US manufacturing regains global edge - could pull up to 5 million jobs in.

[Engineer]

http://ph.news.yahoo.com/us-manufacturing-regains-global-edge-184007372.html

Washington, D.C. (AFP) - After decades of hollowing out, US manufacturing is overtaking competitors and stands to grab up to $115 billion more in export business from rivals by 2020, a new report said.

The Boston Consulting Group study said a more productive US factory sector, enjoying cheaper energy and relatively lower wages, will pull production from leading European countries, Japan and China.

Within six years that production will capture $70 billion to $115 billion in annual exports that would have come from the countries.

And together with "reshored" manufacturing from China, where rising wages are undermining its competitiveness, the shift could add from 2.5 million to 5 million jobs in the country, the study said.

Are we finally going to start repairing the foundation of the US (middle class) before the building falls? Are we going to put people back to work 'making stuff' instead of just selling cheap, imported stuff? IMO, you want to fix what is kicking this countries economy and finances, this is the prescription.

Of course, the usual will come in here and poo-poo this notion and this is what we need and might even give something to the likes that this will hurt us. The last few decades have shown us something....but many refuse (can't) see it.

Time to fix the foundation before the building falls....

 

[Bowfinger]

Sounds promising. Let's hope it pans out.

 

[mshan]

Ford to add 12,000 hourly jobs by 2015: http://video.cnbc.com/gallery/?play=1&video=3000195166







"Guns and Butter?":

- 2Q GDP Revision: the second revision of 2Q GDP was released this morning, and it was revised up from 1.7% to 2.5%, despite the drag from government austerity being revised substantially higher (IIRC, -0.4% revised to -0.9%). Private sector spending was 3.3%, and is averaging 3% for this year.


- Workforce Growth Rate: start at 1:50 mark (http://video.cnbc.com/gallery/?play=1&video=3000195142; also http://news.morningstar.com/articlenet/SubmissionsArticle.aspx?submissionid=169792.xml said the workforce is only increasing at 0.5% right now (decreased birthrates and restrictive immigration policies?), so even 1.8% - 2% job growth can slowly reabsorb those unfortunate souls essentially discarded as obsolete during the Bush Near Depression:

""What we have come to know as 'the jobless recovery' may be the new post-recession norm, as employers rebuild their workforces from scratch, take more time to vet candidates, and find ways to operate with fewer workers," said Chief Executive Officer John Challenger.

"To put that in perspective ... basically, every one of the 8,030,000 jobs created between August 2003 and January 2008 plus another 700,000 were wiped out," Challenger said.

Challenger, however, said jobs were being added to the economy at a faster pace than in the previous two recessions.

The problem is that the job losses were huge.

"It is just taking longer to rebuild due to the fact that we started in a much deeper hole," Challenger said."


http://www.upi.com/Business_News/20...kforce-levels-are-history/UPI-36981371758288/

- Is Slower Growth Really Such a Bad Thing?:

"Stipp: So, on balance, Bob, if you could pick the kind of growth rate, as an economist, that you think is the most beneficial for an economy, what kind of growth would you like to see? What's high-quality growth?

Johnson: I think it's 2%, maybe 2.5%. I don't think anything much over 3% makes sense anymore, and I think 2% looks like a little bit of a stretch here in the short run. But I think that's the number that balances the need for growth and people to move, and the mobility and innovation, and yet doesn't really stir up the need for inflation and workers that we don't have."


http://www.morningstar.com/cover/videocenter.aspx?id=609534

- Goldilocks: http://www.economonitor.com/dolanec...ns-underline-need-for-goldilocks-budget-deal/

 

[michal1980]

it was bound to happen. As the '3rd' world countries economies and incomes grow, their cheapness will decrease, and our production will look better.

Just the nature of the pie growing. its the between time that sucks

 

[irishScott]

it was bound to happen. As the '3rd' world countries economies and incomes grow, their cheapness will decrease, and our production will look better.

