“America’s Disappearing Industrial Base”

[nerdgirl 0]

Is the American industrial base shriveling or just evolving?

“When Ronald Reagan took office in 1981, manufacturing made up nearly 25 percent of the economy, compared to 12 percent today. Today, one third of our manufactured goods come from overseas, versus a tenth in the 1970s. In the past eight years of the Bush administration, the U.S. share of global economic output dropped from 31 percent to 27 percent, while our merchandise trade deficit doubled to $800 billion. Those trends are driven by the erosion of domestic manufacturing and the auto industry is biggest component of that sector.

“[Loren] Thompson [of the right-leaning Lexington Institute], who is no liberal, chides devotees to the Republican economic model that goes something like this: ‘deregulate everything and then stand back so the market can work its magic.’ That model has presided over decline of the U.S. shipbuilding, electronics and steel industries and it’s about to work its magic on the auto industry. ‘We are destroying the foundation of our economy, not to mention the arsenal of democracy. If America loses what’s left of its auto industry, or its aerospace industry, or its chemical industry, our superpower status will ebb away,’ Thompson writes.”

More detailed policy wonk briefs here.

One specific example: historically, the National Security Agency (NSA) had manufactured secure microelectronics needed for sensitive applications across the US Government. As the pace of semiconductor innovation and commercial development—including foreign-based advancements—accelerated, a new and more efficient mechanism was needed.

The NSA’s approach/solution was creation of the Trusted Access Program (TAP) and certification of trusted foundries for acquisition of integrated circuits for the DoD and the Intelligence Community.

Through the TAP, a mechanism to guarantee access to trusted microelectronics technologies for critical defense and security system needs now and into the future has been created. The TAP program was initiated in response to concerns about the security of offshore manufacturing facilities. Without government intervention, there would be no trusted foundries.

The increasingly globalized nature of innovation, development, and the market that characterizes technologically-driven business complicates manufacturing further.

So what’s wrong with Thompson’s analysis?

Do you think we should be concerned about the decline in manufacturing infrastructure and capability?

What’s the solution? (Or do you think there isn’t a problem to begin with?)

VR/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[Amazon 7]

I think that this is a prime National Security issue for the US. Somewhere along the line we will have to come to grips that we need to maintain our ability to produce the people and the material to keep this country safe. Outsourcing our ability to protect this nation will just not work.

[akarunway 1]

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Is the American industrial base shriveling or just evolving?

“When Ronald Reagan took office in 1981, manufacturing made up nearly 25 percent of the economy, compared to 12 percent today. Today, one third of our manufactured goods come from overseas, versus a tenth in the 1970s. In the past eight years of the Bush administration, the U.S. share of global economic output dropped from 31 percent to 27 percent, while our merchandise trade deficit doubled to $800 billion. Those trends are driven by the erosion of domestic manufacturing and the auto industry is biggest component of that sector.

“[Loren] Thompson [of the right-leaning Lexington Institute], who is no liberal, chides devotees to the Republican economic model that goes something like this: ‘deregulate everything and then stand back so the market can work its magic.’ That model has presided over decline of the U.S. shipbuilding, electronics and steel industries and it’s about to work its magic on the auto industry. ‘We are destroying the foundation of our economy, not to mention the arsenal of democracy. If America loses what’s left of its auto industry, or its aerospace industry, or its chemical industry, our superpower status will ebb away,’ Thompson writes.”

More detailed policy wonk briefs here.

One specific example: historically, the National Security Agency (NSA) had manufactured secure microelectronics needed for sensitive applications across the US Government. As the pace of semiconductor innovation and commercial development—including foreign-based advancements—accelerated, a new and more efficient mechanism was needed.

The NSA’s approach/solution was creation of the Trusted Access Program (TAP) and certification of trusted foundries for acquisition of integrated circuits for the DoD and the Intelligence Community.

Through the TAP, a mechanism to guarantee access to trusted microelectronics technologies for critical defense and security system needs now and into the future has been created. The TAP program was initiated in response to concerns about the security of offshore manufacturing facilities. Without government intervention, there would be no trusted foundries.

