Monday, January 18, 2010

Who's To Blame For The Loss Of Our Manufacturing Base?

NO ONE!   Let me "splain", as Ricky Riccardo might say.

Long ago, the U.S. was an agricultural leader, with 1 of 2 people making their livelihoods on the farm.  Following that came the "assembly line", which ushered in a period during which agricultural workers were drawn off the farms and into the factories, especially the early auto industry.

While this process temporarily displaced those who only knew milking cows or plowing fields, it was very good for society as a whole, as FEWER people were needed to grow MORE food and an embryonic and powerful manufacturing sector was born.  Today, only about 3% of the population grows enough food to feed our country and much of the rest of the world!

 Post World War II, another transition occurred as fewer employees were needed for manufacturing and a "Services" based economy came into existence. 

By 2006, according to (, services produced by private industry accounted for 67.8 % of U.S. Gross Domestic Product (GDP), with real estate and financial services such as banking, insurance and investment on top.  Some other categories of services are wholesale and retail sales, transportation, health care, legal, scientific and management services, education, arts, entertainment, recreation, hotels and other accommodation, restaurants, bars and other food and beverage services.

Production of goods accounted for 19.8 % of GDP:  manufacturing - such as computers, autos, aircraft, machinery - 12.1 %; construction - 4.9 %; oil and gas drilling and other mining - 1.9 %; agriculture - less than 1 %.  Federal, state and local governments accounted for the rest - 12.4 % of GDP.

An article in "Suite 101" explains why it appears the U.S. is losing its manufacturing base (

"So, how is it that manufacturing production continues to grow, while employment declines? Listening to Washington policymakers, one might assume that all the manufacturing jobs have simply been moved to Mexico or China, but that's only a part of the story -- and not even the largest part. By far, the biggest factor impacting manufacturing jobs is technology and automation -- e.g. smart robots. Don't worry, it is not the Terminator or the Matrix Americans have to fear, but automation is capable of higher functioning tasks than ever before and the scope of work robots are able to manage grows every year.

Even as companies open new facilities in the United States, the expected job creation just is not at the scale people are used to seeing because so much of a factory's operation is automated. There are even dark factories being built that do not have lighting because no humans are working there."

Economist Joseph Schumpeter argued that capitalism exists in the state of ferment he dubbed "creative destruction," with spurts of innovation destroying established enterprises and yielding new ones. 

What is taking place now is nothing new.   

The process of transition from one state to another is painful.  Many of us have been forced out of our safety zones and turned to practices such as blogging in order to re-create new livings.  In the short run, the process is distressing.  In the long run, the process is GREAT!

You know what to do if this article promotes some thinking or disagreement.  TAKE ME ON!

Marko's Take

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