I haven't been myself but my wife is a process engineer and had to go to China to install and train people on a new machine so this is only second hand...
But one of the reasons China is so good at manufacturing is because everything is in one place (or at least clusters)... need 10,000 of an Integrated Circuit? The company that makes it is literally down the street. Need some raw materials? That's down the other street.
I can't think of a place in the US that is like that. If we need parts we have to wait for them to ship. (often from China)
It's not just a labor problem. It is my understanding to be competitive in manufacturing you need to be vertically integrated. And I think that is harder to do in the US.
Although I hope it is true. I live in the US but I don't believe in inherit United States exceptionalism but I do feel like shipping goods by container ship is bad for the environment and bad for consumers. I'd much rather see things made locally.
Silicon Valley is called that because that's how it used to be. They actually made the chips there, and if you grew up there, you could get computer parts cheaply and easily. Jobs and Wozniak could build the Apple I in a garage only because of where they were.
Exactly this. North San Jose (the 237 triangle) used to have PCB, chip, chassis, component, etc., manufacturers in proximity to each other. Consider: Sun used to make and assemble their "workstations" over in the East Bay not far from the 237 triangle. As the late '90s approached much of that local manufacturing was off-shored to the Foxconns and Flextronics, etc. as well as overseas foundries.
And when it all went over there it made room for Google and Facebook. Today it's hard for a startup to find space in downtown PA because of Palantir.
What's a "problem" for the rest of the U.S. is creative destruction here. I worry we may have learned the wrong lessons because of current politics and inequalities. And it's worth remembering that automation is going to result in that manufacturing resulting in less jobs. What's going to happen when people expect the jobs to come back but then they don't?
I know this has all been said, but I'm not sure everyone's connected all the dots.
Ya, I don't think most people think past the surface of this issue, but than, most people don't think at all.
On a side note, unemployment rates are at a low, so we relly don't need to worry too much. If you look at the charts: https://www.google.ca/publicdata/explore?ds=z1ebjpgk2654c1_&... you see that it really was all due to the recession. Now that the economy has recovered, jobs are back.
>it's worth remembering that automation is going to result in that manufacturing resulting in less jobs. What's going to happen when people expect the jobs to come back but then they don't?
/u/Brightball posted this on HN and I felt it was a good response to your concern.
"One of the big perks to manufacturing is that it draws the entire supply chain around it naturally. Even if the manufacturing job itself isn't as abundant, the peripheral jobs that comes with it from shipping materials, producing materials, distribution, sales agreements, logistics, building construction and maintenance...they all provide benefits."
Exactly, there may well be a lot more manufacture and assembly here in the US, but that's to support US deliveries with lower-cost shipments of final products. And most of that is automated, which is what allows US mfg to compete with overseas.
For off-the-shelf electronic parts in small quantities, everybody orders from Digi-Key, or maybe Mouser. Order by 8 PM Central time, delivery by 10:30 AM the next morning if you pay for FedEx.
That's what wiped out local parts stores. You never knew what they had in stock, and the markups were huge.
Also, Digi-Key doesn't have a counterfeit parts problem. Digi-Key deals directly with manufacturers. The supply chain is simple and has no anonymous resellers. If someone finds a bad part and reports it to Digi-Key, their systems can trace it back to the manufacturer lot. So not many duds get through.
Yeah, I understand a DB9 solder cup is a niche product for a local Radio Shack and they have to pay for store space and employees, but there was just no way I was going to pay $6 per connector when I could order them for $0.30 each from Digikey and have it in two days. It wasn't just that part. Every part was like that. $2 for a single capacitor. $15 for a pack of 100 resistors. Etc. And good luck finding the exact one you wanted. Those parts shelves were only stocked every 5+ years ... I could easily see four generations of packaging for the same part in those things.
It's really a shame because it was great to have that "I can get this part in ten minutes" feeling when I was in the middle of a project and I ran out of something I needed, or realized I was missing a part.
This is a problem with shipping with Fedex too. There are a bunch of variable charges that aren't finalized until after the shipment has been delivered. In practice it is rarely and issue and using post paid labels instead of prepaid shipping labels is a better system for most businesses anyways.
Is the order cost variable with digikey because the shipping weight is not known or is there another reason?
Digi-key, Mouser should have retails office ___location in Silicon Valley where anyone can order on-line and pickup in person when notified the order is ready via email/txt.
Plus, many of the major electronics distributors were either based here or had presence here (Hamilton/Avnet, Wyle, and Marshall at least were within a couple-mile radius of each other). Fry's also started here, with its first electronics store in a former Fry's Market building on Oakmead in Sunnyvale.
I don't know if being a manufacturing powerhouse is actually all that exciting anymore. There aren't really that many jobs in manufacturing anymore. Some of Toyota's modern car plants employ a meager 1500 people which is about and order of magnitude decrease from what car plants used to employ.
This las election was frustrating for this very reason everybody assumes getting manufacturing back is going to be great. It's not. Sorry, it just won't be.
Manufacturing is moving back to the US because distributed supply chains are becoming worth the cost increase in labor.
One of the big perks to manufacturing is that it draws the entire supply chain around it naturally. Even if the manufacturing job itself isn't as abundant, the peripheral jobs that comes with it from shipping materials, producing materials, distribution, sales agreements, logistics, building construction and maintenance...they all provide benefits.