Just the nature of the pie growing. its the between time that sucks

This. The average Chinese worker's wages have gone up exponentially over the last 30 years. Still far below US average, but it's no longer as lucrative as it used to be.

 

[mshan]

“Until very recently, China had been cheaper, more flexible and more accommodating to industry, but wages in China are rising at a remarkable clip, putting cost pressure on manufacturers,” he said. “Mexico didn’t start to win the battle against China until we started the recovery from the recent recession.”

Indeed, the average salary for Mexican workers was $2.10 per hour in 2011, up 19 percent from $1.72 in 2001, according to HSBC.

By comparison, the average wage in China swelled nearly four-fold during those years to $1.63 per hour in 2011 from 35 cents per hour in 2001. Thus, the difference between labor costs in Mexico and China is now just pennies per hour.

There’s also, of course, the cost advantage of proximity, notes Gabriel Lozano, J.P. Morgan’s chief economist for Mexico.

With higher fuel prices, he says, manufacturers worldwide are seeking opportunities to manage shipping costs by producing goods close to their market.

Today, it costs roughly $5,000 to ship a container from China to the U.S., compared with $3,000 to truck the same freight in from Mexico, says Lozano.

“We expect that trend to continue and build into 2013 and 2014,” he said.


http://www.cnbc.com/id/49007307

I suspect what the OP referenced study is referring to is return of higher skilled, energy intensive manufacturing returning to U. S. (electricity only costs 1/3 to 1/2 what it costs in other parts of world, and hopefully stays that way as more and more power plants switch to abundant natural gas in North America)

I saw reference to that study on tv and I believe they were comparing to U. S. to other developed countries (e. g. Italy has very rigid labor force such that they get garbage collected something like 4 times a week (http://www.morningstar.com/cover/videocenter.aspx?id=590496) each day a different item, presumably because entrenched interests have carved out their own niches, despite financial difficulties country has had recently (political parasite class and three different mafia organizations taking their share of economy, to say nothing of rampant tax evasion).

 

[Londo_Jowo]

Now we need to ramp up vocational schools to meet the demand as manufacturing increases. Though the mindset of manual labir jobs being bad needs to change as well.

 

[Engineer]

Now we need to ramp up vocational schools to meet the demand as manufacturing increases. Though the mindset of manual labir jobs being bad needs to change as well.

I agree 110% on this. We need more skilled trade workers....good ones who are willing to work and work hard....but they will be paid very well for what they do.

There is going to be a severe shortage in just a decade or so if we don't stem the tide of talent now.

 

[mistercrabby]

http://ph.news.yahoo.com/us-manufacturing-regains-global-edge-184007372.html



Are we finally going to start repairing the foundation of the US (middle class) before the building falls? Are we going to put people back to work 'making stuff' instead of just selling cheap, imported stuff? IMO, you want to fix what is kicking this countries economy and finances, this is the prescription.

Of course, the usual will come in here and poo-poo this notion and this is what we need and might even give something to the likes that this will hurt us. The last few decades have shown us something....but many refuse (can't) see it.

Time to fix the foundation before the building falls....

Careful. Not all mfg jobs are going to pay middle class wages. There's a lot of automation and restructuring going on, a lot of contract labor and a fair bit of de-verticalization.

I love the concept. lets' just be careful that these are 25 dollar an hour jobs. many are 8, 12, 18. Lots of in-country outsourcing going on.

The money still goes to high skill, specialized. Requires smart, educated, motivated workers. And, those functions that can't be easily mechanized.

Be hungry my friends.

 

[charrison]

We are this to 3 things

Cheap energy due to fracking
increased wages worldwide
robots getting paid the same no matter where they are located.

 

[Londo_Jowo]

I agree 110% on this. We need more skilled trade workers....good ones who are willing to work and work hard....but they will be paid very well for what they do.

There is going to be a severe shortage in just a decade or so if we don't stem the tide of talent now.

