US manufacturing still tops China’s by nearly 46 percent

http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2011/02/06/made_in_the_usa/

by cwan • 15 years ago

100 96 15 years ago

beoba• 15 years ago

"Measured in constant dollars, America’s manufacturing output today is more than double what it was in the early 1970s."

What's a 'constant dollar'? Is that nominal or inflation-adjusted? Over that timespan the two could mean very different things.

nostrademons9• 15 years ago

"Constant dollars" = inflation-adjusted.

joe_the_user• 15 years ago

However that raises the larger question of whether these inflation-adjustments are accurate.

See: http://www.shadowstats.com/article/primers_intro

ojbyrne• 15 years ago

"The growth of productivity — output per unit of input — is the fundamental determinant of the growth of a country’s material standard of living."

http://www.econlib.org/library/Enc/Productivity.html

jseliger• 15 years ago

A lot of people don't understand this. I'm an English grad student, and one of my more, uh, politically-minded professors said in a seminar that the U.S. doesn't manufacture anything anymore. I sent him this e-mail:

When I mentioned the bit about the U.S. continuing to manufacture a lot of stuff, I wasn't just trying to be a pain, as it's actually true; see Dept. of Labor Data on the subject here: http://research.stlouisfed.org/fred2/data/MANEMP.txt or a post on the subject here: http://blog.american.com/?p=8593 ("Amazingly, if the U.S. manufacturing sector were a separate country, it would be tied with Germany as the world’s third-largest economy."). CNN even points out that "China's manufacturing sector is on the brink of passing that of the United States, according to a report released Monday," (http://money.cnn.com/2010/06/21/news/economy/china_us_manufa...) but that it hasn't yet.

What has happened is that the U.S. manufacturing sector represents a much smaller part of the overall U.S. economy—mostly because the rest of the economy has gotten so big.

When you stop believing in polemics and conventional wisdom and start trying to look at what really is, you'll find a lot of unusual stuff.

uytrhyujkujhy5• 15 years ago

It's not necessarily good though. A multi-billion $ weapons system built in America for the US taxpayer, even if it is never deployed or even abandoned, counts as a $Bn manufacturing output.

As a famous economist said - from a GDP point of view the ideal person is someone undergoing cancer treatment during an expensive divorce

gscott3• 15 years ago

And many of those components going into these products come from elsewhere. A manufacturing company I worked with bought parts from all over the world and had few US parts. When I tried to increase the number of parts they were using from the US they said good luck and I failed because nothing was available and no one wanted to make what I wanted (for example I wanted 1,000 metal tubes bent, to make them into legs... there were plenty of places that I visited could do it but they didn't want to so it ended up being done in Mexico).

nerfhammer• 15 years ago

I think it's the case the manufacturing output has increased while manufacturing employment has actually decreased

anamax• 15 years ago

> When you stop believing in polemics and conventional wisdom and start trying to look at what really is, you'll find a lot of unusual stuff.

That's good advice regardless of the subject.

enjo2• 15 years ago

That's not really correct tho. Here's a handy graph showing the United States manufacturing output as percentage of overall GDP versus percentage of workforce employed in manufacturing:

http://yelnick.typepad.com/.a/6a00d8341c563953ef01310fc3f3ee...

You'll notice that the output, as a percentage of the overall economy, has remained relatively flat. Jobs, on the other hand, have taken an absolute nose-dive.

What's really happened is that factories in the U.S. have become crazily efficient. Through both technology and significant process improvements.

So we have quite a problem. It's not enough to just make stuff, we need to make it way less efficiently if we're going to solve the blue-collar unemployment problem. I have no idea how we're going to do it.

ianhawes• 15 years ago

Producing more for less = Capitalism

Producing less for the sack of jobs = Socialism

eru2• 15 years ago

Do you have a similar graph for agricultural output and employment?

eru2• 15 years ago

And by the way, the U.S. complainers shouldn't look to China but to Germany for a model on how a modern rich manufacturing economy could work.

3pt141593• 15 years ago

While it is true that North America still manufactures great quantities of luxury and high tech stuff, that isn't what is pissing off the populists. They couldn't care less if our manufacturing doubled in terms of dollars of output. What they really want is a return to the highly paid, unionized, tradesperson.

To them robots making Chevy trucks matters just as much to their lives as nerds writing software. As productivity increases continue, demand for noncerebral labor declines as a ratio for demand of cerebral labor. Even if the average tradesperson is better of today than 40 years ago (they have cars with AC, for example) they want their relative standing to increase. They used to be paid, say, half of what the engineer made, now its a fifth. That really, really pisses them off, so they take it out on China.