With the manufacturing hub overseas all of that's overseas too, which is why China is more vertically integrated.
If I recall, one of the major reasons that Dell took off years ago was that they consolidated the entire supply chain for production and significantly increased profit margins.
Yes, but since China is the manufacturing hub for so much of the world, its local surrounding galaxy of expertise, supply chain, and related resources will exceed the size of such a galaxy built only in the US — especially if the US efforts are by dint of tariffs and related policies, and not economics.
The US was a larger manufacturing nation than China as recently as five years ago. Cutting the US corporate income tax rate nearly in half and lightening economic regulations, will do wonders for boosting US manufacturing.
Given China's $3.x trillion in manufacturing is heavily tilted toward low cost, low value manufacturing, it's not going to be surprising to see their global share of manufacturing shrink in the next decade as other low cost competitors continue to take share from them (whether in Vietnam or Mexico).
Is Africa stable enough? I feel like South America has a better shot at this than Africa. Maybe in a few generations?
Edited to add that I'm speaking in very broad terms, I know that Africa as a whole is enormous, but I don't think of any particular African nation as being stable enough to be able to support the infrastructure needed.
No, I wasn't suggesting nobody compete. By all means, compete. But I don't think measures like 35% tariffs, local tax abatements, overseas profit repatriation discounts, or political bluster are likely to mash more than a little bit of the toothpaste back into this tube.
Producing our own food is not exciting either, but would you like to live in a place that produces no food and has to import 100% of what is needed to survive? This is the same thing here. Manufacturing is not a sexy activity anymore, but it is necessary, as long as we still live in a physical (non-virtual) world.
NYC is part of a larger constituent unit. Japan, for example not being part of a larger state, goes to great pains to subsidize its inefficient agriculture in order that they not rely entirely on trade for their foodstuffs. It's not that they think being dependent _right now_ is an issue. The issue is what state would they be putting themselves in were large producers to put an embargo on them (or there be plagues elsewhere affecting production and thus the little which gets produced by other countries gets reserved for those countries's local consumption).
Such dependencies were the British Empire's key vulnerability during WWI and WWII. They are a part of the reason why the British had to mortgage their empire to the US to pay for those wars.
He's obviously talking about doing so on an international level. As long as the US is around, New York will never have to question whether or not the other states will be willing to do business with it.
While its highly unlikely, its slightly more believable that in the event of another world war or some kind of global food epidemic, a country that doesn't produce its own food might be completely screwed.
'Who feed it', not 'whom'. The latter is the objective case of the pronoun, parallel to e.g. "them"; just as we wouldn't say "them feed it", we wouldn't say "whom feed it", either.
I believe most countries import massive amounts of food, including the U.S. It's much more efficient: Let those who can produce the food most efficiently do that, and you produce whatever you do most efficiently, then you trade. It's called 'comparative advantage' in economics.
Trade is necessary for the wealth of modern economies. Self-sufficiency is North Korea's approach.
The US is most definitely a net food exporter and it has been that way for a long time. "U.S. agricultural exports have been larger than U.S. agricultural imports since 1960, generating a surplus in U.S. agricultural trade." https://www.ers.usda.gov/topics/international-markets-trade/...
That doesn't contradict what I said: The U.S. imports large amounts of food. The charts on a related page show tens of billions of dollars of imports per year:
It still means that the US could probably rely on domestic production if it was forced to do so. In a war, no other country could leverage their position by threatening to stop food exports to the US. It would surely result in less choice, but wouldn't really hurt the US.
My expectation is that it would far more expensive, raising food prices and doing significant harm to the economy. Also imagine the massive costs of shifting production and the gap in food availability during the shift. But I agree that the U.S. wouldn't starve.
I'm not sure about that... a large part of subsidies is to compete in foreign markets. A LOT of food is produced in the U.S. and the majority of trade is so we can get the likes of strawberries year round. A lot of the food staples like grains, beans, nuts, cereals, etc are domestic. Even a lot of the soy and corn. That doesn't mention that we do supply our own meat the vast majority of the time.
I think what would harm us more in total isolation would be the lack of more scarce resources (those used in electronics, batteries etc). We have a lot of materials here, but there are others where China and Africa trade are needed.
I understand the speculation, but if one learns about how economics, trade and the U.S. economy (and all other economies) really work, these hypotheses are clearly wrong.
His point wasn't that we don't import. It's that if we were to somehow have everyone say "we aren't selling food to the US", we wouldn't be totally screwed.
The US has been a net exported of food for a long time. The gap changes, but as far back as I looked, we've never been a net importer. The whole "amber waves of grain" thing.
"It's natural to look at the phenomenon of declining manufacturing employment as a political failure that can be rectified. But the fact that China has lost more manufacturing jobs than the U.S. over the past 20 years is a strong indication that playing hardball with the Chinese isn't going to do anything to increase employment in the United States.
Rather than a political failure, the decline of manufacturing employment is a natural economic process that many industries, like agriculture, have gone through in past eras. As sectors become better at what they do, they often require fewer people to get the work done."
Additionally, manufacturing is often an environmentally unfriendly process, so there are going to be some big added costs for the government and an increase in the importance of adequate regulation and enforcement. Given that the majority of the added revenue these manufacturers will generate is going to go into companies and individuals that are, on average, very good at hiding profits, the IRS is going to have to be very sharp indeed if the U.S. is to actually benefit from this. It's not going to be like it was in the seventies when a much higher share of gross revenue went to unionized workers who dutifully paid their taxes in full.