The company for whom I work is providing training (product specific bootcamp, theory, and OJT) to existing mechanics and new hires. They're also qualifying them for the equipment they work on. As they qualify for specific product line they receive salary increases.

 

[Engineer]

Careful. Not all mfg jobs are going to pay middle class wages. There's a lot of automation and restructuring going on, a lot of contract labor and a fair bit of de-verticalization.

I love the concept. lets' just be careful that these are 25 dollar an hour jobs. many are 8, 12, 18. Lots of in-country outsourcing going on.

The money still goes to high skill, specialized. Requires smart, educated, motivated workers. And, those functions that can't be easily mechanized.

Be hungry my friends.

Yes, I understand that wages have declined over the decade in manufacturing. That's part of the reason that manufacturing is regaining the edge in the US. But, at the same time, it's better than low wage Walmart/McDonalds jobs and it usually teaches a skill for the people involved. Today's manufacturing more than ever involved more automation and a higher level of skill to run 'some' of that stuff. As far as I'm concerned, it's a good start.

 

[OverVolt]

Yes, I understand that wages have declined over the decade in manufacturing. That's part of the reason that manufacturing is regaining the edge in the US. But, at the same time, it's better than low wage Walmart/McDonalds jobs and it usually teaches a skill for the people involved. Today's manufacturing more than ever involved more automation and a higher level of skill to run 'some' of that stuff. As far as I'm concerned, it's a good start.

Agreed but doubtful.

This is alot like Japan. My sister had a penpal or something stay with our family in the 90's when I was a kid. Apparently Levi Jeans were $80-100 in Yen meanwhile only $12 or so here in America in the 90's. She bought as many as she could shove in her suitcase. Her parents were massively disappointed she didn't test into college although she didn't seem unintelligent, fairly normal.

These days now I know its because with an economy like this competition goes through the roof the younger you are with regards to college. Also Japan was having its financial crisis so imports were expensive, cost of living was expensive, and their highly robotic manufacturing became attractive (Hello Toyota!).

It didn't really help their economy though. As far as I know everyone who works for Toyota etc. is overworked and underpaid.

http://www.theguardian.com/world/2008/jul/10/japan.japan

The article is from 2008 so it has some gems in it:

As Toyota continues to grow, I hope it will return some [of the profits] to its workers.

Sound families here now?

"There are lots of people out there suffering from this established practice of 'voluntary overtime',"

Also sounds familiar these days. They are called salaried employees :awe:

 

[Doc Savage Fan]

I work for a large Fortune 500 company with extensive manufacturing operations in North America. This company has been closing inefficient plants for 10 years and continually investing capital in the remainder to make them more efficient....this is especially true the last few years. These efforts have resulted in significantly improved productivity. I believe there are a lot of manufacturing companies that have being doing exactly the same thing as we have in order to remain competitive. It looks like we're through the worst of the downsizing and, if we can keep energy prices down, US industry should be on solid footing for many years to come which should go a long way in helping the middle class.

 

[Exterous]

I suspect what the OP referenced study is referring to is return of higher skilled, energy intensive manufacturing returning to U. S. (electricity only costs 1/3 to 1/2 what it costs in other parts of world, and hopefully stays that way as more and more power plants switch to abundant natural gas in North America)

I think the love affair with China is over and that is helping as well. Not only are their wages higher but their growth is slowing along with a lot of suggestions of manipulations of the growth numbers (ie ghost cities)

The business environment in China towards US companies is incredibly hostile but the growth, low cost and infrastructure 'made it worth it'. Now that growth and lost cost have gone away along with a plethora of quality issues arising companies are starting to realize its not worth it

 

[Atreus21]

http://ph.news.yahoo.com/us-manufacturing-regains-global-edge-184007372.html



Are we finally going to start repairing the foundation of the US (middle class) before the building falls? Are we going to put people back to work 'making stuff' instead of just selling cheap, imported stuff? IMO, you want to fix what is kicking this countries economy and finances, this is the prescription.

