America Can’t Even Produce the Things It Invented

https://www.nytimes.com/2021/01/04/opinion/manufacturing-united-states-masks.html

by vo2maxer • 6 years ago

115 172 6 years ago

I wish Silicon Valley wasn’t just about software, particularly adtech. Some of the most brilliant minds are working on optimizing click ratios. There is some hardware tech (Apple, nVidia, Intel, Tesla), but vast majority of the engineers are working on cushy jobs paying $400k to serve ads.

SV should be leading investments in Semiconductors, automation and manufacturing tech. It doesn’t even live up to its name. If you’ve been following how difficult it is to manufacture things at scale (Tesla), it’s a hard problem. Manufacturing is difficult.

Serving ads isn’t of national strategic importance. It’s just juicy. “Someone’s gotta make stuff” - Elon. It’s true even if you don’t like the guy.

aeternum2• 6 years ago

Thinking about SV as just adtech is pretty reductionist. Through another lens, SV basically solved big data and global software distribution and scalability.

Big tech has contributed to both the tools that allow handling massive data streams and ML. That foundation is what is helping data-driven manufacturing companies pull ahead.

ragebol2• 6 years ago

And what purpose is that big data stuff typically used for? Something related to serving ads.

fermienrico3• 6 years ago

Agree, it is deliberately reductionist to provoke discussion about what we're not doing in SV.

What do you think we should be doing in SV in addition these technologies?

Ar-Curunir• 6 years ago

big data and global software distribution and scalability. Big tech has contributed to both the tools that allow handling massive data streams and ML

Yes, because mass surveillance is good.

deeeeplearning2• 6 years ago

Thinking about SV as just adtech is pretty reductionist.

Is it though? On a revenue basis I wonder what percentage is made up by adtech?

SV basically solved big data and global software distribution and scalability

In order to serve more ads...

s1artibartfast5• 6 years ago

Investment follows returns, or at least the speculative possibility of returns. Unfortunately, semiconductors, automation and manufacturing tech doesn't have the same upside capability. If you want 10-100X returns, you look elsewhere.

MichaelZuo• 6 years ago

Well the return on investment is in fact greater than it appears for critical industries. It’s just that the upside is not entirely captured in dollars or RMB, or any other monetary currency for that matter.

So when people, who have been habituated to looking at numbers denominated in dollars, think about it they effectively have blinders on.

spaetzleesser2• 6 years ago

Very true. It would be great if these brights were working on important stuff like how to deal with plastics recycling and separation. Instead it’s about extracting as much as possible from existing tech.

It reminds me a little of the situation with journalism and news. We have less and less reporters collecting information but more and more websites and blogs that dissect and debate the same information.

jdross• 6 years ago

There are infinite ways to retort this, but let’s go with the easiest and point to the company literally dealing with plastics recyling and separation that raised $55 million today

https://venturebeat.com/2021/01/04/amp-robotics-raises-55-mi...

bmitc3• 6 years ago

working on important stuff like how to deal with plastics recycling and separation

Do you happen to have any helpful analysis, articles, companies, etc. along these lines? I have thought it would be a fun thing to work on, but I have struggled to know where to look and haven’t found anything particular in my searching.

haram_masala2• 6 years ago

Let’s not ignore biotech. It’s experiencing a tremendous boom in SV (and in the Berkeley-Emeryville area). It gets way less attention than Tesla and Facebook, for some reason... probably because its products and innovations are much harder to explain to the public. (Though that may be an overly cynical answer with regards to the media.)

godelski2• 6 years ago

I thought these technologies are still early and in the research phase. That would make sense for them to operate in stealth mode. Tesla sells vehicles to the public (and let's be real, Elon is a big PR department). Are these companies producing useful products currently? It seems that you're implying that they are and that we (me) aren't aware of them, so I'm curious if you could expand on this and enlighten us. I do know investors are dumping a ton of money into bio-tech, just not aware of products that are being sold.

nikanj3• 6 years ago

Apple: Made by Foxconn, not in the US. nVidia: Made by TSMC, not in the US.