On the bright side, more Americans are going to find out what living next to a modern chip fab plant is like. This may cause them to actually reduce the frequency with which they buy new phones.
> On the bright side, more Americans are going to find out what living next to a modern chip fab plant is like.
A modern chip fab plant is one of the cleanest industries we have EVER produced.
Everything is really sealed, and even the "waste" gases are purer than what you get directly from most industrial suppliers. It used to be that most of these plants immediately dump industrial gases into their waste stream and purify them to the level they need.
This is different from a PCB manufacturing plant which creates lots of liquid waste that is contaminated with all manner of nasty metals.
< Some of Toyota's modern car plants employ a meager 1500 people which is about and order of magnitude decrease from what car plants used to employ.
1500 jobs + the peripheral jobs (as a another commentator pointed out) could be a boon for many of the small counties* in which these plants are located.
The biggest cost gains have probably been realized, especially given the reduction in long term obligations (pension, healthcare, weakened union position). I could see another round or two of automation, but at some point it's not worth investing in.
Or worth the cost increase of higher automation.. I don't see people living off of what it costs to manufacture goods today. I don't think those particular jobs are coming back.
Jobs don't matter, the goods coming out of those plants are still valuable and making handsome profit with enough scale.
As we move towards automation, wherever the means of production are located is going to dictate who rules the world a hundred years from now. If you don't have a manufacturing base in your country in time it will be a losing battle to try to afford buying other countries unlimited goods with your limited human resources.
Yes, mostly we sell the equipment and design services that make the manufacturing possible. There is huge leverage in that and the higher margins that WallStreet demands. For quite some time (mostly) Asian governments have been investing in education, infrastructure, and equipment to manufacture the consumer items of the world.
It is much harder to do development and understand the real manufacturing bottle necks when you don't see them first hand... even harder when you can't easily get the raw materials.
I was struck with this the first time I tried to order in the US a PCB to the tolerances available in China. The yield was so bad, they basically weren't available. It was cheaper and faster to have the parts built in China and shipped back than to order from a proto house in the US.
Why? They used similar equipment in China (I saw it myself), but they ran it 2-3 shifts every day and it was completely dialed in. In the US they turned it on once a week and tried to make enough prototypes to pay for it.
Yep. The feet on the ground experience tells you, me and others like us that in the war to create automation, the odds favor China, because in the end, they own the myriad little details that get expressed as "edge cases" and resolved issues during development of the automation solutions, and which are completely unavailable unless you own the literal physical factory. This feet on the ground experience is discounted by the policymakers, so it will be an interesting case study to watch unfold over the next couple of decades. If our experience-informed observations are correct, then US senior management will experience a nasty automotive-industry-style shock when it "suddenly" discovers China is far better at automation than the presumptive US comparative-advantaged expertise led them to believe.
My take is there are no shortcuts for doing the actual work. Just like there is no replacement for lifting the actual weight and eating a clean diet instead of reading yourself into expertise on fitness.
Well see "Musk Enterprises" (aka SpaceX and Tesla) for the new American idea of vertical integration. He's trying to literally own the entire supply chain from the bottom to the distribution of the finished goods at the top.
Washington state has an airplane factory in the woods and a car fiber (BMW) plant out in the desert. In the city you can find businesses to build anything.
That's interesting to hear. In South Carolina we've got BMW in the Greenville area and Boeing in Charleston. The Greenville area itself virtually imploded 30 years ago with the textile industry and BMW has largely driven the recovery. Now it's one of the best places to live in the state.
The big question is what happens when the Chinese government puts a high priority on getting into aerospace and tries to replicate their own 787s or A-350s.
That said, Boeing's defense contracts might keep is secure regardless of what happens in civil aviation. United Airlines might buy a plane from China (in a decade), but the US Navy certainly wouldn't.
what happens when the Chinese government puts a high priority on getting into aerospace and tries to replicate their own 787s or A-350s
I am late to this discussion, but James Fallows wrote China Airborn, a book about precisely this topic! The answer is complicated—if it weren't, he'd not bother writing a whole book about it—but the short answer is that so far China's not succeeded.
China does lots of stuff well and deserves credit for it but is not the indomitable powerhouse sometimes suggested in the media (e.g. http://www.marketplace.org/2015/12/10/world/why-cant-china-m..., although I don't know if this piece or others like it are for real).
The "quick, cheap, disposable" stereotype of Chinese manufacturing (whether deserved or not) seems like it would be a major hurdle for breaking into the Western civil aviation market. I see a lot of people leery of Airbus due to their approach to computer control and fly-by-wire, and that's without any doubts about their manufacturing care or attention to quality control.
They sell Chinese pickup trucks here in New Zealand under the brand "Great Wall".
Everything I've heard about them is that they're unreliable and unsafe to an extreme degree. You're apparently better off buying a 3 year old Toyota Hilux or Nissan Navara for the same price as a brand new Chinese truck.
How long ago did these vehicles go on sale and has there been any improvement in quality since? Japanese and Korean vehicles in general had a rough time entering the US market (decades ago). They did start off being lower quality. But they got better. I wonder if this "Great Wall" manufacturer has it in them to make vehicles that are competitive on a global basis.