The increasingly globalized nature of innovation, development, and the market that characterizes technologically-driven business complicates manufacturing further.

So what’s wrong with Thompson’s analysis?

Do you think we should be concerned about the decline in manufacturing infrastructure and capability?

What’s the solution? (Or do you think there isn’t a problem to begin with?)

VR/Marg

I've been watching it go down the tube for almost 30 yrs. now. Slowly but surely. I started my working days building ships for the USN then went to the oil fields and chemical plants, Martin Lockheed, AT&T, you name it. I thought because I was building infrastructure for this country I'd always have a job. IMO corp. greed is killing this country, I'm now building powerplants and casinos and thought I'd be good for awhile. Everbody needs electricity and some entertainment right. Wrong. Vegas is in shambles right now and nobody wants to fund the new powerhouses w/ the economy the way it is. And cheap labor is killing us. When the lights go out don't blame me. I do think this is a resiliant country and when people wake up and smell the coffee things may change. This current crisis is the wake up call I hope. I hope if and when things rebound it just won't be business as usual.

I hold it true, whate'er befall;
I feel it, when I sorrow most;
'Tis better to have loved and lost
Than never to have loved at all.

[happythoughts 0]

click

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Outlining his vision for a strong US economy, presumptive Democratic presidential candidate Barack Obama has said outsourcing of American jobs to India and China cannot be reversed.

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"I understand that the challenges facing our economy didn't start the day George Bush took office, and they won't end the day he leaves. Some are partly the result of forces that have globalised our economy over the last several decades," he said, kicking off a series of speeches across the country focusing on the economy.

[Coreece 190]

Do you think we should be concerned about the decline in manufacturing infrastructure and capability?

Of course not, these are just fear tactics as usual...let em burn!

Your secrets are the true reflection of who you really are...

[SpeedRacer 1]

hmmm, I don't know whether to be concerned or not.

I am not in manufacturing, yet I earn a decent living as a scientist. Pretty much everyone I grew up with, my friends & relatives, did not go into manufacturing, and yet they seem to be doing all right.

I'm not sure why we should be freaking out about this. Due to robotics and automation, many developed and even many near-third world and intermediately-developed countries are losing manufacturing jobs.

Why should the assembly-line production of physical objects be considered to be so much more important than other lines of work?

Speed Racer
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[quade 3]

First, this is not news. People have been saying this for at least 20 years if not longer. The trouble is nobody in industry has listened because it makes them personally look better and more profitable to ship manufacturing overseas.

Reagan was the first union buster President and, good or bad no matter how you look at it, it looks like GWB is going to be the straw that breaks the camel's back as far as the auto industry goes.

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Do you think we should be concerned about the decline in manufacturing infrastructure and capability?

Absolutely. Becoming a "service" economy is stupid. An economy simply can not sustain itself with 5% of the population controlling 90% of the money and the 80% of the population flippin' hamburgers.

Take relatively cheap resources out of the ground, turn them into something expensive and sell that something to another country. Money flows in. We're doing the exact opposite of that and it's stupid.

quade -
The World's Most Boring Skydiver

[SpeedRacer 1]

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Becoming a "service" economy is stupid. An economy simply can not sustain itself with 5% of the population controlling 90% of the money and the 80% of the population flippin' hamburgers.

Doctors and surgeons and dentists and lawyers are also part of the service industry. And there is also the science industry and the information industry.

As I posted above, I don't know anyone among my circles of friends that are in manufacturing. And they are certainly not flipping burgers.

Speed Racer
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[quade 3]

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As I posted above, I don't know anyone among my circles of friends that are in manufacturing. And they are certainly not flipping burgers.

Understood, but it simply doesn't create "real" wealth for the country to shuffle paper in a circle.

Think of it like people standing in a circle giving each other a massage. Ok, sure, we all feel better afterward, but if we all turn around and give each other $20 bucks for the service, no actual wealth has been created.

quade -
The World's Most Boring Skydiver

[Coreece 190]

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Doctors and surgeons and dentists and lawyers are also part of the service industry. And there is also the science industry and the information industry.