Of course, the usual will come in here and poo-poo this notion and this is what we need and might even give something to the likes that this will hurt us. The last few decades have shown us something....but many refuse (can't) see it.

Time to fix the foundation before the building falls....

Huh. Put this in the feel-good stories thread.

I wonder what changed.

 

[Atreus21]

This. The average Chinese worker's wages have gone up exponentially over the last 30 years. Still far below US average, but it's no longer as lucrative as it used to be.

I thought that Chinese currency pegged to the dollar was intended to prevent exactly this scenario.

 

[Doc Savage Fan]

Huh. Put this in the feel-good stories thread.

I wonder what changed.

I'll tell you what changed...Rob was being an egotistical dick and completely ruined the positive tone of that thread. As someone aptly said...this is why we can't have nice things.

 

[Albatross]

Probably it will take a decade or more,but most of the world will be middle class.The engine of modernity that is USA has fulfilled its role.

 

[Engineer]

I thought that Chinese currency pegged to the dollar was intended to prevent exactly this scenario.

Wages, even with a pegged currency, can rise dramatically as demand picks up for workers. Of course, a floating currency can cause this to pick up (or drop for that matter) even faster.

 

[OverVolt]

Probably it will take a decade or more,but most of the world will be middle class.The engine of modernity that is USA has fulfilled its role.

Income inequality is going the wrong way then.

 

[Doppel]

It's good news, but China is not the only country with low wages.

 

[Genx87]

Hmm labor costs in china are approaching the point of not being competitive enough to warrant compared to manufacturing here. Imagine that...

That said I am interested in knowing how many of these are labor intensive jobs or are they maintaining a computer system to run a workerless factory. I think that is where a lot of manufacturing is heading. And that we can do as cheap as anybody on the planet. Probably cheaper.

 

[mshan]

From OP's linked article:

"The US is steadily becoming one of the lowest-cost countries for manufacturing in the developed world," BCG said.

It said that by 2015, average manufacturing costs in the five major advanced export economies - Germany, Japan, France, Italy and Britain - will be 8-18 percent higher than those in the United States.

By that time US labor costs will be 16 percent lower than in Britain, 18 percent below Japan's, 34 percent below Germany's and 35 percent below labor costs in France and Italy.

Moreover, the report underlined, the US workforce has much greater flexibility than its industrial rivals.

The second key advantage in the United States is the sharp fall in energy prices due to the boom in shale gas production.

"Cheap domestic sources of natural gas translate into a significant competitive advantage for a number of US-based industries."

That will especially help chemicals and plastics industries, but also producers of primary metals, paper and synthetic textiles.

BCG said a common assumption is that manufacturing leaving Europe and Japan would go to China.

However, it argued, Chinese wages have been rising so fast that its cost advantage on many goods it sells to the US will only be around 5 percent in 2015.

"When logistics, shipping costs, and the many risks of operating extended global supply chains are factored in, it will be more economical to make many goods now imported from China in the US, if they are consumed in the US."

 

[Engineer]

Hmm labor costs in china are approaching the point of not being competitive enough to warrant compared to manufacturing here. Imagine that...

That said I am interested in knowing how many of these are labor intensive jobs or are they maintaining a computer system to run a workerless factory. I think that is where a lot of manufacturing is heading. And that we can do as cheap as anybody on the planet. Probably cheaper.

Hard to get to workerless factories for many products (unless redesigned). I've marveled at the Ikea factory (saw it on a documentary) because it uses so few workers and put out and amazing amount of product. But, the product is very predictable and easy to work with. Most products are not.

Sure, things will get better and robots will improve along with vision. More and more force (touch) features will be built in.

But, the flip side is that it will take someone to engineer and install these systems as well as program them. Also, there will always be operators and of course, lots of plant engineers and maintenance personnel to keep things going well. I would rather have a plant full of robots and their support staff "HERE" than a plant full of workers in China putting out the same product.

Besides, I like automation....it's my job! :biggrin: