Manufacturing Is Not the Answer

America will typically always make things weather it's cars, medical equipment, you name the country needs some type of manufacturing foot print.  I state this off the bat as to not confuse anyone with the title of this post from Kiplinger on why manufacturing is not the answer.


The message that the writer is trying to make and I agree is that manufacturing is becoming less and less important as productivity has increased over the past decades.  Those same widgets take less people to make as we have highlighted in several pieces [February 8, 2012 Man vs Machine a Jobless Recovery] and [February 1, 2012 Making it in America].  Education and innovation are now more important to America’s economic success than industrial might.  Case in point the iPhone which we have frequently discussed [February 3, 2012 How- US Lost Out on iPhone Work], created here in the states but built in China.


What we should expect to see is an increase in productivity in the service sector such as health care which should drive down costs just like manufacturing had done and previous to that the gains we saw in agriculture.


Via Kiplinger article

• Manufacturing jobs and output are now enjoying a temporary surge, mostly because of the depth of their plunge in the Great Recession. Factory employment fell nearly twice as sharply as private-sector employment, and factory output dropped 20%, compared to 5% for gross domestic product.
• The resulting postrecession rebound, adding about 500,000 jobs over the next five years, will simply put manufacturing employment roughly where it would have been without the shock of the Great Recession -- on a long-term downtrend since 1979, when the number of manufacturing jobs hit its peak of 19 million. Half a million manufacturing jobs may sound like a lot, but it represents only about 4% of the 12 million jobs that the U.S. will need to create in the next five years to manage even modest economic growth.
• In fact, most of the 2.5 million factory jobs lost during the recession will never come back. By 2015, manufacturing will account for less than 10% of total employment and GDP.
• one of this, however, is the picture one gets from the president or other politicians who know that promoting manufacturing employment makes good politics. But those who hope America can return to its manufacturing past are looking at the cup as half-empty. Many more jobs are being created outside manufacturing because that is where America’s comparative advantage lies today, and not, as in decades past, in labor- and energy-intensive industries. In the Information Age, more value is added in the design, marketing and selling of goods than on the assembly line. The iPad has created many more well-paying jobs in America than in China, where factory wages for Apple’s main iPad contractor are $1.11 an hour
• The U.S. will continue to make a variety of products, such as medical devices, airliners and high-tech machine tools, where much more of the value added is in the design and programming than the assembly. Likewise, we will create service jobs that use information more productively than is possible in most manufacturing jobs.
• From the Model T to the iPad, America will continue to create revolutionary products and benefit from those inventions, even if the physical assembly of those products continues to move to less productive parts of the world. That’s not losing something precious. It’s gaining more opportunity and higher living standards for American workers.