Intel and Tesla are made in the US afaik, but even the hardware startups we do have still tend to manufacture abroad.

jfim• 6 years ago

How much of the electronics in Teslas are made in the USA though?

adventured2• 6 years ago

Apple: assembled by Foxconn.

If your premise were accurate, the primary value would be in Foxconn and they'd destroy Apple by competing with them and take their $60 billion per year in profit.

Most of the value is from Apple and the other component makers, not the company doing primitive assembly. Further, Foxconn makes nothing in the iPhone, so once again it's very obviously not "made by Foxconn." And that's why Foxconn gets such a tiny slice of the profit.

jmisavage• 6 years ago

Intel is global they have fabs in Israel, Ireland, and China too.

https://www.intel.com/content/www/us/en/support/articles/000...

blackrock2• 6 years ago

SpaceX rockets are still made in the US. Go work for them.

Seriously, you do not want to be assembling iPhones. Build a robot to do that tedious work instead.

tomjen3• 6 years ago

It took 2 days for the Moderna vaccine to be created, and it still hasn't been approved in the EU. We could be doing amazing things in bio with mRNA, Crisper and deep learning but the entire thing is so wrapped up in regulation in order to protect the incumbents that it is not a space worth working in.

boringg5• 6 years ago

2 days to determine what the Moderna vaccine should be from a computer. Building the vaccine, bio-reacting it to scale and testing across appropriate populations took a considerable amount of time. Health regulations are in place for a reason, to protect the public not to protect incumbents. Sometimes I am sure it does, other times it makes sure poor products don't go into the public market.

kevin_thibedeau• 6 years ago

Hardware manufacturers have a ton of additional labor needed to produce things. The engineers can't all be paid 200k+ or they'll bleed the company dry. The highest margins are realized in markets with the lowest overhead. That's where everybody shifted to.

nicoburns3• 6 years ago

I share the lament of the GP comment. It seems like it would better if there was hardware engineering and engineers weren't paid 200k+. That the market has shifted seems like a failure of the economic system.

javajosh• 6 years ago

Money wants to make more money. And it doesn't care about national boundaries. It also isn't good at pricing catastrophes like the collapse-of-the-US-financial-system-because-of-the-collapse-of-the-electrical-grid catastrophe that we can't recover from because we can't make the transforms anymore and China won't sell them to us and our ports won't work without computers anyway, and so on.

coliveira2• 6 years ago

You're mistaken, China will most definitely sell that to us. It is in their interest. To problem is if the US will be able to afford it.

m4635• 6 years ago

I also wonder about this kind of stuff.

I think about things like this: What if all the wallstreet quants and sv adtech guys were all put on a nuclear fusion project?

It would be like an unstoppable force against an immovable project.

prionassembly2• 6 years ago

China is able to manipulate its exchange rate to regulate the relative prices of imports and exports. So are ~200 other economies in the world. The US doesn't have an exchange rate to fiddle with. Hell, it can hardly produce domestic inflation with its low interest rates, let alone devalue its currency.

Cf. https://en.wikipedia.org/wiki/Exorbitant_privilege

ska• 6 years ago

True, but there is a reason it's been called "exorbitant privilege" - while nothing here is clear cut there lots of reasonable people would argue that there is a net benefit to US.

prionassembly2• 6 years ago

Yes. To abuse mathematical language, the first-order effects of the exorbitant privilege are very positive for the US. Some negative second-order effects are arguable (strategic capacity / robustness); some are reminiscent of your typical third-world lobbying for a kind of state capitalism. Then, this has beneficiaries and losers.

"Good jobs" in particular is such specious rhetoric.

twobitshifter• 6 years ago

If China can move to DCEP (Chinese state crypto) and get their borrowers to follow their lead, the US will find itself in a tough position. In the end game for China, they displace the US and can avoid the dollar in trade.

seppin• 6 years ago

If it was that easy to displace the dollar, someone would have done it already. What advantage does a Chinese cryptocurrency have over a traditional one?

