> The US has added around 800,000 jobs in manufacturing employment over the last two years, employing around 13 million workers<p>It's too early to know, but if it turns out the solution to decades of economic misery for middle class blue collar workers was<p>1. 50% tariffs on China, and<p>2. $100B of subsidies to chip makers and green tech...<p>The reversal of Reaganomics we're living through will become permanent for at least another generation, and for good reason. Maybe a good time to start a company selling to the government.
Manufacturing employment is roughly at the same place now that it was in 2020, and still substantially lower than where it would have been had the pre-pandemic trend continued, and even that was nowhere near returning the US to pre-2008 levels.<p><a href="https://fred.stlouisfed.org/series/MANEMP" rel="nofollow">https://fred.stlouisfed.org/series/MANEMP</a><p>Construction spending is a terrible proxy for manufacturing - both because the size of a building you need isn't pegged to the value of your output (e.g. a $100 million dollar shop making aerospace components might have a tiny fraction of the footprint of a $1 million sweatshop making t-shirts), and because the cost of factory construction is determined by the cost of construction in general (i.e. if there was a real estate boom building residential buildings then you're competing with that for construction materials, equipment, labor, etc).
Perhaps I'm just bad at economics, but it always seemed to me that the countries making all the <i>stuff</i> would eventually hold all the power (and I say this as someone working in tech who produces nothing tangible). The fact that it costs exorbitant amounts to construct new buildings, railways, etc. in the U.S. and how our cities almost look antiquated or frozen in time compared to Asian cities shows that we missed a generation or two and probably need to catch back up now.
Meanwhile in China:<p>- exports plunge by 7.5% in May, far more than expected <a href="https://www.cnbc.com/2023/06/07/chinas-exports-plunge-by-7point5percent-in-may-far-more-than-expected.html" rel="nofollow">https://www.cnbc.com/2023/06/07/chinas-exports-plunge-by-7po...</a><p>- profit tumbles 18% in April <a href="https://www.reuters.com/world/china/china-industrial-profits-tumble-4th-straight-month-april-2023-05-27/" rel="nofollow">https://www.reuters.com/world/china/china-industrial-profits...</a><p>- chip progress stagnating. Oppo chip design unit completely shut down <a href="https://techcrunch.com/2023/05/12/oppo-chip-disbands-phone-china/" rel="nofollow">https://techcrunch.com/2023/05/12/oppo-chip-disbands-phone-c...</a>. Japan stops shipping semiconductor equipments to China <a href="https://asia.nikkei.com/Business/Tech/Semiconductors/Japan-chip-export-curb-to-China-will-take-effect-in-July" rel="nofollow">https://asia.nikkei.com/Business/Tech/Semiconductors/Japan-c...</a>. China is still stuck on 14nm chips.<p>- multinationals moving supply chains out of China faster than ever. Tesla asks Chinese suppliers to build plants in Mexico (June '23) <a href="https://cnevpost.com/2023/06/08/tesla-asks-chinese-suppliers-plants-mexico-report/" rel="nofollow">https://cnevpost.com/2023/06/08/tesla-asks-chinese-suppliers...</a>. BYD make EVs in Vietnam (May '23) <a href="https://www.reuters.com/business/autos-transportation/chinese-automaker-byd-make-evs-vietnam-2023-05-08/" rel="nofollow">https://www.reuters.com/business/autos-transportation/chines...</a>. On top of older news this year that Apple wants Foxconn to move out 50% of its production lines from China by 2025. And Dell's production completely out of China by 2027.<p>China is no longer the "world's factory". It will stagnate for 10+ years, similar to Japan's lost decades, but with worser birth rate than Japan today. It reported 8M babies in 2022, low that was last reached in 1940s.<p>We've never seen a large portion (25%+) of a large modern economy vanish in a span of a few years. (factories moving out, which decreases downstream economic activities such as real estate and retail).
I'm not cheering the victory until I can buy a made-in-USA iPhone.<p>China totally outclasses the USA when it comes to manufacturing.<p><a href="https://www.statista.com/chart/28031/manufacturing-racing-bars/" rel="nofollow">https://www.statista.com/chart/28031/manufacturing-racing-ba...</a>
I hope this trend is real and will continue. Manufacturing is so important to a country. It creates jobs. It builds talent. It stimulates innovation. It improves the lives of millions of people. It keeps a country's defense strong and sustainable. Without a robust and comprehensive manufacturing sector, I don't know how the US can proper in the future. I pains me to see that BYD could produce millions of masks in days in spotless and fully automated factories, while GM workers labored at those manual machines that looked like the scraps from the Soviet Union. Oh, and the $20K toilet? The $200M+ fighter jets? The inability to manufacture the screen of Kindle even if we want to? The list goes on, and I truly want to see the current-day version of the US manufacturing of the roaring ages: cheap, innovative, best workers in the world, full domestic supply chain, and etc.
Nice.<p>China becomes less of a competitor on costs as wages rise there. Once the manufacturing wage differential gets into the 4:1 range, offshoring is less attractive. In the 2:1 range, offshoring starts to be a lose. That happened with Japan two decades ago.
