The U.S. Doesn’t Make Things Anymore, Does it?

As a former resident of Michigan who now lives in Massachusetts, I am frequently irked to hear: “The U.S. doesn’t make things anymore.”

This comment strikes a nerve because I was born in what was at least then a great manufacturing center. My father and brother spent most of their lives working in the manufacturing industry. If U.S. manufacturing is dying, then a part of me is dying. But has the light really gone out?

The U.S. has held the position of world’s top manufacturing country for over a century, beginning in the late 1800s when it took the lead away from Great Britain. A few months ago however, the United Nations Statistics Division, which compiles global data on manufacturing value-added, revealed that China surpassed the U.S. in 2010 to become the world’s leading manufacturing nation. China’s 18.89 percent share of world manufacturing output beat out the 18.24 percent from the United States.

Yet the U.S. remains one of the world’s top manufacturing powers, despite growth in places like China, Brazil, India, Russia and Korea.

According to The Boston Consulting Group (BCG), even though the U.S. share of global manufacturing has fallen somewhat, in absolute terms U.S. manufacturing has experienced steady growth.

Output is almost two and half times its 1972 level in constant dollars, even though employment has dropped by 33 percent. Despite the recent wave of outsourcing to China, the value of U.S. manufacturing output increased by one-third, to $1.65 trillion, from 1997 to 2008—before the onset of the recession—thanks to the strongest productivity growth in the industrial world, BCG reported.

Mark Killion of IHS, the economics consulting firm, observes that much of China’s manufacturing output is based on U.S.-derived technologies and driven by Chinese suppliers to or subsidiaries of U.S. companies such as Apple and General Electric.

So while U.S. manufacturing may have slipped a bit, it is still going strong. What does the future holds for U.S. manufacturing? That’s a much harder question to answer. I may be biased, but I will side with experts who believe that the combination of rising costs in China and technological advances in the U.S. will work in American’s favor.

The BCG says that: “The conditions are coalescing for another U.S. resurgence. Rising wages, shipping costs and land prices—combined with a strengthening renminbi—are rapidly eroding China’s cost advantages. The U.S., meanwhile, is becoming a lower-cost country. Wages have declined or are rising only moderately. The dollar is weakening. The workforce is becoming increasingly flexible. Productivity growth continues.”

The U.S. lead in digital technologies such as artificial intelligence, robotics and digital manufacturing is another factor that could help the manufacturing industry get its groove back.

“What happens when you combine AI, robotics and digital manufacturing?” Washington Post columnist Vivek Wadhwa, asked in a recent article. “A manufacturing revolution that will enable U.S. entrepreneurs to “set up shop” locally, and create a wide variety of products. As Kinko’s is for 2D digital printing on paper, we will have shared public facilities like TechShop where you can print your 3D products.”

How do you see the future of manufacturing is the United States?

Photo: The old and the new by Angela on Flickr (CC BY 2.0)

This entry was posted in Industry News, Manufacturing and tagged . Bookmark the permalink.

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