The decline of high-tech manufacturing in the United States

https://blog.waldrn.com/p/the-decline-of-high-tech-manufacturing

by giuliomagnifico • 11 months ago

124 192 11 months ago

blog.waldrn.com

chrsw• 11 months ago

1. Do we really want these jobs to come back to the US?

2. If we do, what cost are we willing to pay for it?

smitty1e• 11 months ago

3. If we don't, who eats the blame when the strategic failure comes home to roost?

johnnyanmac14• 11 months ago

Given current trajections: either Biden, Hilary, or Obama. Changes based on the day. Democrats by default are always at blame, of course.

noosphr2• 11 months ago

Does the US need a functioning war force that China can't turn off when they feel like it? This happens: https://www.theguardian.com/world/2005/nov/22/books.france

8note• 11 months ago

couldnt china make the same threat of nuking america if america doesnt give over its nuclear codes?

4gotunameagain• 11 months ago

Maybe maintaining interdependencies will maintain peace. But of course this is not going to happen, we are on course for conflict.

pokstad• 11 months ago

People need purpose. It’s not enough to work in an Amazon warehouse selling stuff from China to make ends meet or driving Ubers. These manufacturing jobs aren’t low skill industrial age jobs, they are highly skilled professions that improve our national security.

bilbo0s• 11 months ago

I think the implication of question 2 is who, exactly, are we going to tax to get the money to pay for all the highly skilled professionals needed? Everyone can't be working for a military contractor. Someone has to pay the costs of moving the legions of workers needed into those jobs. And taxing the uber drivers, walmart stockboys, or the Amazon warehouse workers is just not going to get us there.

In my view, the way forward is, unfortunately, automation. We can't bring that manufacturing back using the same labor basis as is used in Asia. Just to put that labor basis in perspective, we'd be looking at millions of jobs that the military would be funding through sub-contracts. We have to get some of that work done through industrial automation without creating jobs. We need to do that not only to make this sustainable, but really even to make this feasible at all.

Analemma_• 11 months ago

I've yet to be convinced that manufacturing jobs inherently give more "purpose" than white-collar work, and I think posts like yours are mostly ungrounded fantasy. Ironically, that kind of rose-tinted nostalgia is usually coming from people who have never actually worked a manufacturing job themselves and can only guess at what it's like from internet memes.

I recommend this quasi-review of Rivethead by Ben Hamper if you want a taste of what "manufacturing jobs" were actually like: a lot of people drinking themselves stupid to escape the monotony and utter lack of agency in their work. And this was at one of the Big Three automakers, supposedly the peak of what we're trying to return to! [0]

[0] https://kontextmaschine.tumblr.com/post/96390732283/happy-la...

nemothekid• 11 months ago

People need purpose.

I can't help but feel you are romanticizing manufacturing jobs. The vast number of manufacturing jobs that "give people purpose" are still here - those people just travel to china once a quarter.

The guy that stands at a station for 8 hours a day, stamping the same 4 bolts into a car frame does not have anymore "purpose" than a guy running around in an Amazon warehouse.

mrheosuper• 11 months ago

work in an Amazon warehouse selling stuff from China to make ends meet or driving Ubers

You think those factory workers have a better job ? Imagine sitting 8 hours a day, just screwing screw.

lettergram2• 11 months ago

Yes. Strategically, it makes sense for the US, much like Russia and China to be independent.

Sanctions weren’t effective on Russia because they had most of what they needed domestically and partner markets to sell those goods to.

When the US tried to impose sanctions on China, China called the bluff and blocked strategic materials. The US “trade deal” wasn’t much different than how it started.

In terms of willing to pay for it; what’s having a country worth? Because if a competing country can withhold resources you need, you’re effectively a junior partner.

Ultimately, reduce over seas benefits, tariff and offer tax write offs to build on shore. Then you’ll have better higher paying jobs and onshore manufacturing. More real GDP from goods will not have a negative impact or cost, it’s part of why Germany and Japan grew rapidly (they had tight import controls, to build a domestic industry).

Also, the majority of the country voted for Trump and this was his #1 issue. Like him or hate him, the desire for domestic protection is what elected him.

delecti• 11 months ago

I don't think it refutes your point that supply chain dependence is a tactical weakness, but sanctions weren't effective on Russia because half the world is still buying their oil.

justinrubek• 11 months ago

Given that only 65% of people voted, the majority did not vote that way. Plurality is likely the word you're looking for.

mc323• 11 months ago

They would pay better than fast-food. So, I think so.

When we started shipping manufacturing jobs overseas people in power would say that the future was in service jobs. Ha! What a joke. Every population has a bell curve distribution --i.e. not everyone can work toward being a high value-add service jobber.

We manufactured high end handsets (Motorola) stateside till roughly 2014. Sun manufactured workstations in the East bay. If you go back further Cisco and 3Com used to manufacture in the South bay.

It was better than working at Mickey D's. So, yeah, we'd want these stateside. Better than having people out in the streets strung out on drugs not even aware their lives are going down a whirlpool.

Everyone since Obama paid lip service to bringing back manufacturing jobs --they were doing this to pretend they cared about the blue collar folks Clinton, G "H" W and G "W" sold out. I blame Clinton the most because he just let China ascend to the WTO despite knowing the Chinese had loopholes allowing them to ignore much of the conditions. "W" just didn't care.

varispeed2• 11 months ago

The economy is going downhill, precisely because we have no manufacturing and investment funds are in full asset stripping mode.

In few years there will be no one to buy said services and everything will implode.

wenc• 11 months ago

If we want US manufacturing, it has to:

1) Meet or exceed spec (this shouldn't be a problem)

2) Lower TCO than competition -- labor, automation (this is where the US is current uncompetitive on the lower-end, very competitive on the high-end).