> The second stage of the project will involve the complete transfer of technology, including the 23 ton thrust Progress D-18T turbofan engines, to China, for licensed production of a modernized version in Sichuan Province.
I would think that this would be the lesser of the problems. Growing up in metro-Detroit, the Big 3 had thousands of smaller 3rd party companies surrounding it that made molds, plastic components..etc. The larger issue that I see would be union's and the large wage gaps. There were plenty of my friends parents that worked on the line making well over $100k each a year (as a line worker!).
Everyone enjoys good news, but line work, manufacturing, and coal are not "coming back" beyond those that are highly skilled in the field.
> I do feel like shipping goods by container ship is bad for the environment and bad for consumers.
How is it bad for consumers (beyond the environment)?
Shipping goods does include an environmental cost which is not incorporated into the price of things - an unfortunate externality. We should have a carbon tax to properly reflect the true cost of items made and shipped so the market can choose between a locally made good and one made elsewhere.
There seems to be a popular opinion that even if the environmental cost were accounted for (carbon neutral) that it is still somehow inherently superior to make things nearby rather then trade for them from another city, state or country (especially food).
> We should have a carbon tax to properly reflect the true cost of items made and shipped so the market can choose between a locally made good and one made elsewhere.
I agree, but the results may be a bit surprising. Shipping by container ship is extremely efficient [1]. On the West coast, for example, it might be cheaper (possibly far cheaper) to buy goods from Asia than from the Midwest. And wine drinkers in New York who care about energy consumption might be better of with French wine than "local" California wine.
This probably also explains factories in the middle of the US closing, since they do not have easy transport links in and out of the country. They would have been built there in the past because of easy transport links within the country.
It's not so bad if your land transport uses the train. Although I'm really surprised at how unsafe trains are, according to that. Is that all from automobile/train collisions at level crossings?
You'd be surprised how negligible the environmental impact of shipping compared to production is. As an extreme example, it's cheaper in terms of CO2e emissions to produce and ship lamb from New Zealand to the United Kingdom than produce it in the UK.
I dunno about NZ and the UK, but from what I've seen of farms in Australia and Sweden, I can believe it. In Australia, I see cattle in absolutely massive fields where they eat whatever is growing there. In Sweden, I see small fields that can't sustain the livestock (especially not in winter) and they need to feed them farmed food, which takes a lot of energy to grow, store and harvest.
Producing lamb in NZ is a veryow intensity operation. Usually lambs are just out on a hill and left there for a few months before slaughter. There's also drenching and other stuff, but the actual land they're in isn't irrigated or worked at all.
Not so much these days, but it used to be fairly common to just run sheep up a mountain valley and then twice a year muster them down the valley (often with only horses and dogs) for shearing and slaughter. Any sheep that fall ill would either recover or die.
That's still the case usually, a lamb is worth a lot less than the vet costs.
if you're producing wool, let's substitute/add shearing, washing, drying, processing, packing, etc.
not to mention sales, marketing, client relations, accounting, human resources, payroll taxes, corporate taxes, property taxes, sales taxes, value added taxes, etc. because a ranch is a business that turns over probably millions a year.
how much does all that cost in the UK? how much does it cost in NZ? find the difference, and compared to the shipping costs, which are trivial, probably a couple of thousand dollars to get a refrigerated 30 foot container from Auckland to Amsterdam, then another few hundred pounds to get it across the channel and into a distribution center in the south of england.
i don't know a damn thing about farming or logistics, but all it takes is about 2 minutes of thought to see how the economics would work.
Still a lot of truth to this. Here in West Michigan, there are tons of auto parts manufacturers, both "boring" manufacturing (plastic molding, etc.) and emerging tech.
Yes, that was a big part of it. If even one of the Big Three had failed, the ripple effects would have crushed the entire industry, as well as the region. The resulting failure of many suppliers (due to them losing ~33% of their business overnight) would have crippled the surviving auto companies as well.
I read an article from the economist awhile back detailing how Mexico is a better source of manufacturing than China due to raw materials being available from within the country. In that article they stated that raw materials are actually scarce in China and have to come from abroad, causing larger fluctuations in pricing during depressions.
That may be true for inegrated circuits, but for other things north america has clusters. Im in vancouger. Want to film a movie? Everything from costumes to CG is here. And we can have whatever celebs you need here overnight. China cannot do that. Want to build something out of wood? We got that too, with a world-class wood sciences program in town (UBC). If you want you can see your product from tree to shelf all within an hour's drive. China cannot do that either. Get out of the consumer elecronics mindset and you will find all sorts of local clusters.
Doing electronics here in the states is a pain in the ass. Maybe a little less so in some parts of CA, but for the rest of us it sucks. Pretty much everything has to be shipped to get anything done. You spend more days waiting on UPS then actually moving forward. Unless of course you can foot same day / next day shipping all the time.
Relieved to see Deloitte issuing a report sure to ease the firm's path toward sizable billings from Chinese businesses, SOEs and government entities who are currently struggling with overcapacity and other existential economic threats. I chuckle as I see energy, currency and infrastructure inputs seemingly underweighted in their analysis. As one example... the USD is expected to continue appreciating sharply against developing nation currencies to the great detriment of US manufacturers who exports goods.
not to mention thousands of people willing to work tedious shifts and live in cramped quarters. People willing to leave their villages and move wherever the opportunity presents. People who culturally respect authority of their superiors. People whose memory of dire poverty is still fresh.
