Sunday, May 20, 2012

American Manufacturing Renaissance Updates

1. From today's WSJ article "Indiana Steel Mill Revived With Lessons From Abroad:"

"American manufacturing—from chemicals to washing machines—is growing again. Spurred by stable labor costs, weaker unions and low natural gas prices, today's manufacturers have emerged from the recession far different from what they were even a decade ago. They employ more highly skilled workers, are more automated and have far fewer workers.

Globalization often is blamed for the travails of American manufacturing—from the relentless pressure of imports from lower-wage countries to outsourcing and overseas production by U.S.-based manufacturers. But globalization has its upsides as well. Not only does it often mean cheaper goods for American manufacturers, but it puts pressure on U.S. factories to become more efficient to keep up with global competition, making it possible for them to survive."

2.  From the Financial Times article "Factories begin to shift back to US":

"Two-thirds of big US manufacturers have moved factories in the past two years, with the most popular destination being the US, according to a survey being released on Monday by Accenture, the consultants."

5 Comments:

At 5/21/2012 12:48 AM, Blogger Unknown said...

Here's another one. Job growth in manufacturing in - get this - south Florida has been growing faster than job growth in tourism.

Actually this mostly pertains to Broward County, which has added manufacturing jobs for 11 straight months now.

LINK

Have no idea what they make there. Food processing? Electronics? Article mentions medical devices, but that's it.

 
At 5/21/2012 4:17 AM, Blogger rjs said...

i see in the FT article that "President Barack Obama has proposed tax incentives for companies that move their overseas operations back to the US and tax penalties for those that do not."

does this mean we'll have a manufacturing bubble just like government interference caused the housing & student loan bubbles?

 
At 5/21/2012 8:45 AM, Blogger Jet Beagle said...

marmico: "A manufacturing renaissance would mean that output growth was rising faster than multifactor productivity growth. Therefore, employment levels rise."

Sorry, but I think you are mistaken. Aggregate output can grow far, far faster than employment growth. Capital investment and process improvement are driving the growth of American manufacturing. Your assumed requirement that all factors of production must increase is not correct.

Furthermore, marmico, you should not forget that these are aggregate numbers. Labor-intensive manufacturing has been offshored while capital-intensive manufacturing has grown sharply. What the U.S. is seeing is a shift in the relative employment of factors of production.

If you wish to argue that their has been no renaissance of labor-intensive manufacturing, I will agree with you.

 
At 5/21/2012 9:21 AM, Blogger Jet Beagle said...

marmico: "That is nondurables goods, no?"

No. Both durable goods and non-durable goods are today produced using automation rather than labor.

marmico: "The bulk of the increase in employment in durables since the nadir is light vehicles and primary metals."

Who care where the increase in employment occurred? Did you not read what was has been pointed out to you? It is the manufacturing which is not labor-intensive which has been growing and will grow in the U.S.

Renaissance in manufacturing does not mean renaissance in manufacturing employment. Get it? Probably not.

 
At 5/21/2012 6:35 PM, Blogger Ed R said...

You better read that Accenture report again. While it does show the USA as the #1 single country to relocate to; if you add up ALL the foreign relocation destinations (China, Mexico, Europe, etc) that total is still higher than the US total.

 

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