3) Non-cost strategic requirements compared to the competition -- supply chain resilience, national security, lower lead time, consumer preference for US made (but not all products fall into these categories)

4) Benefit from policy intervention like subsidies, tariffs, tax incentives and regulations vis-a-vis competition (the problem with these protections is they make US products uncompetitive in the long run in the international market -- US cars for instance are not competitive in most countries)

laughing_man7• 11 months ago

1987, literally the peak cold war military spending, is an interesting year for comparison. Much of that high tech manufacturing (and employment) was underwritten by the taxpayers through the Pentagon, and that military tech eventually made its way into the civilian market.

Very soon after the US took a decade-long "procurement holiday", and we lost an enormous amount of manufacturing expertise.

Can we bring those jobs back? Sure, with a lot of tax money. Do we want to? I do - the value of "service economy" jobs is in free fall as companies replace white collar employees with LLMs.

avalys• 11 months ago

Is this really about military spending? The US used to make so many products and appliances domestically - everything from steel to uranium to doorknobs to refrigerators to chemicals to CRT displays to roofing shingles, and everything in between.

The military benefited from the massive industrial base that supported this production - but it didn’t create it.

And now the loss of that domestic manufacturing base is largely why military production - and indeed, any kind of large-scale endeavor in the US, including construction - is slow and expensive.

bad_haircut72• 11 months ago

its not specifically military spending, just good government. If they pivoted after the cold war back into the space race or something, we would still have a high tech sector and it need not necessarily be military focussed

derefr• 11 months ago

An interesting rabbit-hole I fell into the other day, was researching the French company Vantiva, the maker of my ISP's fiber ONT (and many previous cable modems I've had from other ISPs, under their previous names Technicolor / Thomson.)

If you trace out why Vantiva makes modems, it turns out that it's because all the patents for cable modems / coaxial carrier-network signal modulation and amplification were filed by RCA; GE bought RCA; and then GE divested its own + RCA's consumer-electronics businesses (including these patents!), selling that unit to Vantiva.

Presumably, cable modems were the kind of industry that only support a few big players, because there's not enough margin there after licensing costs are paid to patent-holders. The default winner of such a market would be a vertically-integrated player who holds those patents and can therefore make cable modems without licensing them.

That player was RCA (American); then GE (American); but is now Vantiva (French).

Vantiva released the cable-modem patents into a free IP sharing consortium kind of thing 15+ years ago now; but only once they already had an extremely dominant position in the space, with existing contracts with pretty much every ISP, such that they could be assured continued dominance even without the weight of licensing pressing down on all their competitors' backs.

Whenever I read about tech IP, I run into similar stories to this one. Some American company owned some tech innovation, but sold it to an overseas buyer some time in the late 80s / early 90s. And now it's not worth it to make that thing in America any more, because doing so would require licensing that IP from its current overseas owner.

(Perhaps, if America wants to be competitive, the government should encourage American firms with lots of free cash to [re-]acquire foreign companies that hold especially-valuable IP. Then, at least the IP incentives would lean in favor of vertical integration of manufacturing within the US.)

laughing_man7• 11 months ago

The article identifies three areas as "high tech manufacturing": Computer and electronic products, Pharmaceuticals & medicine, and Aerospace products and parts.

It's likely microchip development would have happened somewhere else without large US defense contracts. The industry was literally created by defense contracts for things like spy satellites, combat aircraft, and ICBMs.

Same with aerospace. The entire commercial aerospace industry exists because of bomber development in WW II, and all the engine tech since was initially developed and deployed in military aircraft. Carbon fiber, radar, fly-by-wire, plus the entire manufacturing process that produces aircraft that work the first time were all technologies developed or made practical to manufacture for the military. There's a reason passenger aircraft aren't manufactured in countries without a lot of military spending - companies like Boeing, Airbus, UAC, and Comac all depend on military contracts to pay development costs.

What constitutes high tech manufacturing is probably a bit different today. I would include sectors like exotic materials (superconductors, boutique alloys, and almost-here stuff like graphene and CNTs) and battery tech.

evantbyrne• 11 months ago

Where did you see that white collar jobs are in a free fall? The employment rate is still tightly correlated with level of education as it always has been.

laughing_man7• 11 months ago

People who graduated in June are having a real struggle finding a job. Companies haven't laid many people off (outside of the ones that over-hired recently, like Meta and IBM) but they're not hiring. That's just the breeze that's heralding the storm. LLMs are going to make "any degree" jobs an increasingly rare thing as time goes on.

d_sem• 11 months ago

When I see data like this i'm reminded of the history of automotive manufacturing in the 20th century and the several waves of technological changes that re-wrote the role local labor played in building cars.

The question isn't, what are the absolute number of jobs in a given sector. The question is, what are the overall trends in productivity, robustness of supply chain, and relative competitiveness in the market.

alephnerd2• 11 months ago

Good callout.

Also, a major pet peeve of mine for over a decade now has been the lack of granularity in classifying "high tech" jobs.

Most studies use BLS codes, but those are extremely dated - they still treat a typist like a skilled worker and a machinist as a semi- or low-skilled worker.

In reality, aside from macro-level production stats and private sector signals such as dealflow, we have no idea about the rate of production in the US.

From personal experience, I doubt any "make in America" policy would lead to more jobs - most low and medium level assembly roles have been automation friendly for decades now (even in India you can buy and install a programmable soldering robot for roughly the same amount as a year's salary for an employee).

Most discourse is divorced from reality, I blame this on the lack of engineers in the policy space - most of us with those backgrounds would rather remain in the private sector, because an LA or think tank staffer salary ain't making rent in DC.