Contrast that with Americans who have been told from birth that they are special and their life is exceptional, a philosophy that doesn't gel very well with tedious work at factories.
China wasn't always that way: it was a choice they made to become the worlds manufacturers, with the complicity of the global financial elite. We moved the factories over there, we can move them back.
I'm perfectly happy with that, although I think it is oversold and used as an excuse in many cases. So long as the productive capacity, intellectual property and knock on effects are kept domestic, good.
Have you heard of comparative advantage? It may not be advantageous for the U.S. to keep such things domestic; instead the intellectual property may be better utilized in China.
Watching the asian economies thrive with mercantilist practices, learning about America's early mercantilist practices, and reading Vox Day, John C. Médaille and Steve Keen on the matter.
For a lot of things, I'm not sure it saves people enough money to notice. Production isn't the entire price of a product - you also have things like transportation, retail markup, R&D, advertising, etc.
Let's say that there's a $3.50 product that costs $1.50 to produce, and a company can save 10% of production costs by producing it in China (even with lower wages you don't tend to have huge savings when things like transportation, lower quality, distance from quality inspectors, etc. are added in). So that's a 15 cents saving - now some of that the company is going to keep (let's say 5 cents), some will go to the businesses buying wholesale (let's say another 5 cents), and some will go to the consumer (let's say the remaining 5 cents). So in the end it might be the difference between paying $3.45 and $3.50 for the consumer - something most people wouldn't notice.
Of course, for a company it's a much bigger difference - if everything costs them $2.25, and they're selling it for $2.75, then an extra 5 cents per unit means their profit margins go up 10%.
Of course this is going to vary a great deal depending on a number of factors (what kind of product, if you're buying generic, etc.). But I think for a lot of products the average American wouldn't notice much of a price difference if they were being made in the U.S.
A notable example of electronics that is not made in China is the Raspberry PI which is made in the UK, in Pencoed, Wales, formerly the heart of the coal mining industry.
They haven't always been able to make it in the UK, but as the computer became more popular, the economics have worked out. But the driver for this has been the fact that the organization behind Raspberry PI wants to develop hi-tech engineering education and manufacturing in the UK.
There is an embedded computer called PICaxe that was launched in the UK for similar reasons, boosting engineering education in the country. It roughly competes with Arduino as a platform.
Most/all of the components are manufactured in China, so I'd guess that much less than half of the total retail price represents value added at the assembly stage in the UK.
There's a wide range of electronics/white goods still made in Japan as well, for the Japan domestic and Asian market as there's a quality reputation that people will pay a premium for.
For instance just walking through an electronics store, there are fridges, air conditioners, washing machines, room heaters etc with large "Made In Japan" logos.
Thank you for those links. One thing that jumps out from the links is it looks like the US has an absurdly high corporate tax rate but if you click through you see it is only high because there are few data points and China and India bring down the average.
This chart is almost worthless as a measure of US Manufacturing capacity or production. Why? Because sizable orders to a handful of companies (eg. Boeing, GE, Lockheed, etc.) offsets and distorts the disappearance of thousands of medium and small manufacturers over the past two decades. Its tempting to attribute the associated job losses to automation, but one look at this table: https://en.wikipedia.org/wiki/List_of_largest_manufacturing_... and its clear millions of similar jobs have shifted overseas.
True, millions of similar jobs are created overseas, but that's when salaries are so cheap that automation is more expensive than just manual labor. As wages go up, automation makes more sense in manufacturing, and job losses happen to those countries too.
When looking at developing countries that are actually developing (instead of stuck in the middle income trap) what we see is a picture of a more developed country decades ago, except with access to modern tech. While the modern tech makes them move faster, you should expect them to be more like the US or the EU every year. Look at pollution: China has a huge pollution problem, but that's not unlike LA in the 70s and 80s. People are getting wealthy enough to demand environmental regulations, and in a decade their government will care about environmentalism.
So instead of thinking about how China or India have things that we've lost and try to turn back the clock, it's more productive to think that we have to deal with our own problems today, as China will also have them in 20 years.
How is it a distortion to count output from large companies? If a handful of giants make up a large portion of American manufacturing and have sustained total production, then American manufacturing production hasn't decreased.
Of course manufacturing jobs have shifted overseas; I can't imagine anyone disputing that. I'm not sure what that table means in this context, though. Replacement of smaller manufacturers with larger conglomerates is indeed a major driver of the shrink in jobs, and I don't see where I mentioned automation.
I agree it is worthless, but for a different reason. All manufacturing isn't created equal. The US growth in manufacturing is largely driven by increased oil production. That isn't the manufacturing we want to have. It is not great for jobs, not great for the environment, and it isn't sustainable.
That's a dramatic exaggeration. It's at a low post 1960s (an era which produced a temporary fake high because the rest of the developed world had been blown up, so the US took over half of all global manufacturing, a boon for working-class wages).
Go take a look at what labor pulled in per hour in 1890.
We really need economic indicators that reflect conditions for most people, not just the top few. Indicators that are often used in the news like rising GDP, house prices and manufacturing output are pretty useless if only a few get benefits from them.
> We really need economic indicators that reflect conditions for most people, not just the top few.
We have economic indicators that do that, such as median income and various distributional measures. They don't tend to get covered as much in the news because most of the people with power and influence don't like people paying attention to the stories they tell.