Tycho6• 6 years ago

At a certain point, does automation/robotics swing the manufacturing base back towards the west?

jbay8083• 6 years ago

It's mostly being deployed in Asia, where the demand is high and the supply of complementary parts is also high.

PCB manufacturing is almost completely automated, for example. Didn't move back.

s1artibartfast5• 6 years ago

Unlikely in our lifetime. The same automation will be available in the east, but with cheaper technicians, electricity, taxes, regulation, and land.

bmitc3• 6 years ago

Also, what is there to automate in the U.S.? Most of what could be a target of automation is already in China.

MartianSquirrel2• 6 years ago

Yes, but no.

Automation could, should and will bring back more manufacturing towards the west, in the sense that the west will produce more goods, in terms of net quantity/value compared to today.

It does not necessarily mean more jobs.

It does not mean the west will produce a higher percentage of global products.

Paul Krugman, amongst others, has written about the subject, I will try to link articles once I get home.

Quick edit: example: GM produces more cars than before the crisis but employs less people

Edit 2: here's one https://www.scientificamerican.com/article/krugman-trade-job...

Tycho6• 6 years ago

Might not mean more jobs in the west, but I suppose it will mean less jobs for the east.

blululu• 6 years ago

It depends, but probably not. The main benefit would be transportation/logistics, but intercontinental freight shipping is pretty cheap and fast (especially China -> USA). Assuming equivalent machine costs (Chinese firms can potentially get government backed deals from to local & international vendors), equivalent financing (subsidized loans are common in China), equivalent operating costs (rent in the US is ridiculously expensive), equivalent labor costs (you still need skilled technicians to operate, maintain & repair the machines, and China has a much larger pool of labor), and equivalent access to input materials (the supply chain is mostly in China/East Asia, so it is often cheaper and faster to source components in Asia than in North America), then yes it would make sense from a cost perspective to reshore operations to the USA. Given that none of these conditions are met, and given that American firms are ideologically committed to their balance sheet it seems unlikely that there is much will to make any changes here.

Tycho6• 6 years ago

But without the need for cheap labour, it becomes much easier for governments to impose tariffs on imports (or provide subsidiaries, etc), to even the scales, no?

jbay8083• 6 years ago

Assuming equivalent machine costs

I know of at least one automation equipment company that prices their machines in China at about half of what they charge to US customers, because that's the price point that the market will bear. Exact same machines, same specs. Just like any other region-based price discrimination.

coliveira2• 6 years ago

No, the automation/robotics train has already left and China is leading there too.

hangonhn2• 6 years ago

No. Because China is working on that too. This is what their Made in China 2025 initiative is all about: https://en.wikipedia.org/wiki/Made_in_China_2025

"The plan aims to upgrade the manufacturing capabilities of Chinese industries, growing from labor-intensive workshops into a more technology-intensive powerhouse.[6] The goals of Made in China 2025 include increasing the Chinese-domestic content of core materials to 40 percent by 2020 and 70 percent by 2025."

This is a major source of all the economic anxieties the US government and allies are feeling.

China isn't just a source of cheap labor anymore. Cheap labor was what it had to offer because it was so under developed but they aren't blind to history. They know they have to move up the value chain and have been gradually but steadily moving up.

Tycho6• 6 years ago

But cheap labour is a sustainable advantage that the west can never rival. Everything else, we can compete on, in theory.

jonkho2• 6 years ago

Not until the USD loses reserve status. Until then, it’s cheaper to print and export these USD tokens for imports rather than to exert labor to make stuff to trade for imports.

recursivedoubts5• 6 years ago

We were sold down the river by our own elites, particularly on Wall Street and with the full complicity of the Economics Departments of the west.

"Comparative Advantage", something something about corn and wool, meanwhile the whole supply chain was moved to China, our middle class was decimated and we went into tremendous amounts of debt to pretend everything was fine...

Left, right... whatever. The elites have failed us.

nikanj3• 6 years ago

The stock market and housing prices are higher than ever, so a large part of the population is doing good. Not just the elites have benefited from the spoils, people with retirement portfolios and paid-off houses are sitting nice and flush.

boringg5• 6 years ago

Also a pretty broad brush to paint a whole "class" of people that being the "elites".

habosa• 6 years ago

84% of wealth in the stock market is in the hands of the top 10%

Not sure about housing.

