers will focus on the most lucrative products.

Shifting percentages

About 12.7 million Americans, or 8 percent of the labor force, still held manufacturing jobs as of last month. Fifty years ago, 14.6 million people, or 28 percent of all workers, toiled in factories. The numbers — though painful to those who lost jobs — show how companies are making more with less.

Still, the perception of decline is likely to grow as factories and jobs vanish, and imports rise for most goods we buy at stores.

Thirty years ago, U.S. producers made 80 percent of what the country consumed, according to the Manufacturers Alliance/MAPI, an industry trade group. Now it’s around 65 percent.

American factories still provide much of the processed food that Americans buy, everything from frozen fish sticks to cans of beer. And U.S. companies make a considerable share of the personal hygiene products like soap and shampoo, cleaning supplies, and prescription drugs that are sold in pharmacies. But many other consumer goods now come from overseas.

In the 1960s, America made 98 percent of its shoes. It now imports more than 90 percent of its footwear. The iconic red Radio Flyer wagons for kids are now made in China. Even Apple Inc.’s iPod comes in box that says it was made in China but “designed in California.”

“Some people lament the loss of manufacturing jobs we could have had making iPods. So what?” said Dan Ikenson, associate director of the Center for Trade Policy Studies at the libertarian-leaning Cato Institute. “The imports of iPods support U.S. jobs,” including engineers, marketers and advertisers.

Comments

jrlii 5 years, 2 months ago

However, US manufacturing, even at the high end is none the less in danger: The infrastructure to support manufacturing, particularly for small businesses has sharply declined.

The infrastructure I'm talking about is not the public infrastructure of roads, bridges, water and sewer systems, but that of wholesale suppliers.

It used to be that you could walk into the local bearing dealer and walk out with what you needed unless it was a pretty uncommon part. Now you are lucky if they even have common sizes.

Nuts, bolts, screws. It used to be the local and regional dealers had what their customers needed in stock. Now it is pretty hit or miss. Mostly miss, I'm afraid.

I once went to a local fastener supply house and the salesperson didn't even know what a round head rivet was, never mind having any. That would have been unthinkable twenty years ago.

It goes on and on. The local welding equipment dealer used to have the full line of Victor cutting tips. Now they only carry the most common few.

Minimizing and focusing your stock on the most demanded products helps your profitability in the short run, but when you can't supply your customer with what he needs, you may lose him to some internet supplier who can.

I'm told the Navy can't build submarines without imported steel plate, 'cause plate of sufficient size and quality is no longer made in the US.

These are the sort of things I mean when I say manufacturing is in danger because of the lack of infrastructure.

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DouglasCountySucks 5 years, 2 months ago

I hope the lean times bring people back to Buy USA and gets some new manufacturing jobs here.

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