Thursday, December 29, 2016

Manufacturing never left



As the chart below shows manufacturing in this country has grown with a few exceptions fairly steadily since 1975.  While this chart ends in 2011 the trend has continued.

Image result for manufacturing output chart


What has gone away are jobs.  This is caused by a number of factors. 

One is that labor intensive manufacturing has moved to cheaper labor areas.  Clothing manufacturing is a prime example which has been migrating for quite awhile, from its original northeast centers, to some southern state centers and now to cheaper overseas locations.  Labor continues to be a significant factor in the cost of production so it determines location as other costs are relatively stable.

The second reason is automation.  Industries that used to have many workers have replaced them with robots which are more dependable and ultimately much cheaper. 

Other factors include more subtle influences, which includes things like subcontracting work, more use of overtime, part time workers and temporary labor, partly because under our system of benefits, employees come with a heavy burden.  In fact the one thing that would increase our competitive posture the most and bring the most jobs back would be a national system of health and pensions which would reduce the cost of employment dramatically.

However, that is not likely.  To bring jobs back is probably impossible on any significant scale.  The United States is a huge economy and subject to world economic trends.  If it becomes more profitable to hire workers here than elsewhere it will happen.  However, the best manufacturing jobs are not overseas but being done by your friendly neighborhood robot.








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