March 28, 2010

Goodbye US manufacturing jobs.


Americans used to make things. And then they purchased things that other Americans made.

And then came Walmart, corrupt and incompetent unions, bad management at GM, lots of robots, idiots in DC, and, of course, communist China.

Well, I guess everyone can work at Walmart. Or maybe they can build robots and have their robot go to work for them?

BTW, are charts supposed to do that?

37 comments:

Bukko Canukko said...

Amazing to think there are fewer manufacturing jobs in the U.S. than at the start of WW II, when the population was half what it is today. But unfortunately, "free trade" (i.e. selling out your own country's workers so you can get cheap crap from abroad without the supposed evils of "protectionism") is now gospel throughout the Western world. I'd rather pay more for a good product made in my own land than pay less for disposable dreck made elesewhere. I often do, when I have a choice, except I often don't.

One thing that surprises me about living in Canada is how much U.S. made stuff I see here. Lots of it is food, of course, but I see many manufactured consumer goods with a "Made in the USA" label. Even some plastic kitchen items. I didn't see this much American mfg. when I used to live there. And of course it's heart-breaking to look at the "made-in" labels on many of my older items like tools and even electronics to see that they used to be made in the USA (that's why they've lasted for 20 or 30 years). But the free-traders have killed all that.

Way to go, Chicago-schoolers! Wal-Mart and "economic rationalism" wins, the American people lose. We can buy low-priced imported junkola, if we still have a job to pay for it...

Mike Hunt said...

True enough. I've been working to strengthen manufacturing in SE Asia since 2003. I've been using the latest modern management techniques picked up from the USA here to improve productivity, drive costs down and quality up.

Do I feel like I'm putting a knife in America's back? Not at all. I'd gladly come back to start something up if I could get a job that paid equal or more than I am making here.

Then again, there remains wage inflation in Asia, maybe one day the cost of labor between the US and Asia and then jobs will move back as the cost of shipping will make manufacturing in Asia unaffordable.

The world is too connected to say that US manufacturing jobs will never come back.

Manufacturing has become more productive over time except when productivity went backwards when operations transferred from the West to the East. However manufacturing uses high amounts of energy in the process of becoming productive (automation runs more energy than manual processes).

The key will be on how to get concentrated energy usage down AND maximize productivity.

I believe the US will have a chance to compete in manufacturing agian, it may just take a few more years for this trend to play out.


-Mike

casey said...

So the boys to the south do all our manual labor and the chinese build all our stuff.Wtf are we doing anymore?surfing the net and playing on facebook?The govt seems to be getting good at propping up assets like stocks and homes.the ponzi scheme roles on.

Anonymous said...

"Well, I guess everyone can work at Walmart. Or maybe they can build robots and have their robot go to work for them?"

I want one of those robots.

Sign me up, please!

Kenduffelsniffenspotzen

Charles said...

Your most sensible and empirical data backed post in some time Keith ;-)

This is why I'm not seeing a REAL housing or economic rebound anytime soon. The credit card funny money has just been taken out of the consumer's hands and directly into the financial cartel speculators.

Only when their losses are fully realized (either masked by inflation or in real dollars) will the economy find it's equilibrium. I think we might be 5 years plus away from that though...

And in the mean time we HAVE to have our Greek crisis. Public employee unions must b allowed to destroy themselves. Luckily the current public mood would be quite against bailing them out.

The doody is really gonna hit the fan when Kalifornia comes calling for a bailout. I've got a front row seat here in LA county and your gonna see a civil war between the tax taking union sycophants and the working tax payers!

I'm not a fan of Whitman but she will likely beat moonbeam on a no new taxes pledge. She will have no choice but to honor that as the crisis is already here and she signed he pledge. Political suicide if she doesn't.

That will bring the issue of pensions/unions to the forefront. The rest of the nation should watch CA very closely.

Anonymous said...

No problem. We will just all go work for the government, Soviet style. I want to be a health bureaucrat.

born to lose said...

Everyone is to blame except the noble employees.

If employees provide a competitve advantage for successful companies, they are also the source of competitive disadvantage for substandard companies.

