US manufacturing strong, so why the disastrous job losses?

As the farm became automated, the farming jobs disappeared, going from >50% of jobs in 1900 to 4% and less today. Farming output increased to the extent that we export great amounts of food even today. Yes, we buy specialty items off shore, particularly items out of season here but not in the southern hemisphere. But we grow more food than we can eat. As manufacturing becomes automated, the manufacturing jobs will continue to disappear. Lights-out style, fully automated factories and warehouses are common today. And industrial output did not fall over the past half-century, it rose. If one pundit is right, the US still manufactures more than China and Japan combined, although most of this is not seen because it is not "newsworthy." There is no-one to blame for this. In fact it is not a bug, it is a feature. In business, the only way to stay ahead in the race is to come up with better products at a lower cost. If you do not, the next guy will. And in America, the belief is that the better man should win. And humans cannot win against machines. "John Henry was a steel drivin' man," but the steam drill won in the long haul. Off-shoring pits remote humans against on-shore machines. It may help in the short term when starvation wages are less than the cost of automated machinery. But as Japan and others have found, this is temporary. Wages rise, the cost of machinery falls and you are back where you started. As an older engineer, I appreciate the nostalgia for the factory floor, having been there. But that is like nostalgia for the family farm. It is still possible to have either life style, but it takes extra work and is no longer mainstream. We do not need to fear our manufacturing output, any more than we need to worry about farming output. Automation continues in both sectors. And the machines will win. We need to refresh our imagination, the same way we did when farming became automated. There were jobs after farming, and much of it it was manufacturing. But things seemed hopeless at the time because people were not used to imagining a future not based on farming. Today, we need to imagine a future not based on manufacturing. Service jobs are proposed. What is a "service" job, anyway? the short answer is anything that is not farming or manufacturing, a negative definition that is not helpful. A positive definition is any job that creates or supports a business, the process of finding a need and filling it. Business is about filling human needs and wants. Machines want nothing. It takes humans to find human needs and wants, and it takes humans to invent successful ways to full these needs and wants. Short of real estate agents, travel agents, teachers and tax consultants, what is the way forward? I can see two threads: information handling and material handling. Information is data you understand. Information handling converts raw data into something humans can use. We have that going in a major way today. Microsoft, Yahoo and Google are huge companies that work in this market, with many others to follow. Even real estate agents, travel agents, teachers and tax consultants benefit from this. The other component is moving material around. Take a minute and think about how much time you spend moving things around inside, to and from your house, from groceries to taking out the trash. Then consider what employees do in any store. They get stock from the truck to the back room to the display, all day long. And consider UPS and Fed Ex, huge companies that spend all their time moving things around. This is a big, fundamental component of any economy, from trucks to boats and planes. some of the most important inventions have been the wheel (cart), the boat, the train, the automobile(truck) and the airplane: machines that move things around. People are moving things around now, but robots are starting to automate these functions. Real robots (not Commander Data, but automatic machines) are the basis of manufacturing today. They will become the basis of moving things in the future. It will take 50+ very productive, job filled years to get us there, which we will enjoy. In the process, we will build things we never imagined. Think about having an army of robots for major construction projects, such as dams and canals. Even cities. We need to get past the fear-and-blame reflex and focus on what we can do next, not be nostalgic for the jobs that are gone, replaced by machines. Nobody likes change that they did not initiate. The only solution is to initiate our own changes to adapt to the new environment.

The decline in jobs through automation is predicted since more than thirty years, and it is inevitable. Companies have to calculate cost of labor, and if a machine is cheaper than a worker, a machine will be chosen. Automation does free people from hard work. This is intended. There has to be a look back to the Declaration of Independence and the Constitution - look at article 1, section 8, first sentence - to be reminded on the foundation of the United States by our forefathers. There has to be economic security for every American. Thomas Jefferson, Abraham Lincoln, Franklin Roosevelt did their part, and even Richard Nixon tried to. We need something like an upgraded Alaska Permanent Fund Dividend for every citizen to have enough money for food and shelter. This can be done by restructuring our tax-system and system of subsidies. Doing this, we will start a new era of prosperity. I recommend to read Steven Shafarman's "Peaceful Positive Revolution".

The great society has been America's downfall. Instead of encouring everyone of employable age to go to work, LBJ and president's who followed created socialistic welfare plans ad nausium. There's so little difference between Repubs and Dems that the vote tipping occurs by a last-ditch promise of more entitlements that garners a disenfranchised minority and swings an election via a 1% vote shift to candidates promising more free bennies. Bush used to say "illegals are doing jobs Americans won't do." Until someone tells "those Americans" that they won't receive government benefits unless THEY do those jobs, we'll continue our decline using under-the-table wages while encouring more of our citizens to sit it out waiting for the next vote buying promised hand-out. Most of which never really materialize.