But the same government agencies that publish the headline figures publish my more useful ones for assessing how most people are experiencing the economy.
The people who make money by moving plants offshore, are also behind the design of the economic indicators, knowing that if you can control what is measured then you are in charge of the conversation, and therefore in charge of the politics. That is what American oligarchs have been doing for the past 5 decades, distorting the entire system from top to bottom so that nobody can figure out what is going on. It's the same behavior of a pickpocket or a con artist.
Can you take a look and help me pick which of those 421,000 pieces of time-series data are the conspiracy ones so that I know not to look at them any more?
The physical house will typically depreciate with regular use. It is the value of the "___location" that can fluctuate wildly in recent years. The policy failure is allowing ___location values to to become so disparate and sometimes hard to predict.
I disagree. Previous generations valued housing for its utility: it's a place to live. The land would be seen as an investment if it was used for farming. Gen-X came of age at a time where housing was viewed as an investment to make money on.
The idea of buying a house with the promise of selling it later to make a profit is very modern. My great-grandparents and grandparents all owned one house and lived it in for the majority/entirety of their lives, so the value of he house was inconsequential to them.
My parents and their siblings have mostly owned multiple houses. They never moved for pragmatic reasons, like relocating for a job. Instead, they took to the modern notion of "starter homes", where a family continues to move up to a better house by "using the profits" from the sale of their previous home.
Ugh, "starter homes". Someone saying that about their most recent purchase usually tells me all I need to know about them. American over-idealism at its finest.
Lots of people buy vehicles that depreciate like mad because they believe the total value of the purchase exceeds the total cost.
I'm not necessarily saying that prices should have significant downward trajectory. Of course desirable locations will command a premium over time and so on. But as a society we probably shouldn't be excited that housing sometimes goes up substantially, even as the stock deteriorates.
> I'd be better off renting from someone else losing money.
No, you wouldn't, because if the rental market wouldn't support recovering the full costs to the owner, no one would bother owning land and renting it. Whatever costs fall on land owners will, inevitably, be fully (and then some, usually) distributed to renters of the land.
Only if the landlords are rational. If the landlord primarily bought the property hoping to sell it to a greater fool later on, then they won't care about the negative cash flow.
This is what's happening in Toronto right now. You can rent a condo for less than the mortgage interest + property tax + condo fees + maintenance.
Land already does depreciate to a degree, because most places levy property taxes on land. People don't realize capital losses when they sell because the paper value of the land likely increased. But it's completely possible to experience a net-loss holding land over a long-term, even if it is sold for a profit.
Maybe if housing/land didn't appreciate over time then investment dollars would stop chasing it, and the overall price of renting would stay flat or decline due to the lack of capital inflow to the underlying asset. Who can say?
The problem with these thought experiments is you have to assume some reason why housing prices have stopped increasing, but also that nothing else about the economy has changed. Otherwise the thing that stopped housing prices increasing has probably also had some other pretty serious effects on the economy.
It's like asking "what if World War 2 never happened"? Well, why didn't it happen? The same forces would have pushed us in the same directions. If it didn't happen, well, that world doesn't look very much like the one we live in, so who can really say what would have happened?
In general, making as tiny a change as possible, housing still would be priced the same as it is now - i.e. based on what the market will bear, rather than some weird idea that landlords would get vindictive and crank rents just because their asset is no longer appreciating. To the extent possible that's what they already do, and they would price themselves out of the market with further increases.
But if landlording is still a revenue-positive activity, then people will do it, and housing prices would continue to increase in anticipation of future gains. People would still want to move to desirable locations like big cities, and that increases housing prices too.
So I don't see how exactly this happens without a major, major shift in the housing market - something like "landlording is a revenue-negative activity" or "there is a significant chance of losing your asset value in a fashion that it will definitely never recover within the span of several generations". i.e. nothing like the world we live in.
It's a complex system. One can identify the immediate consequences of a change, but they certainly work more like some "pressure", where other factors will also change and apply their "pressure" on dissimilar ways.
Reducing the lucrativity of owning a house will put pressure into less housing stock and higher rent prices. If it is a fast change the rent price will almost certainly not keep up with it, because the housing stock is kind of fixed at the short term. And yes, some unrelated action may overwhelm that factor. Some unforeseen consequence may also do that, but this one is much less likely.
You seem to have read a "No, we shouldn't, because..." into my post that wasn't there.
My point was directly that it is, in fact, not a policy failure in the usual sense since it is working both as policy makers and voters intend, and, on a deeper level, that --given that people who, in fact, benefit from housing price appreciation are overrepresented among those who actually vote -- changing this is likely to require either changing who actually votes or getting people to vote against their own financial interests.
I simply didn't state that it is a policy failure.
I said We should also start treating rising housing prices as a policy failure.
It's a prescription for what society should do, not an assessment of whether current policy aligns with voter wishes.
In the comment I replied to initially, rising prices are treated as a measure of economic success. Treating them as a policy failure would contrast with that current attitude...
Couldn't one country's CEO be unreasonably bullish or bearish on their country's capabilities relative to others? Do they really know how far along foreign manufacturing schemes are evolving? Nobody is sitting on their hands here; "Made in China 2025" and Germany's "Industrie 4.0" are pretty strong desires to push into advanced production using IoT, smarter automation, and all that jazz. Anecdotally, in a factory visit near Shenzhen, the manager claimed that moving to an automated production line has been pretty easy. Some areas are kept manual only because the worker is cheaper, for now.