These are very important jobs, and it would be hard for me to picture a life without them...If I have arms, but no legs, it becomes very difficult to serve anyone anything, and there will be no manufacturers to build a reliable wheel chair.....

sorry....I'm trying, I know its a stretch.

Your secrets are the true reflection of who you really are...

[NWFlyer 2]

If you want a non-wonky, very personal take on the situation, read A Year Without "Made in China". I just finished it (started reading it on Black Friday, which seemed appropriate). It's about one family's attempt to go a year without buying anything made in China. They're fare from perfect in their execution of it, and they do allow some exceptions (gifts, for one).

It's definitely a book that made me more aware of how precisely *how* global our economy has become and how few consumer goods are manufactured in the U.S. anymore. The especially interesting part to me was that even when they cut out China, most of the things they bought still came from outside of the U.S.

"There is only one basic human right, the right to do as you damn well please. And with it comes the only basic human duty, the duty to take the consequences." -P.J. O'Rourke

[Andrewwhyte 1]

What would happen if the rest of us spent "a year without Made in USA?"

[nanook 1]

I believe you think of things as more "hands on" when it comes to product. When you think of a shuffle circle, i think you may be leaving out information and services that requires a lot of dicipline and experience to create. Since all are not equal in persuits, there will always be a need for someone elses experience. You are looking at a closed system when you describe the massage circle. Wealth isn't made, because service and money were the same and everybody traded to the left. no one was better or more specialized so no one was able to have more or have less. A society of same product and equal wealth cannot exist.

Service can be a wealth maker because of the manufactured product that supports it is somewhere down the line. It doesn't matter who owns the plants, their existance is what prevents an "information ponzi scheme". it just matters that we can buy its product so we can use it for service. The only thing manufacturing plants does helpful is supply income for workers inside. Manufacturing is the most wasteful and the least efficient way to make money as it is. Any type of coporate tax makes it even worse. That's why they are moving overseas.

But, a 100% service and no manufacturing (theoretically possible? ) means we can be embargoed and controlled by other countries. We do, i believe, need to have some sort of Manufacturing specialty.

_____________________________

"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[SkyDekker 1,121]

Unless people's greed changes, Notrth America's manufacturing base will disappear. We tend to want most things cheaper and cheaper, so we can buy more stuff. Other countries, specially developing or communist/heavy socialist countries will be able to manufacture cheaper for the forseable future...

[piper17 1]

I've spent most of my working life working for manufacturing firms of one variety or another...in sales and marketing. I'm close to retirement now and I have seen the changes firsthand.

I have thought for a long time that it is poor, short-termed thinking to outsource manufacturing but, while I blame a lot of this on top management and their compensation packages, the unions (UAW in the case of the auto industry) are also to blame by their unrealistic (based on market realities of overseas competition and outsourcing) demands for compensation.

Too much greed on the part of management AND labor...not to mention the shareholders. If you can build your product cheaper elsewhere and make more money for the company, management will do it. It is their fiduciary duty.

You can also throw government into the mix for not ensuring there is ACTUAL free trade when they sign treaties like NAFTA and not let trading partners block our exports while we accept theirs. Government not enforcing immigration laws have suppressed wages on US citizens or eliminated employment opportinities for the most unskilled US workers.

Many European countries haven't seemed to realise the competitiveness of the global marketplace and their economies have suffered. Compare their unemployment rates to ours for example. Demands for 4-6 weeks of vacation, thirty hour workweeks etc have made much of Europe non-competitive.

We live in an extremely competitive world.The US economy needs to learn from Europe's examples and start dealing with the realities of the global marketplace.

"A man can never have too much red wine, too many books, or too much ammunition"...Rudyard Kipling

[lawrocket 3]

Gee, Paul. You seem to have made a great point without intending to make it: manufacturing has left the US because there isn't any money in it.

