During World War II, the popular image of Rosie the Riveter (representing civilian females working on the formerly male-only industrial assembly lines) helped further the belief that the manufacturing industry in the United States was second to none. Many historians feel that this concept helped bolster spirits both at home and on the front lines. In addition, it contributed to winning the war. The post-war U.S. economy was also heavily dependent on industrial sector growth which, due to reconstruction efforts in Europe and Asia, faced limited global competition for almost three decades.
Since 1980, however, there has been a major decline in the number of manufacturing jobs in the States. Wikipedia estimates that up to ⅓ of the manufacturing positions disappeared over the first decade of this century. Also, while the economy continues to post steady gains, that few of these jobs have returned. Some of the reasons for slow growth in this sector could be the fact that technological advances, such as widespread use of robotics, have replaced the need for many skilled workers.
For example, this is particularly true for assembly line production, where computer-driven robotic machines produce, assemble, weld, and convey a product from start to completion. Another reason for the decline in American manufacturing jobs is competition from foreign markets such as China. Since its entry into the World Trade Organization (WTO) in 2001, competition from China has created a US. goods trade deficit (imports greater than exports) which, again according to Wikipedia, was approximately $350 billion in 2016.
Let’s begin with a list of the top industries (by revenue) currently fueling the American economy. These are:
- Food processing
- Consumer goods
The United States is the world’s second-largest manufacturer, the U.S.’s Q3 2016 industrial output (nominal GDP, annualized) was approximately $2.18 trillion. Adjusted for inflation and other factors, this output still lags behind 2007’s pre-recession peak. Still, these figures have been trending upward since 2010.
Here are the top manufactured products that Business Insider and The Bureau of Economic Analysis, an arm of the U.S. Department of Commerce, posted that during 2016, the U.S. exported $1,051 billion in manufactured goods and imported $1,920 billion, (a manufacturing goods deficit of $868 billion). Below are some of the metrics that comprised America’s $2.1 trillion Export Industry that year:
- Electrical Equipment: total revenue of $32.2 billion.
- Fabricated Metal Products: total revenue of $32.6 billion.
- Medical Equipment, Sporting Goods, Misc.: total revenue of $39.4 billion.
- Primary Metal: total revenue of $49.6 billion.
- Food: total revenue of $50.9 billion.
- Petroleum and Coal Products: total revenue of $50.9 billion.
- Transportation Equipment: total revenue of $252.0 billion.
- Chemicals: total revenue of $174.0 billion.
- Computers and Electronic Products: total revenue of $116.0 billion.
- “Machinery-Except Electrical”: total revenue of $109.0 billion.
Another factor that indicates industry change is the co-production of what were once wholly American-made goods. The infamous North American-Foreign Trade Agreement (NAFTA) (signed and sealed in the 1990s but rolled out in this century) dictates that manufacturing is shared across globally-distributed supply chains. This means that different aspects of product development conducted in different countries. The best-known example is that cars are no longer completely produced in the U.S. Parts are manufactured in the States, then shipped to Mexico where they are assembled, then returned to the U.S. for distribution/sale. International production sharing is widely blamed for U.S. manufacturing job losses since 2000.
Currently, U.S. manufacturing continues its evolution, led by advances in information technology, supply chain, and distribution innovations, reduced barriers to trade, and less competition from low-wage countries like China and Mexico. During the fourth quarter, 2017, the Bureau of Labor Statistics (BLS) forecast in October 2017 that manufacturing employment would fall from 12.3 million in 2016 to 11.6 million in 2026, a decline of 736,000. As a share of employment, manufacturing would fall from 7.9% in 2016 to 6.9% in 2026, continuing a long-term trend.
Rescinding trade agreements with Canada and Mexico was a hot topic during the 2016 Presidential election with American job preservation/creation a campaign issue that has yet to be resolved. Most experts agree that regardless of the outcome, the health and continuance of the manufacturing industry in the U.S. is integral to the overall health of the U.S. economy.
It is also important to note that while manufacturing was integral to boosting the United State’s post-war economy, that today the measure of the health of a nation is not chiefly its manufacturing output. (The size and spending strength of a nation’s middle class, as well as its education system, are additional factors that determine whether a nation is a world leader or a country in development.) Therefore, while U.S. manufacturing employment trends down, manufacturing output in 2017 was near record levels for real Gross Domestic Product (GDP).
This means that productivity (output per worker) has also improved significantly. This is likely due to automation, global supply chains, process improvements, technology innovations and consumer demand. So that while technology takes away a number of jobs, it facilitates the production processes, reduces the time to market for most manufactured goods, and from an output standpoint, is not a negative statistic
In conclusion, U.S. manufacturing has been reshaped markedly since the days when Henry Ford’s production line was considered revolutionary. Technology and the world stage both impact where, when, and how American goods are made and in what quantities. Given the innovation of one and the sometimes volatile nature of the other, these factors will continue to dictate what is made, where these products are made, and how they are made for decades to come.
photo credit: Wikimedia