Combine that with the fact that 40 years ago "mom" stayed home, converting (tax free) raw ingredients into delicious food, as well as watched the children and mended the clothes. Now they buy less healthy instant food and need to find a way to pay for daycare, as well as a second car to get to work, and if they are American, substantially inflated healthcare costs.

I'm not envious of their position.

hartror• 15 years ago

It depends on the economy, Australian tradespeople make the same if not more than good coders right now. We're growing so fast the demand for those skills is high and shows no signs of dropping off.

MarkSimpson• 15 years ago

Yeah. My brother just finished his apprenticeship in cabinet making and is already on more than me, a programmer. Unions don't have anything to do with it, either - I don't think he's even in one - it's just that the demand for tradesmen is so high over here. Hence the rise in cashed up bogans.

brc6• 15 years ago

Depends on the trade, of course. But tradesmen work on different projects, travel to different areas, work with a range of skills.

I guess what I'm trying to say is that tradesmen != manufacturing plant worker.

I have a relative with a manufacturing plant. Their strategy is to try and out-niche the chinese. Their chinese competitors can dump finishing product onto the market cheaper than they can buy the raw materials. Thats' before the value-add of labour is included, with all the attendant taxes and benefits of the labour is paid for as well. The only way they can compete is to develop close relationships and fast turnarounds with their clients and hope like hell that's enough for them to ignore the price discrepancy. It generally depends on the final item being manufactured - anything competing in a fierce marketplace is going to go overseas at some point.

It's the unionised manufacturing sector worker that is getting smashed by low-cost foreign labour. And that is happening across all high-cost labour countries, Australia included.

jacques_chester2• 15 years ago

I spent most of highschool being told that if I didn't study sooper dooper hard, then I would not go to university. I would be doomed to be ... (horror film scream) ... a tradie!!

Well gosh, I worked hard and got into a good uni. I became depressed (for reasons unrelated to my studies) and gave it away for a few years, but now that I have the degree and job I earn about as much as a 4th-year apprentice can down at the mines.

Are you a plumber? You can charge hundreds per hour. Are you a diesel fitter, boilermaker, even a plain welder? Get thee to the Pilbara region, where wages north of $150k await thee.

I wouldn't enjoy being a tradie and I like programming, but the whole argument that I needed to go to university or wind up an impoverished loser tradie turned out to be utter horseshit.

edit: fixed a hilarious negation of my preferences in the final paragraph.

rdouble6• 15 years ago

Tradespeople do fine in areas where the economy is good. They are still highly paid and unionized. My friend welds staircases in the Bay Area and gets paid more than most programmers. Is there really a case where an electrician or pipe fitter today makes a lower wage than they did in 1970? If anyone's salaries in the USA have remained stagnant or dropped, it's the average engineer.

nostrademons9• 15 years ago

Engineers do fine.

It's the line workers in factories and people in service jobs that have gotten screwed. It used to be that you could make a steady middle-class income as a factory worker, airline stewardess, or retail clerk. Not so much now. Tradespeople and professionals have done okay because they have marketable skills that accrue to their person, but people whose only assets are owned by their employers haven't done so well.

dantheman• 15 years ago

I think it's not the tradeperson; it's assembly line worker. Skilled tradesmen like carpenters, welders, plumbers, electricians, etc are doing great. Those who worked on an assembly line are being phased out - those who welded, assembled, pushed the button, snapped together, etc are being replaced by improved technology.

3pt141593• 15 years ago

You are right. The reason I worded it as I did is that my friends that are in the trades are mostly millwrights, welders, and other manufacturing related trades.

Charuru• 15 years ago

Maybe this sounds slightly kooky, but...

I believe there is no 'solution' to their plight. The timeline until singularity is too short for a complete retooling of the economy. However the pace of development at the higher end is fast enough and explosive enough that we can afford to keep on subsidizing the lower classes with bread and circuses until we reach sentient AI, at which point we will be able to provide everyone with robot servants and who knows what else.

Just think about the current web 2.0 economy. If a nineteen year old is able to write a piece of software and execute on a plan that makes him a billionaire in a few years, that's... really quite amazing. Yes yes I know, some people are going to call bubble. Whether or not it's true, I think it's evident that the pace of innovation has sped up more than most people realize. Things like this will continue happening and happen quickly. We're at the beginning of a fantastic time when the pace of wealth creation will increase exponentially, with the internet as the great enabler.

tomjen33• 15 years ago

Look, I admire your optimism but General AI has been a pipedream for almost 60 years now and though we build at an insane rate, the singularity is so far away that it doesn't matter.

arethuza• 15 years ago

That really does sound awfully like the kind of hyperbole more associated with the nuttier Christian sects rather than technologists.