If you do not know the difference between AC or DC or what solder flux is, let alone further intricacies, you have no position making industrial policy or grand strategy for American manufacturing or engineering (this is a shot fired at you so called "Software Engineers" as well - Leetcode doesn't mean you understand how Infiniband works). But this principal also works in reverse w/ regards to policy matters imo.

ericmay3• 11 months ago

I doubt any "make in America" policy would lead to more jobs

This seems guaranteed to be false because at a minimum you’d have construction workers building manufacturing facilities. But I don’t think you meant it literally, which leads to my next point which is that even if moving a factory making X widget from (insert country here) resulted in a single job at the expense of any number of jobs in (insert country), I would deem that trade off to generally be worth it. Now as we add in prices and cost and all those things it means there’s a social cost to moving those jobs back, but often times the “jobs” angle is that moving production here or even to other western countries won’t create that many jobs, but even if it’s 1 it’s 1 more than before. I think it’s better and more important to think of the whole package of trade-offs instead of caring about number of jobs.

varispeed2• 11 months ago

It's painfully obvious if you want to make something in very much any western country. There are very few firms you can subcontract CNC work or PCB assembly. Then the costs are so high, your product will be dead on arrival price wise, but also there is lack of skill and capabilities.

Unless you are dealing with companies that supply to the military, you'll get poor workmanship and months long lead times. Might as well just give up or...

Just subcontract work to China. Sure, there is many crap suppliers, but once you find good ones, it's another league in very much every aspect. Parts take days to deliver, not months and are top quality.

I think many people don't realise that we are very much in the middle of shit creek and without a paddle.

A_D_E_P_T• 11 months ago

Unless you are dealing with companies that supply to the military, you'll get poor workmanship and months long lead times. Might as well just give up or...

This is true even if you deal with companies that supply to the military.

Just subcontract work to China.

The thing that kills me is that dealing with China is so much easier than dealing with anywhere else.

Part of it seems to be an attitude thing. Like, if I shoot somebody in China an email, it will inevitably be answered within 24 hours, and more likely within 4.

Send an email to an EU or US company, and you're often (I'd say typically) going to wait days for a response. I've never seen that, not once, in dealing with a Chinese firm. What's more, if you're buying from their B2B megamarkets (like 1688.com) they almost always have live 24/7 customer service and procurement support available on chat.

The other part is that, if you know what you're doing, it's less risky. I was chatting with a French vineyard owner a couple of years ago. He was pulling white vines to plant more red varieties, because his best clients, the Chinese, preferred reds. He told me that dealing with China was easy -- they'd always pay in advance, and a handshake deal was always honored. Dealing with the US, in contrast, was a nightmare of legal quicksand, double-dealing, and Net-30 that always seemed to turn into Net-90.

foobarian• 11 months ago

The more I read about this kind of thing, the more I wonder what it would be like to up and move to a bustling tech center in China like Shenzhen or similar. Where there are stores in walking distance selling electronics parts. Where you can walk into a shop and get PCBs made. Where you can meet and talk shop with fellow makers who are not just LARPing arts and crafts but actually doing cutting edge manufacturing. Has anyone done something like this?

johnnyanmac14• 11 months ago

China doesn't have what I'd say good labor laws. But you can't jsut lay someone off at a moment's notice. This generally means that employees stay around, build expertise, and generally have progression to care for when building a career.

The US... I'm sure we all know the story. So much bearacracu and crazy turnover. So many times I'm communicating with a partner and then things stall because that partner's liaison was suddenly gone. No backup to pick up the ball, no sense from anyone else on what this context really was. So at best it's weeks spent re-aligning on stuff previously discussed. Worst case you end up ghosted and your partnership silently dies (at least from my end. I'm sure higher up the law firms are being revved up).

There is also culturally just a lot of disdain here. Hyper-individualistic culture can make it hard to work together at times. Be it because of pride or because they are barely keeping themselves afloat. There's very little stability and it's long gotten to a point where the dysfunction reflects outwards, publicly on display. Especially these days with Vulture capitialists grabbing brands to pick off what remains instead of trying to turn a company around.

It's all a mess here.

ai4u• 11 months ago

In fact, China has a complete surplus of productive capacity because of its large population. Every path that can lead to remuneration by meeting demand is crowded with people.

anghunk• 11 months ago

Or it's a good thing for consumers, but cruel for workers. He has to work at any time, otherwise he will lose this job, because there are too many people who can replace him. They even work overtime overnight, not complying with labor laws.

genman• 11 months ago

The writing has been on the wall for quite some time. It became quite obvious when the Arduino wave took the hold and people started to design their own PCBs and realized that they can get their designs done in China much cheaper and faster. It was by now over 10 years ago - this was the moment when the opportunity was really lost.

johnnyanmac14• 11 months ago

I think many people don't realise that we are very much in the middle of shit creek and without a paddle.

To be fair, the current powers are trying to pretend we're rafting in a chocolate river, because we won a golden ticket and it's gonna make us rich. Whether that's on the adminsitration for lying or the people for believing, that's for the reader to place blame on.

mitthrowaway23• 11 months ago

As few and far-between as the CNC machine shops and PCB assemblers are in the west, it's even fewer if you want something even moderately sophisticated for making a high-tech product like stamping, spinning, heat-treating, electroplating, coating, anodizing, rubber-overmolding, photo-etching, screen-printing, and so on. At that point you basically buy machines (probably from China) and do it all in-house, or you send it to China where, as other commenters point out, you'll get an affordable quote back within 24 hours.

But once you're having your parts heat-treated by one Chinese company, electroplated by another, and over-molded by a third, you really may as well move the whole production line there.

phil212• 11 months ago

I think many people don't realise that we are very much in the middle of shit creek and without a paddle.

Yep. I've watched things for some time, and I think almost everyone is stuck in a "I was 20 years old and things were like X" mentality. Including their take on China capabilities.

Yes, China was the place you outsourced cheap BS that had horrible quality to 25 years ago for stupid cheap labor and materials.

Today? You are not outsourcing to save money, at least in the direct sense. You are outsourcing there because it may be the only place in the world that can get shit done for you in a reasonable time with a reasonable competency level.

And at this point? It's basically the entire value chain short of product marketing and branding for many products. All the technical design knowledge is located there for the most part, and operates at lightspeed compared to the US.