Outcomes from competition are hard to predict. It's interesting that Deloitte predicts Germany "holds strong and steady at the number three position" in 2020 when their own survey has them jumping between 2nd and 8th within a couple of years.
I'm pretty sure our manufacturing output exceeded China's for most of the oughts, also. The myth that "we don't make things here anymore" is, well, a myth. We just don't employ people to make things anymore.
It's a well founded myth based on an extremely high percentage of consumer goods produced overseas.
I can't find hard data on this, but anecdotally it's very hard to find things made in the US unless it's a high end store. Chinese manufacturing filled the burst in consumer demand for budget-level products...
True, but that's a relatively small part of the economy to begin with. We make most of the heavy plant in the world, so we're essentially building the factories China uses to make the plastic crap we buy.
Are you sure about that? I'm pretty sure that German machinery exports are higher than those of the US. Couldn't find numbers but remember that Germany was #1 in that segment for quite some time, would be surprised if the US is now leading.
> anecdotally it's very hard to find things made in the US unless it's a high end store
manufacturing output is measured in dollars, not 'amount of stuff' except in very specific cases. producing fewer but more expensive high end goods (like what the US makes) can still result in more output.
That's true most people are surprised to learn this but measured in the value of the goods manufactured the US was the worlds largest manufacture for over 100 years until around 2010 then China edged ahead.
The US manufactures a lot more high value items where as China dominates the cheap junk category. Same way that Apple has all the smart phone profits even though they don't dominate the smart phone market on a number of units sold basis.
China exceeded the US in manufacturing output in 2010. And while absolute output hasn't gone done, our share of manufacturing output has. The US manufactured 28% of all goods in 2005, and 17% in 2015.
I read the article and skimmed the full study and was left scratching my head:
- What exactly do they mean by 'Competitiveness'?
- Why so much focus on labour costs, when manufacturing cost is increasingly driven by large capital investments (especially in China, where low interest rates and government encouragement have expanded capital investments for years)
- Why all the talk about R&D expenditure. Is that really a driver of manufacturing competitiveness (whatever that means) or manufacturing output?
- How do they expect (on page 46) China's consumption to rise to 46% of GDP by 2025, if GDP will rise at 6.5% per year during the period? Such a shift would require consumption to go up by ~10% per year.
How do they expect (on page 46) China's consumption to rise to 46% of GDP by 2025, if GDP will rise at 6.5% per year during the period? Such a shift would require consumption to go up by ~10% per year.
Perhaps a relative reduction in exports? When costs go up in China the goods that can be profitably produced elsewhere tend to increase.
Because the other things you mentioned - i.e. 'capital investments' - China does not have a huge advantage in. Yes, they have 'government participation' but US companies have access to capital, low interest rates, yada yada.
The focus on labour cost is, I believe, because China have been suppressing it's own currency to stay competitive. But it's just a guess as I am only reading through the article and the study as we speak.
> because China have been suppressing it's own currency to stay competitive.
Had been.
China's currency is facing pressure to depreciate nowadays, and the Chinese government is having a hard choice between propping the value of CNY and preserving its reserves of dollars.
Jobs that are vulnerable to automation are generally not worth keeping. That's no comfort to those loosing them though.
Science fiction from the 60's painted a world where people would lounge around in their airships hopping between beaches, and mountains and parties while robots took care of everything and the lord scientists and engineers that gifted the wold with such plenty smiled benevolently down on the citizens of the Age of Plenty. Yea that did not happen, nobody thought about who would own those automatons, and lo, it was not us.
Ah, surely the aristocrats of before would instantly jump at the opportunity of giving up their lifes of free-time, leisure, education, servants, 3-hour-meals, giant houses, countryside retreats, upper-class-socializing, to trade it with the shopping-mall-worker that does 60h weeks(no weekends), for he'd have a smartphone! Funny.
This argument, which I've read before, only works with a really, really narrow definition of 'rich' and 'poor', maybe what you mean is upper-middle-class and lower-middle-class?
As if there isn't a counterpart. Honestly, I've been in farms where simple people lived in with no electricity(my grandparents lived in a farm, and it took some time for electricity to arrive, and around the place there were people living even more simpler, completely isolated, which I'd visit to greet with my cousins), it's actually pretty ok. Now, seriously, using "television" as an argument is just lame, who cares about this trash?
Just because you or someone else never got used to living without these, it doesn't mean everyone else needs it, not at all. From my point of view, autonomy is the greatest thing ever, it is freedom, and dependence is weakness and slavishness, subjulgation. IMHO Only a fool would think in terms of "if I enslave myself I'll get to play with this!"(plus, isn't it a bit like the deal with the devil?), to me it's just an example of how little some people can see what is actually beautiful and good in life to raise stuff to this level. Sincerely, I think people who think like this don't have a clue of what freedom feels like(and gladly, I think I've enjoyed plenty and been introduced to it early on). My life is not made of stuff, it is made of time, living, thinking, appreciation, growing, caring.
As another personal example, my father is also deurbanizing and moving back to the farm(which is not an industrial farm as in a business, but actually a place to live, think straight, work on living things which do need upkeep but not artificially). There's no AC, the only thing he watches is F1 races. He's busy most of the time anyway, usually having a beer and working on the farm, he loves it.