As Ken MacLeod put it "the Rapture for nerds".

nickpinkston3• 15 years ago

This post may be a little over the top, but if you dont think manufacturing is going the way of agriculture (standard processes & very thin margins), you're not near progressive manufacturing... 3D printing (for direct manufacturing) already approaches the cost of materials, and will be far cheaper when materials patents expire and margins get razor thin on production.

3pt141593• 15 years ago

I think we both have the same vision of how the mid-distant future looks.

Retric• 15 years ago

In many cases overseas manual labor is cheaper than automation in the US. When people outsource intermediate parts this looks like an increase in productivity because fewer people in the US used to make the same product for less money. However, if you look at the total man hours to produce a given product it may have significantly increased.

http://www.evolvingexcellence.com/blog/2006/12/american_manu...

marshray• 15 years ago

Gee I remember when it seemed the US's manufacturing output was orders of magnitude beyond China (and Japan seemed like it was where China is today). Good for China for bootstrapping their economy so effectively, but no one would claim that the US trade deficit was irrelevant to the process either.

Even if you believe that China's output is now approaching parity with the US (46 percent is nearly equal on the long term graph), is it not reasonable to ask at what point they're going to start buying some of our stuff in return?

Or if they're not going to spend their dollars with us, the least they could do is let their own currency valuation happen in open markets.

sunsu• 15 years ago

Let's hope the US changes it's ways before the Chinese "start buying some of our stuff". When that happens it will mean China has finally developed its own consumer class. At that point, China wont be so dependent on US consumers to buy their goods and there wont be much incentive to hold on to our continuously growing debt.

shrughes• 15 years ago

What are they going to do, sell it? Gosh, this will push the interest rates slightly higher! That would be so scary.

rdouble6• 15 years ago

Even if you believe that China's output is now approaching parity with the US ... is it not reasonable to ask at what point they're going to start buying some of our stuff in return?

They have bought 20% of the US Debt...

Edit: 20% of the US debt owned by foreign countries

grav1tas3• 15 years ago

That's incorrect. They hold 20% of US Debt held by foreign countries. In the total scheme of things I think it amounts to somewhere between 6-9% of the total US debt.

brc6• 15 years ago

And the Federal Reserve recently surpassed China as the largest buyer of US Debt. China has stopped buying as much as the US government will print.

Well, there's your problem.

bugsy3• 15 years ago

I was reading about how the US now considers McDonalds hamburgers to be part of US manufacturing output, whereas in the past that was credited as service since it was a restaurant.

So we must ask. Does the claim made by boston.com include hamburgers?

uytrhyujkujhy5• 15 years ago

It also misses a lot of chinese industry. It's somewhat harder to track the business operations of a Chinese army owned construction company than a US NYSE listed engineering firm.

In $ terms there is also a big gap. The Boston big dig costs $22Bn, while a similar project undertaken by chinese army conscripts is likely to cost 1/100 of that, it doesn't mean that the US industry is 100x bigger or better - just 100x as expensive

dtc2• 15 years ago

That's nonsense. This never happened. If you are going to make an extraordinary claim like that, take a moment to find a source.

bugsy3• 15 years ago

Citations:

http://www.cbsnews.com/stories/2004/02/20/politics/main60133... http://www.nytimes.com/2004/02/20/business/in-the-new-econom...

I await your apology.

joelmichael2• 15 years ago

I am skeptical of this article because I just looked up this data a month or so ago -- opened the UN's Excel document and everything -- and found that China had recently surpassed the US in manufacturing output.

Unfortunately I am limited to the iPhone right now, so can't re-investigate the data myself until later. I have no interest in diminishing the American economy nor in over-valuing the manufacturing sector, but facts are facts and I'm legitimately confused now.

joelmichael2• 15 years ago

OK, I am back at my computer. My source is the following website, specifically the second link listed: http://unstats.un.org/unsd/snaama/dnllist.asp

If you open that up, scroll down to the United States, go to the Manufacturing row, and scroll all the way over to the right (2009) you will find $1.78T dollars. If you search for China and do the same, you will find $2.05T. You may also note that China, with its high rate of growth, only first surpassed the US in 2008.

The next highest country after China and the US is Japan with $1.05T.

Edit: Interestingly, the corresponding spreadsheet for "2005 dollars" shows the US at $1.68T and China at $1.48T in 2009. Now I'm even more confused. Shouldn't the difference between 2005 and "current" dollars scale proportionately?