If we went to war it'd be over as soon as the weapons stockpiles got depleted - only one side has the capability to manufacturer at scale. And it's not even like a mismatch - it's an ability vs. complete inability.

bix6• 11 months ago

Meanwhile farmers are also struggling but we can just eat AI right?

nostrademons4• 11 months ago

So here's what I don't get about the public discourse on manufacturing in the U.S:

When I talk to people who actually run factories here, they say that manufacturing in the U.S. is fine. It's just highly, highly automated. You'll have a production line that takes in plastic and chips and solder, and spits out consumer electronics at the end, and there are maybe a couple dozen employees in the whole plant whose job is to babysit the line and fix any machine that goes awry. Their description is backed up by data: manufacturing output has been flat since roughly 2000 [1], but manufacturing employment has dropped by more than 50% [2].

The public discourse about why we want to bring manufacturing back to the U.S. has been split into two main points (and you'll see it in comments here):

1) We should bring back manufacturing jobs so that we can have good, middle-class wages for the large segment of the population that's currently in low-wage service jobs and about to be displaced by AI.

2) We should bring back manufactured goods so that if we go to war with China, we can still make all the things we need to wage that war.

If it's #2, that's fair enough, and every indicator is that we can do that, it'll just take time and capital and perhaps some entrepreneurship. But it won't fix #1. Just like all other manufacturing in America today, the lines will be highly automated and largely run by themself. And that's a good thing - if we go to war, we want highly productive, distributed factories because we'll need the people to actually fight the war itself. The jobs are not coming back. If you expect someone with a high-school degree to be able to own a home today, the solution is not to put them to work in a factory ("manufacturing engineer" is a skilled job today anyway, not unlike a computer programmer), but to automate building houses and get rid of zoning/permitting constraints so that there are actually enough houses for everybody.

Is this just a case where politicians tell voters what they want to hear so they can go do what they want to do anyway? "We're going to bring back good high-paying manufacturing jobs for everyone" is a lot more palatable message than "We're going to go to war so you can die."

[1] https://fred.stlouisfed.org/series/OUTMS

[2] https://fred.stlouisfed.org/series/MANEMP

mattnewton• 11 months ago

I think it’s as simple as the selective pressures in our democratic system push for this rhetoric.

Politicians who pitch “I match your worldview and will implement the simple fixes you want” outcompete “I think your worldview is incomplete and this is what you really want instead”, by a lot.

Some might be very crafty and believe the second while shouting like the first. Many will actually believe the simple solution can work though.

patagurbon• 11 months ago

There is a 3rd point, that craftsmanship, machining skills, and logistics experience don’t fall from trees. As the US moves certain “lower” tier manufacturing overseas it can risk losing the experience needed to create tooling for production lines, or the industrial knowledge to build large numbers of ships, etc. The jobs argument on its face falls flat for me, but I think a better justification for it is depth of experience and knowledge being lost.

echelon• 11 months ago

This. We're in a tough spot because the know-how has atrophied. We're not making the raw inputs anymore.

Since the jobs are low paying, we should create a new class of worker visa and bring over folks from developing nations to work these jobs.

We should build the exact same factories they have in China, but staff them with immigrants from Latin America, Asia, and Africa. The wages wouldn't be great, but we could build the factories in LCOL areas and extend citizenship as an additional carrot.

Bringing the factories on shore would let us be prepared for the upside of eventually automating it all. I don't think we can do that unless the factories are already here -- you can't will fully automated factories into existence from nothing, with no demand and no know-how. We can manufacture that demand now if there's enough political will for it.

Immigration has always been our real superpower... We should double down and get people to immigrate and work in new factories we spin up within CONUS.

awesome_dude2• 11 months ago

All of the manufacturing economies have started out as "low quality", and "cheap" - Japan, South Korea, Taiwan, China.

All of them took the feedback onboard and improved the quality of their systems (Continuous Improvement is a practice that was refined in Japan - Toyota)

There's nothing stopping any other country from doing the same.

nostrademons4• 11 months ago

I've been having similar thoughts about software engineering since one effect of LLMs is they make senior devs very productive, they make junior devs superfluous, but being a junior dev first is how you become a senior dev.

But I wonder if the outcome is simply that we drop every known manufacturing technique on the floor and just start from scratch with current adjacent technologies. Basically kill the whole industry and reboot it again.

My sister was a petroleum geologist. She went into oil in the early 2000s because she saw the roughly 30,000 person shortfall of petroleum geologists that was about to happen as the baby boomers aged out of the profession, and was like "Well, they're going to need to hire new blood, that's good for me." And it worked great for about 5 years, she was paid a shit-ton of money because they couldn't get people. But then two layoffs later, what actually happened is that the entire oil industry and associated value chain is dying, and we're replacing it with electricity, solar, batteries, EVs, smart-grids, and a bunch of things that didn't exist in the early 2000s.

Maybe the same thing happens to manufacturing, and we just get rid of craftsmanship, machining, and logistics, and have everybody 3D-print their appliances in a factory-in-a-box they keep at their home, just shipping filament and chips and other raw materials directly to them.

jppittma• 11 months ago

Not sure where I fall on that one. In business, it is said that one ought to focus on core competencies and let other companies handle the rest. Why shouldn’t a country do the same? Should low level manufacturing be a core competency of the US? Why? Turning steel into screws is certainly lower margin than turning screws and engines into airplanes.

mikrl• 11 months ago

I think a better justification for it is depth of experience and knowledge being lost

My favourite example from Adam Smith remains the nail maker. At the time, London factories were churning out iron nails by the bushel, whereas the provincial Scottish blacksmith was able to craft perhaps 10 in a day.

Is it so terrible that no one these days knows how to make nails? That our physical and mental capabilities are put to more productive ends?

That’s how I see these skill sets ‘lost’, national security related industries notwithstanding.

Caligatio• 11 months ago

SmarterEveryDay has a whole series[1] on manufacturing that covers how the US is losing/lost the ability to create tooling. I believe the "Smarter Scrubber" episode[2] is the one that explicitly talks about how not only has the US lost manufacturing capacity but it also lost the ability to spin up manufacturing. The tool and die episode also touches on it[3].