Haha I'm a farmer myself. Your comments seem a bit intense, but objectively it just isn't as cut-and-dried as you have it here. Living in a big drafty house with some servants and a coal fireplace seems somewhat romantic but mostly just cold. One would have time to read, but with no internet and about twenty unique books in the county a lot of that would be re-reading. In every age, we should appreciate new and old things both.
Objectively, there are many health indicators that have improved dramatically. Elimination of many commonly fatal diseases, prevention of starvation, better communication, cheaper goods and services, fairer laws (i.e. anti-discrimination against minorities and women).
Since I'm not interested in arguing about it I'm not particularly motivated to define it clearly. But good examples are life expectancy, physical pain relief, availability of the entire sum of human knowledge through a small glass and metal rectangle that fits in your pocket, likelihood of living in a democratic country, likelihood of avoiding a violent death, etc.
But housing and education prices continue to outpace wage growth, with medical care becoming increasingly expensive. Things are objectively better, but the non-wealthy see their societies stagnate and wealth being extracted and concentrated far away from their communities.
Education at least, the best chemist, economist, physicist or whatever fresh out of school probably wouldn't do to well against even a poor graduate today.
Relativity, quantum mechanics, crystal growth, there is just so much they didn't know. In any field, really.
A rising tide lifts all boats. Even poor people in 1960 have objectively much better living standards than rich people 100 years before, yet we work longer hours and have less security. What happens to you today if you loose your job tomorrow, and cannot find employment within 6 months ?
Huh? Working hours in 1960 were significantly less than in 1860. And working hours in 2016 were significantly less than 1916. Other than ramping up for war production I think hours worked has been monotonically decreasing.
It's always been the problem that the previous social orders tried to excuse as a natural consequence. Be it divinely ordained or a material necessity (calling the rich job creators when in practice their ventures act as a conduit for which demand is satisfied). Folks like Adam Smith and David Ricardo were acutely aware of this (go back further still to Thomas Aquinas and the scholastics for just price theory) problem but people continue to clutch pearls whenever any distributionist notions are entertained. It seems to me that it's time to push back hard against anti-distributionist (be they anti-Marxists or otherwise) because it's gotten to a point that the next generation after the Millennials may be poorer than them.
We could just all stop buying made in China. Seriously, all these things are laws of economics. You can't bypass them, as they are natural laws. Economics is the study of human motivation. Motivation is what dictates what we do and don't, it rules our actions.
If you wanted to have an impact, be conscious about your actions, pay that extra cost and buy local if you care so much, and don't buy at all if there's no local options.
I live in europe. I'd assume 80% of the things i own are mostly made in china. Maybe 19% are made within the EU and 1% everywhere else. I cant recall a single product i own that was producted or even manufactured in the U.S. therfore i have a hard time believing that title.
We're not even using the right metric system, so our export abilities are crippled, right? I remember trying to find parts for my 3d printer in the US.
Try McMaster-Carr. Virtually everything is available in US and metric units. There is less variety of things like metric fasteners, because designs have improved to use fewer weird parts.
Since almost everything is designed in CAD and manufactured by CNC these days, the real distinction between US and metric units has practically vanished. A dimension is a floating point number.
Most stuff is at least secondarily labeled in metric units. In many cases the metric measurement is actually the authoritative one in the specifications and contracts, even when it's in smaller print or parentheses on the package.
No Trump will cement the US's inevitable trend towards mediocrity.
Manufacturing are not the jobs of the future. They are too easy to automate and will far too easily flow to cheaper countries with lots of young, skilled people e.g. China, India.
What should be happening is a massive skills and education investment in the US combined with some sort of basic income.
According to the report [1], the US is already at 99.5% competitiveness of China. It's not a big shift they project. Don't really see why many companies should shift their production if they haven't already.
It won't help Joe Six-pack. And your questions make me think you did not read the article. The manufacturing output will increase due to automation & other improved techniques.
My fave quote from the article:
> So while it's understandable the state of manufacturing is of concern to presidential candidates, those who say they can bring back lost jobs in the sector either don't know what they are talking about, or are being disingenuous.
> So while it's understandable the state of manufacturing is of concern to presidential candidates, those who say they can bring back lost jobs in the sector either don't know what they are talking about, or are being disingenuous.
No. It implies one is attempting to pass of a false statement as true. If you know your statement is false, you are lying. Just because you don't know the truth doesn't mean you can't lie.
> Upon what data and assumptions is this prediction based?
None. It's based on a survey of CEOs sponsored by a nonprofit thinktank made up entirely of CEOs. This article is a barely rewritten press release, and the content of the survey is worthless.
> How will this help Joe Six-pack?
Its purpose was to advocate for Clinton and anyone-but-Trump. I suppose that it told Joe Six-pack who America's CEOs wanted him to vote for?
But one of the reasons China is so good at manufacturing is because everything is in one place (or at least clusters)... need 10,000 of an Integrated Circuit? The company that makes it is literally down the street. Need some raw materials? That's down the other street.
I can't think of a place in the US that is like that. If we need parts we have to wait for them to ship. (often from China)
It's not just a labor problem. It is my understanding to be competitive in manufacturing you need to be vertically integrated. And I think that is harder to do in the US.
Although I hope it is true. I live in the US but I don't believe in inherit United States exceptionalism but I do feel like shipping goods by container ship is bad for the environment and bad for consumers. I'd much rather see things made locally.