I agree completly: ?There have been calls for a US industrial policy -- that is, for Washington to essentially "pick winners and losers" I have lived and worked in China, and there vision of capitalism directed by a cental government is hard to argue with. They own America now.

Americans are too dogmatic to solve any of their problems. Fact: Germany has not only kept all of it's manufacturing jobs but furthermore their manufacturing has grown as a percentage of GDP. This in a country that American's view as "socialist". Unions are strong and workers comprise 50% of the board seats. Taxes are high and so are incomes. Workers enjoy 6 weeks off, free health care, low cost education and an exceptionally high standard of living. Unemployment is low. I'm not going to tell you how they do this. Smarten up America, lose your dogmatic belief that America is best, and steal good ideas from everywhere in the world. Ah but I'm dreaming, it will never happen. Blame the dems, blame the republicans, blame government, blame the lawyers, blame wall street, blame taxes, blame bankers, but above all keep doing the same things over and over and expect different results.

I one worked for a company that made a technical product highly desired by the leisure time market. At first their company history and technology skills allowed them to make the best and cheapest in the market. Soon, the Japanese learned how to manufacture the low-end versions cheaper. The US company then abandoned the low end market and concentrated their resources on the high end (highest profit margins) market. Then the Japanese parlayed their experience in making cheap items to making the high end items. The US company was forced out because no one would pay their prices. Years before, the same US company made a very cheap, widely used commodity product based on similar technology. The poured investment into the manufacturing process and were able to make it so cheap that they achieved a de-facto monopoly, protected by patents. The US goverment forced them to license the technology to other companies. Nevertheless, they continued to hold on to a major portion of the business for many years, based on their superior technology and economical manufacturing capability. Any lessons here?

While there were many good points in the above comments... (trade practices, money markets, etc..) The original article mentioned another aspect. Automation Positive Mind (above) mentions improved productivity. Automation is the primary method of making this happen. When high levels of automation first appeared... people were concerned about job loss.. but, the fear was replaced with different jobs, requiring higher skills and education.. But there is a limit to job creation in production.. when production can be nearly 100% automated. What happens when someone makes a "replicator"? (Star Trek).. yea.. a bit into the future. in 1900... 90% of the world's work force was creating food. in 2000... less than 10% of the world's work force is creating food. (and it is a much bigger population). What will the world be like in 2100? What we have is a world in rapid transition. The faster the change .. the more disruptive. (and painful) Strap yourselves in, it's going to be a bumpy ride....

We already have American designed and manufactured LED lighting products available that are fully machine built using SMD components only with lifetimes into the 100,000 hours. It is not only possible to completely avoid Chinese manufacturing methods, you have to if you want high quality products. It is pointless to build an infra-structure with inferior cheap, products that fail pre-maturely. China must be avoided like the plague it has become. We Americans can do this as we have shown. Check out www.silescent.com.

Bah - blaming unions is a headfake from what the fat cats (more like rats in terms of what they've done over the past decade) are really doing. Americans are quite dumb when it comes to seeing the man behind tehe curtain The bigger and more important thing to Wall St and CEOs is not offshoring jobs but sheltering and offshoring MONEY to avoid paying taxes. Yes you need an offshore manufacturing plant to ship from that plant but that's an expense line item that's puny compared to corporate tax liabilities, especially when you factor in a highly automated and productive capability in the good ole USA. Take a look at the box next time you order a part from Microchip - it ships from Thailand - revenue is recognized from point of shipment. US derived and declared income for your purchase? -> ZERO, ZILCH, NADA, GOOSE EGG. Automate all you want in the US for the same expense structure as what China has, but you still lose as a CEO or shareholder because of the taxes owed if the income is brought onshore. The loophole on foreign earnings needs to be closed off once and for all by Congress no matter what John Dane at Altera and his buddies cry about to Washington DC; all the while building engineering teams and manufacturing in Malaysia and having silent US layoffs. They know they'll be paying the piper soon when the peasants break out the pitchforks and then it'll be time to get the heck outa Dodge.

Instead of automatically building in China, why not try Mexico, Viet Nam, Indonesia, Phillipines, Thailand ? Those countries are not trying to become a dominant power at the expense of the United States, they don't build nuclear missiles or try to hack US computer systems. Instead of having to visit a factory in inland China, you could visit a factory where more people speak English and stop by a nice beach.