American employees cost too much for the ever decreasing amount effort they are willing trade for a job.
The employees are to blame for their own failures.

patrat said...

Go to Yahoo Finance and look at the interactive chart of the S&P 500. It's interesting to me how the bizarre-ness (twin peaks!)in that chart coincides so well with the bizarre-ness in this one. It all starts about 1997-1998.

And another coincidence, I suppose, but in 1996 Walmart "entered the Chinese market" and in 1997 it replaced Wooworth's in the DOW (Wikipedia). Now I am curious about what-all Congress was doing at that time.

keith said...

It really is odd. Everywhere I go, and trust me, I've been to a LOT of countries in the past few years, their manufacturing base has been stripped, factories are closed down, people out of work, many countries looking back to the days of communism with some 'oh, the good ol' days' feeling'. And the rich (especially those with gov't ties) got not just richer, but sickening, holy-crap, I can't believe one human can become that rich richer.

It's not just America. It's everywhere. Well, everywhere that is, except China. [generalizing a bit - singapore, vietnam, etc doing good too]

Bottom line?

China, by exploiting labor and manipulating their currency, has f*cked the world. And China's distributor, Walmart, has f*cked the world. And American consumers, i.e. Walmart shoppers, have not only f*cked the world, they've f*cked themselves. And the US government, by enabling a monopoly like Walmart and enabling a goods dumper and currency manipulator like China, has f*cked the world.

edd browne said...

Bukko Canukko said...
"…in Canada is how
much U.S. made stuff I see here."
------------////-------------
Other nations import some US products to balance trade a bit.

The free traders provided the death blow;
but the disease raged for several decades in
homes and classrooms without standards:
academic, disciplinary, social, parenting …

Not to mention killer complacency;
"winners disease", as Gorby said.
.

Lost Cause said...

"The employees are to blame for their own failures."

They all have bosses. Silly to blame people who are under the control of others. There is no alternative in our system. I suppose a blooming of entrepenuership will take a place, and manufacturing will return like Mr. Hunt says, just as soon as wages equalize. This happened in Korea & Japan -- it became cheaper to use American workers than Korean workers.

Prisoner No. 6 said...

Check out the excellent podcast of This America Life, about the NUMMI vehicle plant in Fremont, CA, that GM built after sending key workers to Toyota in the mid-80s. http://www.thislife.org/radio-archives/episode/403/nummi

It reminds me of nothing so much as the real-estate meltdown. Everyone, at every level, knew that things were unsustainable the way they were going at GM. But each one, due to their selfish, "I got mine, Jack" interests, let the whole company go to shit, because it was someone else's problem. Kind of reminiscent of the whole libertarian mantra.

The workers were pissed at being ignored, and acted out by being drunk on the job and sabotaging cars. The unions protected incompetent workers. The line managers just wanted to make their quotas. The GM top dogs just wanted to make their bonuses. And the problem was kicked down the road.

The U.S., in response to the tax laws put in place by Reagan, have abandoned a generation of R&D and infrastructure upgrades. They were allowed to take the money that should have been going to the long-term health of the economy, and instead take it out of the companies and cart it home as fat bonus checks for the 1/10 of 1% ultra-elite.

Dimwit right-wingers cheered. And the manufacturing economy rotted from within.

keith said...

Stories of disgruntled GM workers sabotaging their cars were real.

Unions, their corrupt bosses and their greedy workers, killed the US manufacturing base, more than Walmart ever could.

I hope every idiot who (still stupidly) pays dues to a union looks long and hard at that chart, and then asks themselves why they are such fools.

Once the unions die, and their corrupt Democratic Party sponsors get voted out of office, then maybe we'll get somewhere.

Even though by then, it'll likely be too late.

Anonymous said...

Looks like 5,000,000 manufacturing jobs went away during the Bush years.

Thank you GOP!

Banana Republicrat said...

Dude, Charles, California already asked for a bailout.

Anonymous said...

.



Thanks for nothing Ross Perot


.

Anonymous said...

Thanks Unions and Lawyers

Anonymous said...

.


The War is still going on

Gasoline is above $3 a gal avg

Jobs are down

Taxes are up

Thanks G.W.B


What????