BitwiseFool• 6 years ago

I won't dispute that retirement portfolios and people with real estate have done quite well. But I personally think that many of these people are only doing well on-paper. This is only speculation, and you may rightfully call me a doomer, but I feel like most of this wealth is virtual.

jefurii• 6 years ago

people with retirement portfolios and paid-off houses

That's definitely not everyone.

nicoburns3• 6 years ago

So there's also a generational divide. This isn't a good thing.

cpursley• 6 years ago

Paid off houses? Mortgage rates are under 3% meaning people doing well can deploy that savings and cash into the stock market, other investments, furthering the wealth gap. No reason to pay off property when money is this cheap.

minimuffins• 6 years ago

The stock market and housing prices are higher than ever, so a large part of the population is doing good.

confusing the map for the terrain

jbay8083• 6 years ago

"Higher" is measured in dollars, so isn't a high stock market and housing price consistent with the US dollar simply decreasing in value?

If wages haven't risen in proportion, then this doesn't seem like a win.

iphorde• 6 years ago

Those Elites are back in power in a few days. Enjoy it. America voted for it.

adamnemecek• 6 years ago

The elites have been in power since idk when.

babaganoosh89• 6 years ago

The problem isn't comparative advantage, it's that the US left the poor states to languish with poor education. So instead of higher quality manufacturing / blue collar jobs, non-educated folks got minimum wage service jobs.

recursivedoubts5• 6 years ago

The US is at or near the top of all western countries on educational spending per student:

https://nces.ed.gov/programs/coe/indicator_cmd.asp

anonunivgrad• 6 years ago

There are not enough "higher quality manufacturing / blue collar jobs." The US has embraced an economic model of outsourcing manufacturing and shifting to an economy based around intellectual property, finance, and other knowledge work. What's left is low-skill, low-pay service jobs, where outsourcing is not possible, but where technology is instead the threat.

And knowledge jobs are jobs for smart people. Most people are not smart enough to do those jobs and no amount of money spent on education (the US spends more than almost every other western country, at every level) can change that.

908B64B1972• 6 years ago

the US left the poor states to languish with poor education

Why didn't state funding pick up the tab?

viburnum• 6 years ago

Comparative advantage never made any sense. It's a model of a world without technology, without supply chains, without increasing returns to scale, and only two countries.

whatshisface• 6 years ago

You sort of had me until the last claim (no more than two countries), I know for a fact their models are more advanced than that. Any actual economist care to chime in and explain comparative advantage?

blackrock2• 6 years ago

Your politicians failed you.

You vote for them, and you feel good if they win. But then what happens? Nothing.

The rich keeps getting richer. While the poor stays poor. And the middle class becomes poorer.

The elites just wants to make more money. And what do they do? They buy out the politicians, in order to keep themselves rich.

And what’s the biggest lie that they’ve sold you?

That trickle-down-economics works for everyone.

esoterica6• 6 years ago

Who is the "you" here? Given that this is a tech focused website, I bet a lot of people on here have done very well in recent years. Hard to consider the 20- and 30- something year olds making $500k/year at a FAANG or a few million dollars when the unicorn they work for IPOs an oppressed class.

roenxi• 6 years ago

Replacing all the financial and political elites is a good idea, they have demonstrated incompetence at running the economy.

But it is too easy to blame them and overlook the role of the public. Particularly in politics, where it cannot be overlooked that the voters vote for whoever they want. This didn't creep up on the US - this was a 30-40 year process overseen by the Boomers which anyone could have seen coming had they looked. Many did, it was obvious China was the future. It is well worth being sober, realistic and evidence based about what they did and whether their successes and failures were correctly learned by the next generation.

I think the 30s and under have learned a lot more lessons about the environment and social theory than developed an understanding of why China is becoming the pre-eminent world power, why it is led by Communists and whether the US should have done things differently.

jhallenworld2• 6 years ago

I think this all started as some kind of national security consensus that we would help China by having free trade with them.