Margery, I believe you selected a very biased article on which to make your point. That author obviously had an agenda to promote free trade, eschewing protectionism. Whether you agree or not, he presents data that seems to indicate nothing is wrong when common sense says something is very wrong. Take a walk around a Target and count the manufactured goods that were made in the US. Take a look at our trade deficit statistics. Some of the commenters to that article were keen to pick out many of his distortions, such as omitting population growth, for instance. Nevertheless, I believe you are trying to make the point that when it comes to nuturing our manufacturing, that we should focus on the higher margin goods. It is a good point, but that does not excuse the blatant disregard we have shown to the low end either. When we lose our low end manufacturing "en masse", justifying that by pointing out how profitable our stem cells are, or our fighter jets, or our Microsoft software, no longer corrects for the impact of our trade deficits. Few people get to enjoy the profits of our stem cell research, regardless how profitable it may be for some. We need a national industrial policy that is not so much about picking winners and losers, but is just basically manufacturing friendly. We need to promote education that is oriented to the sciences. We need to educate people in some basic economics, and even our economists need to relearn the critical, critical importance of balancing our trade deficit, which they have apparently forgotten (judging by your referenced article). Our trade deficit indicates we are losing our ability to produce things the rest of the world wants to buy. We are losing our value. Our losses in manufacturing are a big part of this. I agree China needs to float their currency. And though I fault them on a human level for prolonging the poverty among their population, I cannot fault them economically for wanting to inhibit their population from simply consuming their gains in productive capacity (I believe that's the net effect of holding their currency low - they are growing because they are reinvesting their dollars while paying their workers in devalued yuan). It would certainly be in our best interest if they floated their yuan, but I understand if that's not much of a concern to them.

The slow slide down in manufacturing employment in the US started in the 70's with the steel industry, via federal trade policies from Jimmy Carter. This was followed by Reagan's pro business environment which expanded US business but did nothing to help foster more manufacturing jobs. This was ended by the Clinton policies, the worst of which was the granting of MFN status to China. That opened the flood gates and greatly accelerated the move to off shoring. The unions were immaterial to most of the change so they cannot be blamed anymore than anything else. Many of my business associates in Japan and China are amazed at how easy we ( ie the citizens) allowed our own government to change rules to make this all possible. So if you want someone to blame and you are over 30 just look in the mirror.

This to shall pass. It's going to be very tough on a large portion of our country while a sect few will walk away with the goods - for no apearrent and adaquate reason. Eventually the econimies will all be leveled off and the top 2% will have %99.999 percent of the cash. The problem is as i see it is we the collective let this happen. We voted against own on best interests. Yelled and screamed for changes that further down the road ended up costing us. Blame ones own self for the misery we have all caused

While statistics can be made to say anything at all. I am distressed to see the conclusions posited without any consideration to normalizing for the value of the dollar, the wage received for the hours worked, and the number of hours worked for the population. All of the normalization factors have varied widely over the decades reported. I would guess that if the data were normalized, that we would see what the nay-sayers are crying, that our economy has moved to a low paying service economy and that we have traded $40 engineering jobs for $7 burger flipping jobs.

What is happening to manufacturing is what happened to farming. In 1900, 50+% of the jobs were on the farm. By 2000, only 4% of the jobs were associated with farming and only 2% were actually on the farm. In 1950, perhaps 50+% of the jobs were in manufacturing. Today it is 12% and declining rapidly. OK, why? Answer: automation. Farm machinery automated farming, and the tractor provided a major boost. With a tractor and farm machinery, one farmer could farm land that previously required 10 working with simple machines and horses or mules. With a fixed food output, you need fewer people to supply it. There is a good argument that the Great Depression was made worse by the fact that the farming jobs were gone or declining rapidly. Same for manufacturing. Seiko had lights-out, no humans required factories making watches in the 1980's, if memory serves. This effort continues, aided by computer control. So we may be headed for 4% of the jobs in manufacturing, too. But there are other things to do. Machines want nothing, but people want things and experiences. So there will be life after manufacturing, just as there was life after farming. For example, the environment could use some help.

This whole business about unions is such a canard with zero shred of proof. I live in NC and it is the least unionized state in the nation, virtually no unions. We lost more mfr. jobs than nearly any state in the nation but have no unions. Same for South Carolina, again, no unions. The entire furniture industry vanished in the US in the last 4 years and it has no unionization at all. Same for textiles, same for a lot of industries. Engineers are not unionized but still our jobs flee over seas. Give it a rest on unions. If we had more of them we'd be in better shape than we are now as they'd counter some of the abuses in the managerial class.

Also missing here is the triple taxation of businesses, the big-bad-busnesspersons. If a company makes a profit, it is taxed, then some of the profit goes to investment/expansion/increased employment, some of it goes to dividends which are taxed from an already taxed pool. The employees get pay, which is further taxed, and the business must pay fees and taxes on what is paid out. It has been proven time and again that lower tax RATES increase the tax receipts, of course, lost on our unions and Congress Reps of eother stripe. Innovation, profit motive and close coordination with employees and employer, should be highly sought..no need to go over seas.

The only thing neither of you hit on is the unions position in all this. Someone should run a poll and ask all the out of work union peolpe if they would rather have a job with less wages or continue to pay union dues and sit at home unemployed.