Who’s Making It in the US?

Lots of talk this election year about how our manufacturing jobs are leaving the country. China and Mexico are supposed to be the prime culprits. Both have greatly increased their manufacturing in the past few decades to the benefit of all concerned in their countries and ours.

But are they the main reason for the loss of manufacturing jobs? Dr Kevin Grier, an economics professor at the University of Oklahoma posted this chart in his blog  a few months ago and it’s been tickling me ever since. Note that manufacturing jobs have been at a pretty steady rate from 1946 to the present.

At the same time the US is manufacturing more than ever.

More manufacturing yet fewer manufacturing jobs? How can this be?

The answer is productivity. Over the past 100 years the American worker has consistently been the most productive in the world. And they just keep getting better every year. More productivity, or more efficiency if you prefer, means getting more output from less input.

There’s 2 key factors behind this increasing productivity.

Ingenuity – American industry has benefited from creative thinking aimed at constantly improving manufacturing. Some of this has been directed at improving the machinery and equipment. A lot has also been directed at improving how that machinery and equipment is used.

Power – Expensive power makes it hard to justify automating manual processes. Cumbersome power also adds to costs. We’ve gone from one large engine driving an entire plant via line shafts, to miniature servo motors at point of need.

There has been a cost, to be sure. Many of the relatively unskilled and semi-skilled manufacturing jobs of the past no longer exist. Most of them never will again no matter what any politician says or does. There is no reason to pay someone even minimum wage to stack cases on a pallet when it can be inexpensively automated.

Even if it was more economic, would it be desirable? Think of someone stacking cases on a pallet for 20 years. To call this work “backbreaking” is only slight hyperbole.

We’ve been hearing for a century or more how automation was going to put everyone out of work. The opposite has happened. It has created more and better jobs.

As Henry Ford said, as he went from a couple hundred to tens of thousands of employees: “Never use a man to do something a machine can do”