It worked in that millions of Chinese have been uplifted (of course this is vast oversimplification: they helped themselves and many other countries also trade with them), but has definitely failed if we ever thought to make the Chinese government less authoritarian as a side effect.

It was definitely paid for by American workers. I don't know what economists were smoking when they thought the entire blue collar workforce would be retrained into better jobs, but that's the theory they kept forwarding.

I've also heard that this has helped America by keeping inflation low. What they mean when they say "inflation" is almost always "wage inflation". You can see the mindset in the Covid relief debates- God Forbid we give people more money than the slave wages they get from corporations- they might not work! Corporations might have to pay more in wages!

magicsmoke• 6 years ago

In a sense this has kept inflation low. China's factories and population can produce more cheap knick knacks than America can ever consume. Instead of newly printed money chasing after an inexhaustible supply of things to order from Amazon, it chases after things that are actually limited in quantity like land, stocks, gold, and bitcoin.

esoterica6• 6 years ago

Why the obsession with manufacturing jobs? Unemployment was still low (at least pre-covid) and total compensation, while not growing as fast as some people would like, is still higher than ever.

slv77• 6 years ago

Manufacturing requires the ability to marshal human, technological and financial resources at scale. The US policy for the last 50 years has been to invest heavily in the technological and financial capabilities of the equation and outsource the human capability to other countries.

COVID-19 has made it apparent that there are significant advantages to having the operational capabilities to organize human resources at scale. The US, for example, was unable to staff an effective test and trace program even while a significant percentage of its population sat idle or to mobilize healthcare resources to hot spots. Effectively the US traded 300,000 lives because the US couldn't effectively organize 300,000 people quickly.

mc32• 6 years ago

Dems used to be pro labor, Repubs used to be pro business (on balance, but kind of served both when it made sense).

In the ‘80s Dems saw being default pro business was more lucrative and jumped ship.

Now both parties play both hands and workers get shafted.

Oh but the Dems are pro workers! No, they are not. They pretend they are. The only ones who are pro worker also sold out (Bernie) and went globalist —Compare his positions in the 80s vs now.

liminal• 6 years ago

"Made in America" is a nice slogan, but "Not Made by an Enemy" would be more apt. Made in an Ally would be fine too (Canada, Mexico, Western Europe...)

boringg5• 6 years ago

Haven't heard that one. That would be the best expression -- Made by an Ally to co-brand with Made in America. Made in America protectionism raises the ire of all its allies (which over the last 4 years it has trashed).

Udik• 6 years ago

What you call "enemy" is, in this case, simply a fully independent nation. That is, one free to have goals and strategies that put its interest first. What you call "allies" are subordinate nations, free to pursue their own interest as long as it doesn't conflict with the interest of the US. The US are a perfectly independent nation. So is China.

earthboundkid• 6 years ago

I felt like we should have done that with Saudi oil after 9/11. Why did we let them have no consequences when their policies were most directly responsible for it, out of all countries in the world? We should have put a tariff on their oil and used Canadian crude until they stopped promoting extreme Wahabiism.

adventured2• 6 years ago

Because it would have crashed the US economy. The US was highly dependent on Saudi oil back then, and Canada could not have come close to filling that gap (their output was 2m barrels per day circa 1999/2000, the US needed both all of that supply and OPEC supply).

Over time the US has removed its dependency on Saudi oil, courtesy of fracking. OPEC oil is no longer necessary for the US economy.

The most interesting thing about Saudi Arabia going forward is that the US will eventually benefit from destroy them as China is the primary beneficiary of Saudi oil (which will also make US oil that much more valuable, we'll send it to Saudi's #2 and #3 customers, Japan & South Korea). I'd expect the hawks in DC to eventually consider turning Saudi Arabia into another Syria.

The second most interesting thing about Saudi Arabia, is their population to barrels of production ratio. It keeps plunging as the Saudi population soars and oil production can't keep up. A revolution is inevitable; that ratio plunging represents a ticking timebomb of the non-elite population's future wealth rapidly declining (while they perpetually fail to develop an alternative economy).

jl6• 6 years ago

“Made using labor and environmental standards that would be illegal in this country” could work too.