[1] https://youtube.com/playlist?list=PLjHf9jaFs8XUZ3azgCNyawIQ5... [2] https://youtu.be/GDzBE6vz5r0 [3] https://youtu.be/3ZTGwcHQfLY

cogman10• 11 months ago

I have coworkers that used to work in chip manufacturing (used to being the key phrase) and they saw what you are describing first hand.

One example they gave, it used to be someone's job to load and unload the silicon wafers into the various etching phases. As time went on more and more of that manual work was replaced with automation. A floor with 50 workers became 25, then 10, then 1.

And, to be clear, this was absolutely a good thing for the product. So many yield issues were caused by manual processes.

The future of any manufacturing is that of high automation. That means low to no jobs. We aren't going back to an economy where a shoe factory employes 500 people.

What's particularly bleak, IMO, is society in the US revolves around work. Every job out there is being automated away. That's not a bad thing for quality, but what it means is there will be increasingly fewer jobs to go around.

bushbaba• 11 months ago

Automation lowers costs, which increases consumption. We essentially trade time for dollars, and then dollars for goods that themselves took time to produce. While the exchange rate of time-for-time stays constant, automation means we now get more goods for the same amount of time worked. So it’s not nearly as bleak as you make it out to be.

magicalhippo• 11 months ago

I have coworkers that used to work in chip manufacturing (used to being the key phrase)

A family friend was a chip designer for a large European company. Back in the 2000s he told me he saw the writing on the wall as they moved manufacturing to Asia.

He said he expected design to follow not long after, and sure enough some 5 or so years later he lost his job as they moved design department closer to the factories.

Perhaps it's different now, but as I recall he said there were advantages of chip designers being close to the chip manufacturing folks.

platevoltage• 11 months ago

If the average person can’t afford any of the products being made, and the inevitable handful of trillionaires have more money that they could possibly spend, society will have a big problem on its hands.

SilverElfin• 11 months ago

The problem is there is no pipeline to get people into these highly automated levels of manufacturing. How can you learn about all the steps and how they’re done “manually” and all that, to be able to participate in the high end of manufacturing? It feels like an island. And once the current talent retires it may leave a void even for those highly advanced factories.

abe_m5• 11 months ago

I'm split on this. Tradesmen that came up through their apprenticeship say that people need to learn the old manual machines to "feel what the machine is doing", before you can move over to computer controlled machines. But I think that is just the tendency of people to say the path to their current location is the path they took. Not that another path isn't actually a better way to get there for the current environment.

I also think there has been a bit of bias in trade schools towards learning manual processes because it is cheap. You can have a room full of students spend weeks learning to use a file to shape a small block of steel to precise dimensions. A $5 file and $10 of material is easier to supply than a $1XX,XXX computerize manufacturing machine that can process $XXX of material or more per day. But spending weeks to learn how to precision hand file is pretty well a waste of time for modern manufacturing.

awesome_dude2• 11 months ago

2) We should bring back manufactured goods so that if we go to war with China, we can still make all the things we need to wage that war.

I think that I have seen that this kind of "independence" has been a driving reason for China's strategies too. I don't think that it's necessarily a defence against a war, maybe more of an economic buffer, ensuring that China, and whomever follows the strategy is no longer dependent on any other entity for parts of their supply chain.

One of the things, too, that people seem to forget is that the West (in general) has neglected their manufacturing capability in favour of the "Asian Tigers" doing the work (Japan, Korea, Taiwan), China is just the current holder of the title (for how long is anyone's guess, Japan especially has endured a sustained stagnation of their economy over the last several decades).

Germany, for a while, was a strong manufacturer, and have (so far) been using the resulting economic position to their advantage inside the European Bloc. Perhaps that's the model that the USA (and others) should be looking toward?

yupitsme1232• 11 months ago

I think a big component of China's imperialist strategy is to de-infustrialize the world, much like what's happened to the US.

mc323• 11 months ago

It's obvious that any high end manufacturing in any country capable of sustaining high end manufacturing will not produce jobs like in 1950, '60 or '70. But the same is true of service sector jobs. More is being automated.

That said, we can bring manufacturing back stateside which can be highly automated and have high value while employing workers at wages much better than their service-job counterparts.

In addition, we don't have the same population growth we had in the post-war years, so we don't need to produce millions upon millions of jobs. What we need to do is stem the job losses and increase output.

We can be a bigger version of Switzerland. Sure, things get more expensive, but by and large folks live better.

GauntletWizard• 11 months ago

The problem is that the two are equivocated regularly for political points. We want both - highly automated factories for productive output, and middle class jobs. Building the factories will bring some middle class jobs - not a lot, but there's a decent number of maintenance and operating staff even at lights out factories, and the expertise building those factories is a bunch of valuable jobs and experience that we've let China hoover up.

The problem is that these two concepts are treated as one.

givemeethekeys• 11 months ago

Let's say we manage to bring ever more fully automated factories back to the US - wouldn't that create many more jobs to fix the robots?

markus_zhang• 11 months ago

That’s still fine. You gotta hire people to maintain the robots, the people to build the robots, and the people for all service companies to service all those people. Then there is infrastructure, entertainment, etc.

And on top of it you retain the knowledge to build, assemble and maintain these robots. This is alone worth the effort.

johnnyanmac14• 11 months ago

And on top of it you retain the knowledge to build, assemble and maintain these robots.

Not with these constant layoffs and high turnover. We're not working like a country that wants to last long term.

abe_m5• 11 months ago

I think we're starting to see the pile up that assuming people who worked assembly lines will just become robot tech isn't happening. For the entirety of humans, there have always been a place for low-skilled labour. We had subsistence farming, then as the industrial revolution came on, we ended up with a lot more types of labour jobs. As farms mechanized, we got factories, and as factory output went up, new products were created that needed labour to install them. Now that the remaining factories are requiring smarter workers, farms are pretty well fully automatic, we have a glut of working age people sitting on the sidelines unable to find work that is worthwhile doing.

I think we're at the point where more automation means more loss of work, as opposed to people moving into the new jobs created, for an ever larger portion of the population.

alberth2• 11 months ago

My understanding is that this is all about cutting edge manufacturing.