Oh that was the last guy


Thanks Obama


.

gettinold said...

I'm one of those evil small business owners here in the USA. When I started my business in 1987 (during the Reagan years) we employed 41 people and actually turned a decent profit selling to those evil aerospace companies. The recession of the early '90s kicked our ass, but we survived because of automation. I replaced half of my shop floor employees with CNC machines, got rid of the receptionist and most office staff, and outsourced some engineering work.

Then Clinton came along and decided that we really didn't need a military anymore, and by '94 I was faced with bankruptcy. I fell back to a core group of people and we became a virtual business with no "official" offices or manufacturing facilities. Our products are still made here in the USA (the niche is too small for the Chinese to grab), and now I regularly turn down work that would require me to hire new employees because it's too damn much trouble.

President Obama's latest initiatives are the last straw for me. I'll bank a few more years of profits and then shut the whole thing down and retire, probably in another country.

AMF.

RobertM said...

@ Kenduffelsniffenspotzen

About those robots taking over. That is exactly what the zeitgeist movement is predicting and encouraging/trying to bring about. Judging by the exponential growth of science, it is quite possible that in 40-50 years, we could, should we choose to go in that direction, make most jobs obsolete (for better or worse).

Anonymous said...

What's up keith!

Love the thread

I have been a silent S&A and it has been going on for about 3 months now. I havent liked the political stuff lately I have a job again which is rare in south florida. The unemployment level says its about 12.5 % in FL. I belive its closer to 20% and then count the illegal jobs and its even higher. I grew up in Pittsburgh, PA where manufacturing was Pittsburgh. STeel Town USA! That all went away and most young people had to move out of the area to places like Houston or Florida. I moved to florida and south florida has a lot of tech manufacturing jobs also. There was IBM, Motorola, Pratt & Whitney and all of the smaller companies which supported them. They are all gone! Then housing was the thing to do in Fl. Now thats gone!
I can definitly see the chart and I read you post about this has been everywhere you have been. I have always been concerned yet the chart tells the cold hard truth of how we have gone backwards in the past 30 years. Its very sad to me

Rich in FL

Anonymous said...

So if Keith is right, then China's rise in manufacturing output came at the USA's expense, right? I mean % share of world manufacturing output, not employment, output. According to The Economist, Keith is wrong. China's increased share came at the expense of Germany and Japan, the countries well known for protecting workers against layoffs. The USA, with unrestricted layoffs, kept its share all the way through China's rise.

As for losing manufacturing workers, all countries lose mfg workers every year, including China.

Keith FAIL

Anonymous said...

Again with the Union bashing. It's OK for CEO's to rake in 475 times the average floor worker whilst working under a contract that offeres a golden parachute........ At the same time workers should work for $5 a hour with at-will working conditions that offer no contract security or "parachute".

CEO walks with 30 million after F'n the company. Employee walks with ZERO after CEO F'd him/her. Yeah, no need for Unions at all. Idiot.

Charles said...

RE: Banana

I'm not talking about "Hey we need more of our FED dollars back" like Arnold did.

I mean a "HELP US WE'RE BROKE! HIGHWAY PATROLMAN NOT GETTING PAID IT'S ANARCHY" type plea.

This will be the greatest test of moral hazard theory in recent US history. Funny thing is those obstinate Republicans Keith loathes will prove quite useful in blocking bailout legislation. If Cali get's bailed and congress goes right along you can stick a fork in the Republic.

At that point it would be best o just enjoy what you have while you can and not bring any children into this shit storm. It would be a cruel act.

The saddest part is 90% of the people are to stupid to REALLY understand liberty and it's principals. If your a person who believes in freedom but had the misfortune of being born anywhere but the ruling class, your freedom is an illusion.

Bukko Canukko said...

Again with the union-bashing! I pay dues to a union, and I'm proud. It's a government union, too, since I work for the public hospital system here.

Union membership is mandatory at the hospital where I work, so everybody pays dues whether they like it or not. I haven't heard anybody bitching about THAT, just over how this Canadian nurse's union doesn't do enough for the workers. (The 3% pay raise this year will be sweet, though.)