908B64B1972• 6 years ago

I would like that.

Especially when it's countries where it's as expensive to manufacture as here. And with whom we have free trade (meaning our products gets preferential treatments there too!)

ryandrake3• 6 years ago

"Not Made by an Enemy" would be more apt

If there is one thing America is good at making, it's enemies.

EdwinLarkin• 6 years ago

Manufacturing coupled with enviro taxes is coming back to West.

legitster2• 6 years ago

So few of these conversations actually discuss the reasons American manufacturing is so uncompetitive and assume it's entirely legislative/outside factors.

As I been told, cost is rarely the primary factor - Chinese manufacturing is insanely flexible. You can set up a plant with almost no capital, be able to retool at a moment's notice to a customer's whim, and add and drop employees to production at the drop of a hat.

Meanwhile, in the US, unless you are talking about very expensive CNC processes, batch production is not a thing. If you set up a production line, everything needs to be stable and long term. You need permits. You need employee contracts. You need to train people. You can't handle a lot of turnover. You bring in robots, and that requires more specialization and training.

I firmly believe that things which increase fluidity in the labor market will be key to improving US manufacturing. Things like affordable healthcare and housing. Make it so that people can comfortably live in a gig economy.

mncharity2• 6 years ago

actually discuss the reasons

On topics where the fraction of HN readership with professional expertise is relatively small, it seems HN infrastructure and culture often isn't able to surface that expertise, to sustain the quality of discussion which exists when the fraction is large.

I wonder if there might be some form of low hanging fruit, like maybe a cultural convention of creating a "professionals" comment tree, where people are expected to apply a stricter-than-usual test of whether they have the expertise to comment? Attempting to create a lump of critical mass professional discussion.

mncharity2• 6 years ago

flexible

I don't disagree, and very not my field, but I found it curious that France's manufacturing exports per capita remain 2x the US[1], despite not having a reputation for flexibility.

Germany remains 4x. Which raises a question, with respect to manufacturing exports, why does the US look like a smaller EU, rather than like a larger France or Germany?

[1] https://tcdata360.worldbank.org/indicators/mnfc.ex?country=B...

johnzim• 6 years ago

Germany has 2 advantages: 1) A deliberate political aim to maintain a manufacturing base, prosecuted over decades; and 2) A currency which is deliberately kept cheap by use of ballast (the PIGS - Portugal, Italy, Greece and Spain) - countries whose currencies would, on their own be considerably cheaper than the amalgamated Euro.

The US could, if it wanted to have both of these advantages, which is why I'm pretty bullish on the potential for the US manufacturing future, if not on the reality:

1) is political and requires expensive action that is broadly not favored by either party - protectionism, boosterism, technical training, PPPs. Concerted effort at Federal and State levels. We do it for Defense but not for other sectors.

2) would look reasonably achievable but somehow the Fed has missed its inflationary targets for the few years, so I'm a little skeptical about the chances. Also if you look at the dollar's relative price over the last 30 years it broadly approximates a sine wave that we're on the upwards slope of (past performance yada yada etc)

benhurmarcel2• 6 years ago

All your points are down to lowering cost by exploiting workers more.

Lower capital needed due to low salaries, no employee protection, no building or environmental regulation, no employee contracts, no training… Is that really what you want for your country? I imagine you don't see yourself working one of those unprotected low-paying jobs however.

ReaganFJones• 6 years ago

If I was part of a developing nation then, yes, I would absolutely want those jobs. They tend to be the best jobs in the region and one of the key ways to advance your social class. There's a pretty strong amount of research backing up this position: https://www.nber.org/papers/w9669

It's one of the main reasons we've seen such a sharp reduction in poverty at basically every single monetary value you could measure it at https://imgur.com/a/qIB24jP.

What you appear to be characterizing as strictly bad worker exploitation is a key part of the best known way to reduce global poverty.

legitster2• 6 years ago

I think my argument is that putting the onus for welfare on employers is clearly counter-intuitive.