E.g., in semiconductor fabrication - over the past decade, Intel’s chip production and process nodes have lagged 1–2 generations behind leading non-U.S. manufacturers.

nostrademons4• 11 months ago

That's true for chips but not necessarily for other high-value manufacturing sectors. Americans are still the world leaders in say metallurgy or nuclear engineering, for example: all the jet turbine blades are still made in America, and most nuclear reactors. Also ASML gets all the hype for EUV lithography, but Applied Materials (based out of Santa Clara, CA) is still a critical part of the supply chain for new semiconductor fabs. And the EV industry started in Fremont CA with Tesla, although they've since lost some of their edge to Chinese and Korean manufacturers.

johnnyanmac14• 11 months ago

And that's a good thing - if we go to war, we want highly productive, distributed factories because we'll need the people to actually fight the war itself.

Yay. Men get to spill their blood over a country that won't even give them enough pay to cover rent. The robots are cushy at home making weapons to kill more men with. Very good thing.

If you expect someone with a high-school degree to be able to own a home today, the solution is not to put them to work in a factory, but to automate building houses and get rid of zoning/permitting constraints so that there are actually enough houses for everybody.

Yup, just automate out the construction industry while we're at it.

Sorry for the cynicism, but but somehow I don't think even with more houses that we're going to have Gen Z and Gen Alpha survive the way The Boomers and early Gen X did.

kingofmen2• 11 months ago

If there is one house per person then approximately every person gets a house, because almost everyone is willing and able to pay more for their first house than even a very wealthy person will pay for a second one. If there are 1.5 houses per person then you will have to work quite hard at being homeless.

gonzobonzo• 11 months ago

I don't think conclusion matches what we're seeing, though. Real output being flat while population and consumption have massively increased means that much more of our consumed products are being manufactured abroad now. It's not just automation at work. The original article even talks about that, where it mentions how high tech manufacturing is shrinking as a percentage of the economy.

It might well be true that we're never going to see the kind of employment in manufacturing that we used to, but a blanket "the jobs are not coming back" attitude doesn't match the data either.

MengerSponge• 11 months ago

“The factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment” – Warren G. Bennis

mitthrowaway23• 11 months ago

How come this doesn't match my experience as a customer?

When I buy an iPhone, a vacuum (robotic or handheld), a drone, a camera, a KitchenAid kettle, a silicone brush, an electric fan, a battery-electric drill, just about anything really -- the expensive models might say "designed in USA" but they'll still say "made in China". The US used to be the go-to place to make all of these categories of products. So I don't believe the only thing that's happened is that American factories set up robots, laid off the workers, and got more productive than ever.

nostrademons4• 11 months ago

If you are a customer, it is almost by definition "low-value manufacturing", because you have only one household's worth of money to spend, and not a Fortune 500 company's or nation-state's budget to spend. If you're buying jet engines or nuclear reactors or jet fighters, they are probably made in the U.S. (I probably erred in choosing "consumer electronics" as an example, because most of those are made abroad. Even so, there are some surprises: I just bought a brand-new Toyota Sienna manufactured in Indiana, and a System76 Thelio workstation manufactured in Colorado.)

inferiorhuman2• 11 months ago

You'd have to check specific models but for most of the existence of DSLRs China's been a bit player. High end bodies and lenses are typically still made in Japan, low end stuff got moved to Thailand and Taiwan.

  If you're buying jet engines

Less efficient stuff is absolutely made in China and Russia. But high end engines for e.g. airliners are pretty much only made in the US and UK/France.

csomar2• 11 months ago

Our consumption has massively increased since the 2000s. Production output has remained constant. Someone else was pumping these goods.

dyauspitr• 11 months ago

What exactly is made in the US though? Besides cars and some forged tools, I can’t think of a single thing made in the US.

Edit: I looked it up, it’s a lot of things. Airplanes, military aircraft, helicopters, satellites, rockets, construction/agriculture equipment (Caterpillar, John Deere), ICE and EV cars, chips, medical equipment (MRI, CT scanners), lots of defense stuff, drugs and pharmaceutical, processed agri goods etc.

SoftTalker2• 11 months ago

You'd be surprised. Medical devices, injection molded stuff, custom or small batch machined parts, other kinds of components and/or final assembly and packaging of bulk materials. It's not always very obvious what goes on in all the steel buildings in the parts of town that white collar people don't visit.

killjoywashere2• 11 months ago

A buddy from Bridgepoint made a point to me once: maybe we're not number one in every industry, but find me a sector where we're not in the top 10.

hattmall3• 11 months ago

Guns are a pretty large domestic manufacturing segment.

tdeck3• 11 months ago

So in other words, the US domestic manufacturing economy is very highly dependent on the military industrial complex. That sure dosn't bode well for the rest of the world.

kingofmen2• 11 months ago

we'll need the people to actually fight the war itself.

Will we? It appears to me that modern war works substantially like modern factories - you don't actually want a large mass of semiskilled workers to pull the levers, each of which can substitute for a different one on about five minutes' notice. You want relatively few, highly-trained specialists to instruct the ~~robots~~ drones. It is perhaps less true in war than in manufacturing, quantity still has that quality all its own, but it seems very unclear that just raw numbers of soldiers will be an important bottleneck as between Great Powers.

yupitsme1232• 11 months ago

I'm pretty sure most of the robots and drones are manufacturered in China though. Even if they weren't, a lot of critical components for building things come from there now.

ndiddy• 11 months ago

Here's a great video by Smarter Every Day that came out a few months ago: https://www.youtube.com/watch?v=3ZTGwcHQfLY . It's about his experience with the atrophying US industrial skillset while he tries to make a grill scrubber entirely in the United States. He brings up a few good points about manufacturing that I personally found compelling:

1. During Covid, medical supplies were in short supply, to the point where the US government was flying in individual airplanes from China full of N95 masks and face shields. The guy making the video knew that Alabama (where he lives) wouldn't be on the priority list for where the masks and face shields would get distributed. His community's initial response was to 3D print face shields and donate them to healthcare facilities, but they knew that they had to step up to actual manufacturing to produce the face shields in necessary volumes. He was only able to find a single aging technician in Alabama capable of producing injection molding tooling, which he then was able to use to mass produce enough face shields to supply Alabama and neighboring states. If that one guy had chosen to retire before Covid, they would have not been able to make the injection mold locally. At a time where global supply chains were massively disrupted, they would have been screwed.