D_Alex2• 15 years ago

Measuring manufacturing in $$$ might be a bit misleading. If China makes 4 $10 business shirts for every one $50 business shirt the US makes ... ?

uytrhyujkujhy5• 15 years ago

Then that shows that the US industrial output is bigger. That's why Germany makes $50,000 cars and Mexico makes $15,000 ones

ars• 15 years ago

How else could you possibly compare them?

Zpirate• 15 years ago

Purchasing power parity in local currency?

D_Alex2• 15 years ago

You could compare them in many ways, and $$$ is possibly the best single measure. But the OP article is uncritically self-congratulatory, which is not altogether appropriate given that same products of equal quality do cost a lot less if made in China.

brc6• 15 years ago

yes, back in the old days they used to measure an economy by tons shipped. It doesn't apply anymore due to higher value things being lighter, and tracking air-shipments would be a problem.

However, it does underlie a point - tracking the value of shipments by a currency value can easily obscure important facts.

StuffMaster• 15 years ago

Yeah, it's very non-obvious to the layman that they're talking about value rather than production.

brc6• 15 years ago

Interesting enough - but what's the trend? Is growth in US manufacturing growing at the same pace as China? Or is it continuing to decline, and will cross at some point.

gersh• 15 years ago

Some would disagree "The US remained the world’s biggest manufacturing nation by output last year, but is poised to relinquish this slot in 2011 to China – thus ending a 110-year run as the number one country in factory production." http://www.ft.com/cms/s/0/af2219cc-7c86-11df-8b74-00144feabd...

gxs• 15 years ago

I think it's great Americans have a healthy fear of the Chinese. Keeps them from resting on their laurels.

JonnieCache• 15 years ago

Why can't they have a healthy respect for them instead? One nation's people fearing another rarely leads to good things.

pitiburi• 15 years ago

A commenter in the original article said it better than anyone: "We don't get to qualify as a manufacturing giant just because the defense department gets suckered into paying billions of dollars for a fancy piece of equipment that is built by a small number of folks in a few isolated pockets of the country."

Then again, the numbers (that seem to be incorrect, go check the commments in the original) are however about the money it is made from the manufacturing. Then this is even more worrisome for USA, because that would mean that China has been growing steadily at 9-10 per cent each year, while USA makes MORE money from manufacturing but all it does is barely grow, and produce the biggest debt the world has ever seen.

Frojo• 15 years ago

I thought, that a large percentage if not the majority of US 'manufactoring' is actually agriculture.

known• 15 years ago

Small companies create jobs within America. Big companies create jobs in China/India. Hence Govt must break big companies into smaller companies.

wmeredith• 15 years ago

I forwarded this on to my father who did some excellent source fact checking. I just had to share with HN.

An interesting editorial and comments. I think the Boston Globe is a legit publication, but I was not familiar with Jeff Jacoby. Although he writes well, I became wary at his first reference to the American Enterprise Institute, so I did a little research.

I must admit that my suspicions were confirmed. The sole purpose of the AEI, and similar type organizations on both sides of the political spectrum, is to espouse and promote an ideology. The introduction (Message from the Chairman and President) to their 2010 annual report state, “AFI is showing that liberty, opportunity, and entrepreneurship are not only good economic principles, but moral imperatives.” I have learned to beware whenever anyone claims to know the Truth and talks about “moral imperatives” Such rhetoric has been used to justify the worst atrocities and most hateful acts of terrorism in human history.

I was also unfamiliar with Mark Perry, one of the moral authorities cited by Jacoby. In addition to being a “visiting scholar” at the AEI, Perry is a member of the Board of Directors of the Mackinac Center for Public Policy, an orthodoxy right-wing “think tank” based in Michigan.

According to the Michigan Education Association, "The role of the Mackinac Center is to change public opinion and move public policy toward the political right. The Mackinac Center does not conduct neutral or objective scholarship. Rather, it provides the media and government officials with publications designed to promote and advance its conservative agenda." If any doubt remains about Jacoby’s objectivity or the reliability of his sources, a visit to the AEI website reveals their Board of Directors includes none other than The Honorable Richard B. Cheney.

Based on what little I was able learn, Jacoby, a rightwing taking head who was recruited by the Globe to add balance (or the appearance of balance) to their otherwise liberal editorial page, would feel at home in the company of the former VP. In fairness to Jacoby, he is neither a journalist nor a social scientist. His writes editorials that express a point of view. His job does on included conducting scientific research with the intent of objectively depicting reality.

In other words, consider the source. There's nothing more that the captains of industry would like to peddle more than American manufacturing is great. The real story is the jobs have been sent over seas and the executive pay has been increased at the top for efficiency.

US manufacturing still tops China’s by nearly 46 percent

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