The first question that Dave Beach asked me in the “conversation” I mentioned in my post of May 16, was “Why is manufacturing important?” I gave a short talk on my Good Products, Bad Products book in an annual “Stanford Authors” event at the Stanford Humanities Center yesterday, and the same question came up. On May 5th I will be giving a talk to the Stanford Alumni chapter in Portland, Oregon, and am again expecting the same question.
There is much discussion of this issue in the government, in universities, and among the general public. If you want examples, just look on the internet. People seem to agree that manufacturing is clearly important to our species, and that Manufacturing is also vital to the U.S, economy, and in fact that of most other countries. "Mixed" economies are thought to be more stable. Manufacturing is a tried and true method of creating value, keeping the balance of payments under control, and providing jobs for those who are a questionable fit for such things as the “service " sector, or the “information ” sector. The U.S. also has a lot of residual pride in the “made in the U.S.A.” product and the tradition of leading the world in manufacturing, which is now being threatened by China.
If you try to find dependable statistics on the situation, you find various interpretations and massive arguments as to what is actually happening. As you may know, the manufacturing output of the U.S. measured in dollars has continued to climb over the years. It is true that China, in particular, has drastically increased its manufacturing output, but the U.S. retains about 20%of the world’s manufacturing output (about the same as China). In 1970 the U.S. produced slightly under 30% of the world’s manufactured products, but the drop to 20% is because of increases in other countries, not because of a drop in the overall dollar amount of U.S. manufacturing. At the same time, the number of employees in the U.S.manufacturing sector has dropped precipitously, partly because of outsourcing, but also because of increased productivity due to changes in technology, organizational approaches. The nature of manufacturing has also changed, since the U.S. has responded to lower labor costs in other countries by moving toward higher value-added products.
The traditional measure of productivity in manufacturing (output in dollars divided by number of employees) has approximately tripled since 1970. This pleases some economists. But these factors have resulted in a decrease in U.S. employment in manufacturing from 19 million in the late 1970’s to 12 million at present. During this period the manufacturing output has grown. But productivity is a double edged sword, since it can be increased by decreasing employment, as well as making more products.
The problems I see are a blow to our national pride, and especially a loss certain types of jobs in the U.S. We are definitely becoming more of a service economy. The fastest growing sectors of the economy are financial services and medical services. Many people think this is wonderful. I remember reading an article in which the author extolled this change, because he concluded that rather than working on uncomfortable assembly lines doing repetitive labor, people could become doctors, lawyers, professors, and engineers. Unfortunately not everyone wants to spend the time and money for the training required to do such things, and I even think it is fair to say that some people would not be very good at such jobs.
When I was in high school I wanted to become a tool and die maker – a skilled job producing tangible products. I like skilled jobs and I like being involved with producing tangible objects. But I would find it difficult to locate a job as a tool and die maker in the U.S. these days. Computer controlled machining centers have taken over. For various reasons, after becoming an engineer and working in industry for a while, I became a professor (service economy). I was fortunate in being able still to be involved in manufacturing and working with my hands through my consulting, teaching, and hobbies.
I would not like to work in medical services, or especially financial services. I love ATM machines because I don’t even have to go inside of banks any more. And I certainly would not like to work on Wall Street. In fact, I don’t think medical services and financial services will furnish ever-increasing numbers of jobs in the future. We don’t seem to be able to afford many more medical services, and financial services are at this time feeling a good big of pain. If you have never read Michael Lewis’ book The Big Short (W. W. Norton, 2010), you should. It is a great read chronicling the housing loan-induced crash. And of course, do we really need more lawyers?
The computer and other technical advances have caused a large reduction of highly skilled jobs, many in the manufacturing of products (so-called de-skilling). This is a loss for many people in the country who like and whose interests are matched by such work. Had I married my high school sweetheart instead of wandering off to college, which was the norm for most of my high school friends, I just might have spent my life as one of them, and if not retired, be looking for a job.
I think we have a problem here, because I certainly know a lot of people who seem to have a serious computer allergy and would not like to work in an office or store. In fact, I know people who would not even like to work indoors.
Recent Comments