There are many factors involved. Just to point out one, when the freeze and blackout hit Texas many makers of adhesives got stuck with volatile products in pipes and pumps. The reconstruction effort from that has been big enough that it is still going on.
In order for this to be effective, these factories need to be able to produce at a desirable profit. The reason so much manufacturing drained out of the US in the first place was corporations seeking improved profits. That's not to say many won't succeed, but we need to ensure that global competitiveness is imbued into these operations. Southeast Asia and India remain inexpensive.
The reason all the factories left the US is because of unfair Chinese currency manipulations. The Chinese have pegged the Yuan to the dollar at a rate of 6 to 1. Since the dollar defines unit labor costs, what pegging the Yuan means is a CEO gets 6 Chinese workers for every 1 American worker. It's really like 4 to 1 when you take into account shipping costs for Ocean and Air freight. Other countries do not enjoy most favored currency status. In other countries, the value of the dollar would change if we had a huge trade imbalance which would eventually equalize. But not with China. But pegging the Yuan is only half the problem. The bigger problem is artificial intelligence and automation. With automation, every job becomes menial and corporations can pay less wages. And eventually, corporations will have total automation where workers are no longer needed. But workers are also consumers. And without consumers having money, our economy will collapse. So every year as we move closer to total automation the workers are begin driven closer into poverty. At some point, to prevent total economic collapse, there needs to be a new source of income for consumers. Consumers need to become the new workers doing the hard work of consuming. Consumers need to be paid for consuming is the only answer for ensuring enough economic velocity so everyone has enough money to get their needs met.
There is a mother of all recession happening soon coupled with intense effort to dedollarize. Those factories will end up abandon without recouping their original investments. I have seen how this playout. In the 60s and 50s there were doable because things are cheap and Americans have the Japanese-like ingenuity and innovation. In the 90s, Internet happened and end of cold war. In the 2000s, Chinese supplement worldwide inflations with their cheap goods and students as American human resources together with Indians. In the 2020s USA lost huge chunk of Asian human resources and facing high inflations. Americans still able to hold off due to residue economic growth from Clinton-Bush era. Coming decades they will face immense headwinds with their poorer quality of non Asian immigrants, lack of resources (oil and rare earth no where at Russia level), lack of gold (Fort Knox havnt been publicly audited for more than half century), military weak (Talebans humiliated pentagon and inpending Ukrainian defeat as American sponsored proxy state), population disparity (India+China+Russia+Asean) going to make America looks like 3rd world country population or Monaco at best. Already working in HR fields, I am seeing a lot of capable Americans execs sending their kids to Asia. Some even ditched American citizenships. You can search for extreme end of examples like Severin and Dyson. But those in the "millionaires" range make up the huge bulk of these well to do American leaving western world.
I work in a factory and the opportunities to improve with custom software are huge.<p>Typical MRP/ERP solutions limit the way information flows around a factory. We have custom software running most of everything. It's a lot of CRUD and data pipelines. But wow are our processes easier to automate than I've seen with other systems, such as SAP.
It’s about time. We probably need to go even faster, like face melting faster to remain competitive/relevant. Frankly though, this is just one of the dimensions. There is also the “people will need to work harder” dimension. That will be a harder adjustment for people. Nevertheless this is a good news
Great! But I imagine a lot of jobs we'd expect to be gaining will be automated. With the state of AI and robotics this trend will accelerate. We also lose a lot of interdependency which has its own problems.
This is great news, just anecdotally I have personally seen 3 large factories come up in my state in the last 2 years. All related to EVs and battery supply chain but still quite the pace.
Good. Bringing jobs home is a good idea. It might be cheaper overseas, but making things here where there are stricter safety regulations will get rid if some if the ethical quandaries around buying from a sweatshop.<p>Not to mention that also means that we will hold more power and ensure longer stability...why buy from China that could go to war with our allies and restrict our access to their manufacturers when we can just ask a factory in the next state over to make it?
This is CHIPS and IRA at work, largely. The government decided we needed more manufacturing, paid people money to do that, and... now we have more factories and manufacturing jobs. People get all balled up over policy decisions like this because of politics, but the truth is that Keynesian economics is pretty simple to understand and it works exactly the way you'd expect it to work.
This isn't necessarily the win that some people think that it is.<p>Do you like your standard of living? For most, you should when compared. That comes from one type of economy. This is another type, incoming. And there are no guarantees as to what your change in standard will be.<p>One rhetorical question might be: is your standard of living better or worse than in China, which is replete with factories? Neither does Bangladesh have a factory shortage.<p>Who owns the factories being built? It will surprise some to know that foreign ownership will be heavy.<p>One objective trend is foreign pressure to reduce the cost of exported goods, which means foreign buyer downward pressure on wages as exported goods make up larger portions of the economy.<p>Don't expect wages to be in Federal Reserve Notes. Do expect a continuing rise in corpocracy and feudalism. Do expect large pools of immigrant labor that will serve to minimize wages.