I haven't seen featherbedding, dumb-ass work practices or protection of incompetent employees in any of the three jobs where I was lucky enough to be a union member. No union thug ever told me I couldn't flip a light switch or empty a trash can because that was the job of some other union local.

You know what I HAVE seen? I've seen that bosses can't just crap all over workers at will. Like when I got written up on disciplinary charges two months after I started working here, and a union rep had my back when it came to facing the bosses.

Situation: there was a 22-year-old crack addict/prostitute patient who was admitted with a high fever from an abdominal infection. She was due for her first dose of IV antibiotics at midnight, a medication that would run in over the course of 30 minutes and help save her life. I told her what I was going to do before I hooked the IV line to her needle, and she was agreeable to that.

Then, after just two minutes on the drip, she decides she MUST go outside for a cigarette. She had been outside smoking with her boyfriend/pimp an hour earlier, and she was unsteady on her feet from being sick. She also had a urinary catheter in, attached to a urine bag.

I didn't think she could carry the urine bag and wheel the IV pole without falling down and ripping the IV needle out of her arm and/or the catheter out of her crotch. Not only would that be bad for her health, but I'd have to bung another IV cannula and/or catheter in. Plus it was only half an hour she'd have to cool her heels while she got an antibiotic that again, would help keep her alive.

So I grabbed her cigarettes and lighter from the windowsill and told her I'd give them back and unhook her from the IV as soon as the drip was done. Words escalated, and she started screaming and cursing. The nurse in charge heard the commotion and came in to investigate. I told her "Ms. ______ is acting like a crackhead" which was not diplomatic on my part, and suggested to the young lady that "If you don't want to do what's necessary to keep yourself alive, then don't bother to come to the hospital next time you get sick."

It was a bad choice of words and actions on my part. I don't like loud, irrational crackheads, but I should not have sunk to the patient's gutter level. I didn't lay a finger on the young lady, and I gave her cigarettes back. But I got brought up on charges of verbal patient abuse.

When I had my hearing with two bosses and a woman from HR, it would have been three against me. I was still in my probationary period, so they could have fired my ass. And if I get fired, I get deported, because I'm here on a work visa.

Lucky for me, the union rules say a union rep had to be at the hearing. So it was 2 of us vs. 3 in management. I was apologetic -- I know I should be polite, even to foul-mouthed crackhead prossies. And with the union rep negotiating, I got off with a disciplinary letter in my personnel file. Who knows what would have happened without organized labour on my side?

I'm a hard worker; never miss a shift; patients love me because I tell them lots of interesting stories and hustle to do what they need. I haven't had a spot of bother in the succeeding three months. But I shudder to think how my life might have been screwed if it wasn't for union protection.

To Keith and all you other union-bashers, don't knock 'em until you've been in one. The working man and woman still needs some power to even the odds against the bosses.

Bukko Canukko said...

Which brings me to my second point, a macro one about protecting working people as a whole.

Without unions in a society, there's no counter-balance to the power of management. Unions have been getting wrecked since Reagan's days. That's also the period when American workers have been getting raped by the boss-maggot class.

No coincidence there. Without unions to be a political force, there has been nothing to stop bribed politicians from passing laws that let bankster bastards run wild and enacting trade policies that ship everybody's productive jobs to Mexico or China. There's a class war going on against American citizens, but only one side has an army.

Sure, unions have problems. I don't like New Jersey mobsters taking over unions and stealing their pension funds, and I didn't like Jimmy Hoffa doing crooked deals with trucking company execs in the 1970s. There are laws against those things, though. Shit like that should be investigated and prosecuted by the government.

But just because there are bad union actions doesn't mean that all unions are bad. If you're a working person reading Keith's blog, how's that no-union world working out for ya?

keith said...

Bukko - I was in a union (forced to be) during a summer job in college. I saw first hand how unproductive, corrupt and disruptive they were. They didn't protect the workers - just the opposite, they led to workers losing their jobs, by causing such an unproductive and hostile environment.

Unions had their place in America, decades ago. And then they got greedy, they got corrupt, and they got in the way of companies turning a profit, or producing well-made goods.

Take GM for example. You really don't need another example.