I already spent a fair share of my working life in unprotected, low-paying jobs. And they wouldn't have been nearly so bad if I didn't have to worry about things like healthcare or outrageous housing costs.

esoterica6• 6 years ago

Real manufacturing output is a lot higher than it was back in the supposed heyday of manufacturing.

https://fred.stlouisfed.org/series/OUTMS

Manufacturing employment, on the other hand, is down substantially because of automation.

WillPostForFood4• 6 years ago

How much of manufacturing output growth was driven by the boom in the oil/gas industry? People hear manufacturing and think electronics or cars, but petroleum and coal was 2x the size of the auto manufacturing last time I looked.

taylodl• 6 years ago

How many countries in the world manufacture commercial airliners? How many countries in the world manufacture automobiles sold around the world (don't forget a lot of 'foreign' cars are manufactured in the United States)? How many countries in the world has a private company manufacturing re-usable rocketry capable of carrying crews to the ISS?

I've been reading these scaremongering stories all my life. First it was Japan eating our lunch. Where are they now? Then it was Mexico poised to take all our manufacturing. Didn't happen. Now everyone is scared about China. Pretty soon they're going to realize they don't want to be in the business of manufacturing screws, either. There's simply no money in it.

Meanwhile U.S. manufacturing has been growing. That's something the NY Times is conspicuously silent about.

I'm not saying the U.S. doesn't have social and political issues we need to get sorted out - but there's never been a time in our history that we haven't had social and political issues we need to get sorted out. I'm not saying we don't have progress to achieve. I'm saying I'm sick and tired about hearing how the U.S. no longer manufactures screws and consumer electronics. There's a bigger picture to consider.

m4635• 6 years ago

What's funny to me is that people complain about US automakers losing... with no mention of Tesla at all.

roland_nilsson2• 6 years ago

Well I'm no economist, but this seems inevitable if (1) consumers want cheap products and (2) production is cheaper elsewhere. Given those conditions, any company that wants to survive will have to move production abroad (and those that do not will quickly be replaced).

So if we want to keep domestic production, either consumers need to voluntarily choose more expensive alternatives -- which seems unlikely to happen -- or we have to put tariffs or other restrictions on import of goods. The EU does this for a variety of agricultural products to protect farming, for example.

Or is there another way out?

m4635• 6 years ago

Computer controlled manufacturing, robotics, and other forms of automation, like Elon Musk's gigafactories.

I don't know the reality of the gigafactories though:

- how many "corner cases" are handled by humans

- would it (un)scale for things with smaller production numbers?

roland_nilsson2• 6 years ago

Increasing automation to push prices might keep the factories within the country, but it won't save manufacturing jobs.

jjk166• 6 years ago

Most stories like these completely misunderstand the issues with american manufacturing.

It's easy to see lower American manufacturing employment and increasing Chinese manufacturing and conclude that American jobs are simply moving to china, but this narrative doesn't hold up to basic scrutiny.

Take for example steel production. American employment in the industry has fallen by 55% since 1989, while chinese production is now 5 times higher. Case closed right? Well no. In that time period, the US built over 40 Million Tons of steel production capacity, 46% of its total capacity. Further, while chinese production has increased dramatically, they are not a major exporter of steel to the US, peaking at 7th largest trading partner in 2015 and currently not even in the top 10. Our biggest steel trading partners are Canada, Mexico, and Brazil.

Looking at the situation more granularly, we see that US steel production has been approximately constant since the early 80s, whereas Chinese steel production didn't ramp up till the 00s, around the same time that the decrease in US steel employment leveled off.

There has been a major shift in how steel is produced over the past few decades. Over this time period, blast furnaces have been shutting down and been replaced with basic oxygen and electric arc furnaces which require less manpower to produce steel. In 1920 it took 3 man hours to produce 1 ton of steel in the US, now 1 man-hour produces 300 tons. Further there have been major shifts in consumption. The US is consuming less steel as most of its infrastrucuture is already built up, and as new products use less steel (either because stronger steels can do more with less or other materials like aluminum and plastics are used instead). China is employing many more steel workers to work less efficient plants, making lower grade steels to fuel its transition into a developed nation.

