After President Barack Obama championed the importance of manufacturing, I became intrigued by what role manufacturing plays in the 21st century United States and what business stories could be derived from examining this debate.
Ever since the endless rows of textile mills that once lined riverfronts in the Northeast started becoming abandoned shells in the 1970s, the loss of manufacturing jobs to other countries – and the seemingly quixotic effort to stem the tide – has been a polarizing subject.
The Alliance for American Manufacturing is a good starting place for background material. The nonpartisan nonprofit group, founded in 2007 by manufacturing interests that include the steel industry and the United Steelworkers labor union, certainly has a point of view. Quite helpful, though, are the dropdown boxes with data for each state and links to stories in newspapers and magazines about manufacturing issues, such as China accused of dumping counterfeit parts into the Pentagon supply chain, the impact of the North American Free Trade Agreement on factory jobs in the United States and the rise of India as a manufacturing power.
Although the U.S. remains the world’s manufacturing leader – the United Nations reported the U.S. produced nearly $1.7 trillion in goods in 2009 and beat No. 2 China by 40 percent – that lead is quickly slipping. Manufacturing jobs make up just 10 percent of the U.S. work force, according a recent MIT report.
“The United States was the world’s leading producer of manufactured goods from 1895 through 2009; some experts estimate that China surpassed the United States as the leading manufacturing country last year,” according to a report issued in June to President Barack Obama drafted by the President’s Council of Advisors on Science and Technology, a group composed of industry and academic experts.
During his State of the Union address in January, the president championed the importance of manufacturing and has continued to tout it since, announcing in June the Advanced Manufacturing Partnership, a group co-chaired by MIT president Susan Hockfield.
The brand of manufacturing that partnership espouses eschews the commodities manufacturing that the U.S. has long conceded to overseas countries. Instead, the drive is to invest in advanced technologies, such electronic components and jet engines.
That said, some U.S. companies continue to be successful making more traditional manufactured products , including bowling balls, sparklers, compact discs, sports shoes and pianos. “Bloodied, battered, but not yet down for the count, there are still pockets of U.S. manufacturing scrappy enough to keep the lights on in the face of overseas competition,” Donn Fresard, Matthew Mallon and Justin Rohrlich wrote in the introduction to 10 snapshots of manufacturing survivors for Minyanville. The award for irony among those industries goes to: chopsticks, exported to China by a company based in rural Americus, Ga., that already produces a few million of the wooden utensils a day, the authors said.
While that offers a rare case of a U.S. consumer product flooding a Chinese market, it underscores the value of challenging conventional thinking about the relationship between U.S. and Chinese markets. For example, the rise of commodities made in China that flood U.S. markets, may not necessarily be all bad, research from the Federal Reserve Bank of San Francisco shows. For every dollar spent on a product made in China, 55 cents go to U.S. businesses for services such as marketing and sales, USA Today recently reported.
And some of those products, such high-end Bose noise-canceling headphones, were invented by U.S. companies. A tag on the case for Bose headphones touts that they are designed in the United States. Apple iPods are “designed in California.” Somehow that is supposed to mute the fact that the headphones and media devices are made in Mexico and China respectively. But they were designed here, doesn’t that count for something?
“Some people lament the loss of manufacturing jobs we could have had making iPods – so what?” Daniel Ikenson, associate director of the Center for Trade Policy Studies at the libertarian-leaning Cato Institute, told The New York Times. “The imports of iPods support U.S. jobs,” including engineers, marketers and advertisers, the Times reported.
As our economy becomes more global, companies that are based in the U.S. but shift some or all of their manufacturing overseas – chasing labor pools, supply chains and new consumer markets – are a rich pool of source material for business stories.
While the political rhetoric may be about whether manufacturing and jobs remain here, how companies find success is another story and offers business reporters the chance to help promote greater understanding of our international economy.