2. When an American company gets their products made overseas, the factory overseas that manufactures the product owns the tooling. This means that they're able to fill your order during the day, then at night make exact clones of your product with lower quality materials and undercut you, and you have no recourse. He brings up an example of a local small business that had this happen to them. Even though they had a design patent, they needed their lawyer to continually send letters to get Amazon to take down no-name clones of their product (and then the seller would just pick a new random set of 6 characters to sell it under). If US companies have no choice but to get their products made in countries that don't care about IP, then we're not just giving up on manufacturing, we're also giving up on designing products in the US.

When he was trying to get the injection mold for his grill scrubber made, lots of companies in the US were willing to do the actual plastic manufacturing in the US, but could only get the injection mold tooling done in China. He brought up that in the past, an American company would build a machine and then ship it away to the developing world to be operated there. We've now reversed this, so the high-skill portion of manufacturing is done overseas and the only Americans involved are just pushing the buttons to operate the machine.

rediguanayum• 11 months ago

It would seem like the solution for 2 is for an automated takedown process on Amazon, or for Amazon to certify that their seller isn't infringing on said patent.

abe_m5• 11 months ago

It seems a bit of a tautology to ask the survivors if things are OK. Of course is is OK for them, they are in an industry segment that survived the trend of moving everything possible to China. If you go ask where the factories were shutdown, you'll find different responses.

The dip in number of manufacturing employees corresponds time-wise to China joining WTO, and the massive CEO hype of shutting down US factories and moving them to China, rather than super-duper automation hitting the scene and automating the factories in place.

I have a suspicion that the displayed manufacturing output chart is in dollars, not amount of stuff, and that is likely bumped up by highly automated IC/chip manufacturing that is high cost/value, but low tonnage work.

the__alchemist• 11 months ago

There is a perspective that I think will crystalize the nature of this:

Try to have a device made without sourcing parts of China. Maybe an assembled PCB. Maybe it's a tool of some sort. You will find that this is impossible, or much more expensive/worse experience than sourcing from China.

Now, imagine a scenario where China collapses. (In the broadest sense). Whether it's a war as you say, or any other scenario. Imagine this happens in a few decades, after we (The world) has committed to this path. We will have lost so much of the tools we build our civilization on, and it will take generations to get this tacit knowledge back.

What's good: We (humanity) can build things cheaper, and higher quality than ever before, thanks to China's exquisite, vertically-integrated, and automated manufacturing capabilities.

What's bad: We are putting our eggs in one basket.

csomar2• 11 months ago

How is chart 1 showing everything is fine? US population and consumption have both increased, meanwhile production is still the same which suggests that these products must be coming from somewhere else.

If you really had an automation boom, this will show up as an increase in output. If there is no increase in output and an increase in demand, the prices/margins improve which might explain why producers are happy but they won’t be able to export their products; which they might not want to do as China has killed any possible margins.

hattmall3• 11 months ago

I think you have a flawed assumption. Highly automated manufacturing is only common because of high labor costs. If we are forced by non-profit driven reasons to bring manufacturing back it won't be automated as well. Things that can be highly automated are still being manufactured in the US. The things that can't be are made using human labor in cheap countries.

intended• 11 months ago

Even in cheap countries, manufacturing is being automated. This is a problem for countries globally, the only ladder left to uplift their population is services.

Machines don’t take breaks, don’t need holidays, don’t get injured, and when deployed are more consistent and efficient.

Having people work in factories, and get paid is great in a vacuum. However this is a competitive economy, your competition is doing lights out manufacturing, and is making more consistent goods, cheaper, and faster.

And we’re getting better at building robots. The American debate is about 20 years late.

vivzkestrel• 11 months ago

you forgot to cover the other 12 reasons https://www.molsonhart.com/blog/america-underestimates-the-d... one of them being physical fitness of workers and their willingness to slog

tdeck3• 11 months ago

manufacturing in the U.S. is fine. It's just highly, highly automated.

It's interesting that you mention this because most of the small-time inventors I've seen online in the electronics space either build things in their garage by hand or have them fabricated in China (or occasionally another poor country like Vietnam). Custom PCB production and assembly at places like JLCPCB and PCBWay (both in China) appears to be highly automated. But getting the same thing made in the US in smaller quantity is going to cost not a little bit more, but often ten times as much. And it will require "relationship building" with a job shop, rather than just uploading something to a website and paying for airmail delivery. And will likely have a longer lead time. To say nothing of the fact that most of the components you're buying are made in China anyway.

So it may be fine to manufacture a large run finished consumer product in the US, but it's very capital intensive. For new products that aren't attached to an existing massive corporation with domestic production capability, you basically have to outsource to be price competitive and do any kind of volume beyond your own garage. I would be love to be proven wrong and learn about other options in the US but when I looked around I wasn't too impressed.

hypeatei2• 11 months ago

With the US unemployment rate being so low, with birth rates below replacement levels, and with anti-immigration sentiment: how do proponents of "bring everything back" plan to deal with the human capital problem?

Besides that, bringing everything back would surely raise prices quite substantially and we've seen how voters reacted to COVID inflation.

ericmay3• 11 months ago

There are 340 million or so people in the United States - what’s the human capital problem? It seems like we have a skills gap, and I’d agree if that’s what you had in mind, but shear manpower? I’d have to see some extraordinary evidence to convince me otherwise. Even for agriculture or construction it’s not like America can’t issue seasonal work permits or something. We have plenty of levers there and plenty of folks who would come work here.