Workers should not be at war against their companies. If they take that posture, the company will either go away, as it can't make a profit, or it'll go find workers who want to work somewhere else. And that's what's happened to America - companies just found other workers.

Anonymous said...

Bukko Canukko...Union FAG

TARPHAMPTALF said...

"There are laws against those things, though. Shit like that should be investigated and prosecuted by the government.

But just because there are bad union actions doesn't mean that all unions are bad."


LOL - Bukko, corrupt, mobbed-up unions f*ckin own the current U.S. government. Between them and Goldman Sachs, poor professor Obama doesn't know whether to scratch his watch or wind his ass.

More unions are not the answer. The answer is less government, lower taxes, and higher interest rates. None of the above will happen under the current government of pariahs and fools.

Andrew from Russia said...

(Last attempt at posting this)
Don't worry, protectionism is making a bold comeback. The developed nations will retaliate by pauperizing low-cost industrial workforces of their job-sucking adversaries (note that I didn't say anything about the US getting its manufacturing jobs back as a result!)
Exit FTAs, enter the MAJD - Mutual Assured Jobs Destruction.

Mike Hunt said...

Bukko,

I believe you've come to the wrong conclusion by saying without unions there would be no worker protection.

If you had good management in place you wouldn't need the crutch of a union and their associated evils. Good management would know that you are a strong worker who made a mistake and admitted up to this. Good management would weigh the pros and cons of letting you go and would make an appropriate decision, which would likely be to give you a warning letter.

Good management knows that they need dedicated, focused employees and that they need to reward talent in order to prosper.

Unions get in the way of good management with their outrageous requests and thuggish mentality.

-Mike

Mike Hunt said...

Bukko,

This link from Mish has an interesting perspective on Canadian unions, in the first part of the blog post:

http://globaleconomicanalysis.blogspot.com/2010/03/california-usa-vs-ontario-canada-which_29.html

Still think unions are a good thing?

-Mike

Dave said...

Keith,

Where do you get off bashing robots? Automating tasks via technology is how our society moves forward. By being able to provide the same goods and services with fewer man-hours of input, society is a winner. Stay somewhat rational please.

Also, even if China ends their currency manipulation, those jobs aren't coming back to the USA. They're going to go to countries poorer than China. That is what China is worried about.

never_forget_y2k said...

Manufacturing jobs going to China is irrelevant. Manufacturing will continue to become more automated until there is no more human input at all. So there will be no manufacturing jobs in USA, China, or anywhere else.

Same goes with everything else. 'Thinking jobs' can be eliminated by more intelligent software.

Eventually there will be lots of productive capacity and no one with any jobs. So how will these goods be distributed to the jobless?

Automation will require some kind of reinvention of economics. Well, either that or the richest 1% will just go ahead exterminate the remaining 99% and live happily ever after in their fully automated utopia.

Anonymous said...

I'm gonna say that manufacturing is not going to come back to the USA. Once east Asia (see China, Vietnam, etc) solidifies its position, global wage arbitrage will move low end manufacturing to even cheaper countries in Laos, Namibia, etc, while higher end *automated* manufacturing stays in east Asia at competitive prices. What's left of western capital will move into the financial markets which support these processes.

Next, the current uproar against the unions is just one group of f'-ed private sector workers (the ones whose CEOs make millions) railing against another group of workers but with collective bargaining & a different chain of crooked management leads.

What's basically happening is that there's an ownership class and a disposable working class, which is emerging from this rearrangement. Soon, drugs will be legalized to insure that the masses don't wake up to their ruined futures. At that point, they'll basically be one career left for a middle classer and that's to be a financial type for the ownership class. The problem is that at that point in time, Wharton Business school will get nearly 100K applicants for perhaps a class of 300 so it won't be easy for a newcomer to be one with that crowd.

Anonymous said...

"Good management would know that you are a strong worker who made a mistake and admitted up to this."

What company do you work for? Good management is quite rare these days. It's all about cronyism.

Jasmyn said...

Well not EVERYONE can work at Walmart. I once knew someone that applied and scored to high on qualifying test. So there are some people that walmart wont hire because they are too smart... explains the 10 toothless gack heads (meth users) you see mopping the floors at 4 in the morning...