While this is merely one example, the story is similar in a number of industries - employment goes down in the US, up in China, but there is no decrease in productivity in the US which closely coincides with an increase in production in or exports from China. In general, productivity and capital investment in the US actually remains steady despite shrinking employment, and where there are decreases in productivity, they tend to correlate with reduction of demand, for example in the auto industry.

When people think about automation, they typically picture robots doing what they had been doing. In most industries that hasn't happened, so most people conclude that automation hasn't had any serious impact yet. But the real change is typically in much more mundane process improvement. You don't need as many people to do the same amount of work, and the work that needs doing tends to be different from what was done in the past - more desk jobs and information processing, as well as more low cost unskilled labor, with the blue collar professional in the middle mostly made obsolete. Trade wars with China or subsidies for "onshoring" aren't going to change anything, unfortunately recreating the prosperity of our past will require complicated holistic changes to many sectors, informed by a firm understanding of manufacturing technology and economics.

glial• 6 years ago

Wow, thank you for such a thorough and informative comment.

chillacy• 6 years ago

I remember this fortunately got at least a bit of debate time in US primary season. It looks like (as many things) there are multiple causes, and automation is definitely a huge one that can’t be ignored when talking about losing manufacturing jobs.

kernel-dump• 6 years ago

“Take for example steel production. American employment in the industry has fallen by 55% since 1989, while chinese production is now 5 times higher.

...

Do you know of any data sources for this? I’d like to look at other industries as well.

mips_avatar• 6 years ago

I think what companies really want is manufacturing as a service, much like cloud computing economics but for physical goods manufacturing. They want the ability to scale without building their own infrastructure, they don't want to deal with the personnel, they want to be able to lock-in only the capacity they know they will use and get a discount. The problem is that unlike cloud computing which can automatically scale, manufacturing as a service is all about people. You have to remove people from the equation to the point that the only people are debugging the machines.

nine_zeros2• 6 years ago

I don't see any talk of removing US dollar as a reserve currency.

The only reason China is so export oriented is because they need to earn dollars to buy oil. If they didn't need to buy oil in dollars, they would reorient their factories to sell their manufactured goods domestically, giving everyone a high standard of living. Instead, they are making more and more goods for our fat American consumption just to earn more and more dollars.

Sure, removing dollar as a reserve currency will make all of us poorer by global standards but we won't need to import manufactured goods from China any longer.

kenned3• 6 years ago

Your post contains many errors.

1) The "Petroyuan"... Should this ever happen, Oil will be priced in Yuan. https://eurasiantimes.com/petro-dollar-vs-petro-yuan-is-chin...

2) this is NOT the reason china exports. They do this as they have a large labour advantage, very lax pollution laws and can make things for far cheaper then others can. You can determne this for yourself once you realize that China doesnt only export to the USA. When China exports to the EU for example they earn Euro notes. They can convert Euro's to USD if needed, but i dont think their primary goal is to accumulate USD, espeically given their massive USD Bond holdings. If anything, they are probably looking to sell USD bonds to diversify.

3) removing the US as a reserve curency wont just make americans "poorer" - it will have a devistating impact on your ability to borrow. Since the US gvt constantly runs a deficit who will finance this when other nations no longer want/need USD?

4) The US needs to import because as the article stated, they no longer manufacture things. Try going to a city like "bridgeport, Connecticut" and see the mothballed factories. It will take decades to undue the damage outsourcing has caused.

nine_zeros2• 6 years ago

I understand everything you said. I meant weaning the US dollar as a reserve currency gradually instead of abruptly. We are already getting some ways there by printing to pay for the massive deficits.

What I meant is that we cannot have our cake and eat it too. If we want to assemble smartphones here, our workers will have to accept the life of those workers. Those workers don't own cars, live in shitty shacks and have no wlb to speak of. But considering that so many people are clamoring for such jobs, maybe that's what we should go for.

America Can’t Even Produce the Things It Invented

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