So if there is money to be made, there will be more manufacturing. As much as there have been suggestions by some that manufacturers shouldn't be in the business of making money, any manufacturer that doesn't make money quickly finds itself out of business, which helps no-one.

Carmakers are shutting down plants because the plants are losing large sums of money. They cannot afford to manufacture. The only auto industry business that made a recent profit is the UAW.

So to restate - manufacturing will return to the US when it it profitable to do so.

My wife is hotter than your wife.

[rushmc 18]

So to restate - manufacturing will return to the US when it it profitable to do so.

[rushmc 18]

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I've spent most of my working life working for manufacturing firms of one variety or another...in sales and marketing. I'm close to retirement now and I have seen the changes firsthand.

I have thought for a long time that it is poor, short-termed thinking to outsource manufacturing but, while I blame a lot of this on top management and their compensation packages, the unions (UAW in the case of the auto industry) are also to blame by their unrealistic (based on market realities of overseas competition and outsourcing) demands for compensation.

Too much greed on the part of management AND labor...not to mention the shareholders. If you can build your product cheaper elsewhere and make more money for the company, management will do it. It is their fiduciary duty.

You can also throw government into the mix for not ensuring there is ACTUAL free trade when they sign treaties like NAFTA and not let trading partners block our exports while we accept theirs. Government not enforcing immigration laws have suppressed wages on US citizens or eliminated employment opportinities for the most unskilled US workers.

Many European countries haven't seemed to realise the competitiveness of the global marketplace and their economies have suffered. Compare their unemployment rates to ours for example. Demands for 4-6 weeks of vacation, thirty hour workweeks etc have made much of Europe non-competitive.

We live in an extremely competitive world.The US economy needs to learn from Europe's examples and start dealing with the realities of the global marketplace.

Add to all your good and valid point the effect of government regulations. From crazy safety and liability laws to environmental rules that are nuts.

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[billvon 2,395]

>Think of it like people standing in a circle giving each other a massage. Ok,
>sure, we all feel better afterward, but if we all turn around and give each other
>$20 bucks for the service, no actual wealth has been created.

Actually, it has, and that's sort of a model of where 90% of the wealth in the world is created.

Guy #1 pays guy #2 $50 to teach him more about massage. Guy #2 gets IOU's from the other guys, and with the IOU's representing money he pays for a massage school. He pays them back with the money he makes from teaching at his school, with the money coming from more massage customers.

At the end of the day you have a real thing (the school) created with fake money (IOU's.) This has been going on for a few centuries, at least.

[SpeedRacer 1]

I don't think the massage circle is a good analogy.

Let's look at the real world: How many on here are in manufacturing? And if you're not, how many are flipping burgers?

There are many different ways of producing what human beings consider "wealth" besides just manufacturing objects on an assembly line. Any comprehensive look at the real world will validate that.

In any case, I don't plan on quitting my job as a molecular biologist to start stitching running shoes for Nike any time soon. Nor do I think it would be better for the economy if I did.

Speed Racer
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[quade 3]

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I don't think the massage circle is a good analogy.

It's not perfect by any means, wasn't meant to be. Was intended to show the problem with not being able to have a product that you can export.

If the US continues to have an ever increasing trade deficit by importing more goods and exporting more wealth, our entire economy is destined to suffer. The math isn't really all that difficult to figure out.

quade -
The World's Most Boring Skydiver

[SpeedRacer 1]

How do companies that manufacture goods make more profit by using more expensive labor here than they could get overseas?

Speed Racer
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[happythoughts 0]

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How do companies that manufacture goods make more profit by using more expensive labor here than they could get overseas?

Volkswagen is building a plant in Chattanooga, TN. 2,000 jobs.

[beowulf 1]

Ya think it will be a Union plant?

I think the UAW is a big part of why the big 3 are in the mess they currently are in.

[kelpdiver 2]

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So to restate - manufacturing will return to the US when it it profitable to do so.

Good point. And the reason it is not profitable (mainly) is because of regulation and unions. Mainly the government.

Easly fixed if the population could get straight and complete info from the Democratic and union supporting media........