Monday, January 31, 2011

Still the One

It's the robots, I tells ya. When it comes to manufacturing, we tend to get wrapped up in the outsourcing and wages argument, and for the most part we overlook the fact that our mechanical friends took over while we were busy pointing fingers. The bottom line: The U.S. is still No. 1 - we just need fewer breathing bodies to do the work.

"There's no reason Europe or China should have the fastest trains, or the new factories that manufacture clean energy products," President Barack Obama said in his State of the Union address last week.

Yet America remains by far the No. 1 manufacturing country. It out-produces No. 2 China by more than 40 percent. U.S. manufacturers cranked out nearly $1.7 trillion in goods in 2009, according to the United Nations.

The story of American factories essentially boils down to this: They've managed to make more goods with fewer workers.

The United States has lost nearly 8 million factory jobs since manufacturing employment peaked at 19.6 million in mid-1979. U.S. manufacturers have ranked near the top of world rankings in productivity gains over the past three decades.

That higher productivity has meant a leaner manufacturing force that's capitalized on efficiency.

The US added 136,000 manufacturing jobs last year - the first uptick since 1997. Here's another chart that shows just what has happened in the past decade, and take a look at the drop that occurred when the clock struck midnight on the year 2000:


China is catching up on output though, jumping from 6 percent of the global total in 1998 to 15 percent in 2008. The U.S. accounted for 18 percent in '08. And while we have ceded the trinkets to other countries, the high-tech stuff demands quality that so far the overseas manufacturers haven't been able to provide.

Centerline (Machining & Grinding in Hobart, WI, which makes parts for the paper industry) CEO Dietzen says she isn't fazed by Chinese manufacturing. Some of her customers have placed orders with Chinese companies, she says, only to return, frustrated, to her company.

Chinese factories want mainly big orders. And they demand lots of time to fill them.

Dietzen says her clients are "finding when they get their parts back from China, they're not always what they want. So we end up doing the work anyway."

Think about your $30 DVD player that broke after three months, and then ask yourself if you want your car or medical implant held to the same manufacturing standards. Makes you wonder about the solar panels and the big turbines as well, but so far reports have quality as equal to or better than Western manufacturers. Add in the government subsidies and currency manipulation, and I don't see how we can capture the mass green manufacturing market - unless it's the highly-specialized niche products that we can make with a quick turnaround time.

Of course if (and when) oil goes through the roof and adds to shipping costs, all bets are off. U.S. manufacturing will see even higher growth when the margins are right - but it will still be the robots doing all the work.

( has some great pictures of the new generation of robots and all they can do - and take heed, it's not just manufacturing jobs on the line these days. We may just innovate ourselves to the point where we all will exist to service the machines some day.)