Posted by Larry Doyle on May 29th, 2009 2:19 PM |
On this historic day in which the government of the United States of America is on the doorstep of taking a majority equity stake in General Motors, I thought it may be prudent to address manufacturing in America.
To that end, former Clinton administration Secretary of Labor Robert Reich provides highly insightful commentary at Wall Street Pit: The Future of Manufacturing, GM, and American Workers (part I).
As we wonder what the future of our automotive manufacturing industry may look like as well as manufacturing in general, I strongly recommend we take Reich’s words to heart. Let’s take a round trip as we review the dynamics of the Industrial Revolution and the road ahead:
What’s the Administration’s specific aim in bailing out GM? I’ll give you my theory later.
For now, though, some background. First and most broadly, it doesn’t make sense for America to try to maintain or enlarge manufacturing as a portion of the economy. Even if the U.S. were to seal its borders and bar any manufactured goods from coming in from abroad–something I don’t recommend–we’d still be losing manufacturing jobs. That’s mainly because of technology.
When we think of manufacturing jobs, we tend to imagine old-time assembly lines populated by millions of blue-collar workers who had well-paying jobs with good benefits. But that picture no longer describes most manufacturing. I recently toured a U.S. factory containing two employees and 400 computerized robots.
The two live people sat in front of computer screens and instructed the robots. In a few years this factory won’t have a single employee on site, except for an occasional visiting technician who repairs and upgrades the robots.
Factory jobs are vanishing all over the world. Even China is losing them. The Chinese are doing more manufacturing than ever, but they’re also becoming far more efficient at it. They’ve shuttered most of the old state-run factories. Their new factories are chock full of automated and computerized machines. As a result, they don’t need as many manufacturing workers as before.
Economists at Alliance Capital Management took a look at employment trends in twenty large economies and found that between 1995 and 2002–before the asset bubble and subsequent bust–twenty-two million manufacturing jobs disappeared. The United States wasn’t even the biggest loser. We lost about 11% of our manufacturing jobs in that period, but the Japanese lost 16% of theirs. Even developing nations lost factory jobs: Brazil suffered a 20% decline, and China had a 15% drop.
I’m fairly certain this message is not one commonly promoted by our media. I believe we strictly hear how our manufacturing jobs are purely shipped overseas and especially to developing countries. (more…)