Besides that, bringing everything back would surely raise prices quite substantially and we've seen how voters reacted to COVID inflation.

Agreed, but if both parties get behind it, I don’t think it would matter too much.

hypeatei2• 11 months ago

There are 340 million or so people in the United States - what’s the human capital problem?

As I mentioned, the unemployment rate is already low. Looking at total population numbers is a fools errand since not every single person is able to work (or willing)

it’s not like America can’t issue seasonal work permits or something

How does that fare against the anti-immigration i.e. "only Americans should work these jobs" sentiment?

and plenty of folks who would come work here.

Agreed.

but if both parties get behind it, I don’t think it would matter too much.

That's pretty hand wavey and doesn't address the very price sensitive culture that the US voter base has.

to11mtm3• 11 months ago

There are 340 million or so people in the United States - what’s the human capital problem?

I'll be bold and suggest that the 'third rail' human capital problem that almost feels sidestepped by the Parent comment you're replying to (i.e. maybe that's what they are asking, but really is the question everyone should be asking,) is the question of how there will be enough jobs paying into the overall 'system' to sustain any of it.

Even for agriculture or construction it’s not like America can’t issue seasonal work permits or something. We have plenty of levers there and plenty of folks who would come work here.

But those would be can kicks, and 'properly' implementing most of those levers would just increase the cost. On some level 'work permits' are a can-kick, we are saying we can't pay people inside our country enough to do the work which in itself indicates an imbalance somewhere.

Agreed, but if both parties get behind it, I don’t think it would matter too much.

I feel like this ignores the second+ order effects. US Petrodollar hegemony has been for better or worse a sort of global constant despite Nixon Shock [0] and we IMO don't have the necessary infrastructure to handle another round of that, because this time around we've got way less manufacturing capacity to keep the circus running [1].

The biggest problem being, 'complacency via placation' has been too ingrained in folks for lots of reasons, and now we are in a situation where people aren't willing to give up simple things. I mean you imagine the reaction of your modern American[2] if they had to do something like deal with gas rations, let alone limitations on how much waste they could create...

[0] - I bet folks are watching what's going on with Yen Carry trade very closely

[1] - I will die on the hill that 'Ashtabula Cranks' are a benchmark of basic US Manufacturing capability tho.

[2] - I am, but also I saw what happened during covid

abe_m5• 11 months ago

While official unemployment is low, that is only people actively looking for work. Labour force participation is way down from it's highs when it peaked in the late 90's. From a peak of around 67%, the US is currently at 62%[1], and the fall off corresponds to the time when imports from China were rising hard and it was the trendy thing to do among executives to shutdown US plants and move production to China.

[1] https://fred.stlouisfed.org/series/CIVPART/

Many people and towns that lost work in the manufacturing shut downs still don't have replacement work, and I think part of that is we lost a lot of low-skilled labour work as the factories left.

Now a question would be, if the work does come back, will it be low skilled enough to be able to hire the same pool of people formerly employed?

graeme2• 11 months ago

Unfortunately I think that's just aging of the population. There's no upper age limit in that calculation. It includes retirees as "not in the labour force".

If you look at the participation rate of people aged 25-54 it's near all time highs.

https://fred.stlouisfed.org/series/LNS11300060

juujian• 11 months ago

Note that "Aerospace" is largely arms, not passenger airplanes. It's the billion-dollar bomb the U.S. has dropped on Afghanistan, and air-to-air missiles that cost 10s of millions of dollars each to manufacture. There aren't even any benefits accruing to a large population, it is actually the opposite.

protocolture• 11 months ago

Honestly prefer manufacturing in politically stable countries like China. The US is just too big a risk.

tekno45• 11 months ago

people always want manufacturing jobs that manufacture widgets.

If we spent time expanding and heck just properly maintaining our infrastructure we'd have plenty of blue collar jobs that pay well.

but infrastructure is an unspoken sin in modern america.

esseph• 11 months ago

This article is fantastic

cayu-ai• 11 months ago

We work in blue-collar industries such as logistics and manufacturing, the backbone of the U.S. economy, where most processes remain manual.

Small and mid-sized companies resist change. Convincing them to adopt even basic “data entry” automation can take months. Many prefer to keep friends or relatives on the payroll instead of modernizing. At the level of production lines or logistics functions, the resistance is stronger. The prevailing view is: “we have done it this way for decades, why change.”

I believe the future will not come from persuading reluctant incumbents. It will come from new manufacturing companies that start digital-first, with AI at their core. These firms will redeploy workers into higher-value roles, outpace legacy operators, and set a new standard for U.S. competitiveness.

Case in point - China. They started manufacturing companies mostly from 2000s, using slightly more modern tech than US did in 50s. Obviously, China has more efficiency and higher production capacity per (any normalized unit). Or, in financial services, in APAC, nobody uses checks, or even in Africa. Because they did not have to deal with legacy financial systems.

The opportunity is not to patch the old, but to build the new.

intalentive• 11 months ago

America’s ruling class has driven the country into a ditch. I am profoundly skeptical of their willingness or ability to fix the mess they have made over the past several decades. This is what they wanted.

This is what happens when finance capital holds the whip hand over the state. China furnishes an example of the opposite.

Gud• 11 months ago

Meanwhile, american companies are

1) Building a grid of satellites, surpassing most networks, SpaceX

2) Building a carbon fibre rocket, Rocket Lab

3) Building fusion reactors, Commonwealth Fusion Systems

4) Advanced solar panels, First Solar.

Hard to say how this will all pan out but the USA are absolutely at the forefront of high tech manufacturing. Obviously they are lagging behind in some ends. Poor rail networks, for example.

jonezie• 11 months ago

War will be automated before too long as well. The Chinese are far ahead of the west in automation of production lines too. Basically, we need to be nice to China, not try and start a war with them. Historically, there’s no evidence to say that china would start a war so I guess that’s up to the west to chill out and accept that they’re not number one anymore.

The decline of high-tech manufacturing in the United States

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