Made in America?

(Note to students: Countdown to the GP Promos begins. So let’s get thinking about the themes that y’all should already be more familiar with. This blog will see a new article/post every day (if not, then every other day), accompanied with some questions to think about. Do read the (distilled) articles – shall discuss some of them in class if time permits. )

According to TIME:

From ExOne’s 3-D-printing plant near Pittsburgh to Dow Chemical’s expanding ethylene and propylene production in Louisiana and Texas, which could create 35,000 jobs, American workers are busy making things that customers around the world want to buy–and defying the narrative of the nation’s supposedly inevitable manufacturing decline.

Some nice writing there – a lengthy, but logically- and grammatically-sound sentence. Are we seeing the end of an age in which the rich are outsourcing manufacturing to developing countries? And if so, is this going to (a) alleviate poverty or really just (b) worsen the state of things? Will it put existing low-wage factory workers in developing countries out of jobs? Or will it mean that governments of poorer countries start to realize they need to upgrade workers’ skills so as to participate in this global labour market? ie are we seeing an end to the “race to the bottom”?

TIMEUSA

MADE IN THE U.S.A.

Published in TIME Magazine, April 22 2013 (Source cited at bottom of this post)

Distilled from article:

  • Apple, famous for the city-size factories in China that produce its gadgets, decided to assemble one of its Mac computer lines in the U.S. Walmart.
  • General Electric produces batteries in the state of N.Y – a factory that churns out batteries 24 hrs a day.
  • Airbus will build JetBlue’s jets in Alabama.
  • 3-D Printing processes near Pittsburgh
  • Meanwhile, in North Carolina’s furniture industry, which has lost 70,000 jobs to rivals abroad, Ashley Furniture is investing at least $80 million to build a new plant. “If you go back 10 years, we didn’t think we’d be manufacturing in the U.S.,” says Ashley’s CEO, Todd Wanek.

This isn’t a blip. It’s the sum of a powerful equation refiguring the global economy. U.S. factories increasingly have access to cheap energy, thanks to oil and gas from the shale boom… And about those low-cost plants: workers from China to India are demanding and getting bigger paychecks, while U.S. companies have won massive concessions from unions over the past decade. Suddenly the math on outsourcing doesn’t look quite as attractive. Paul Ashworth, the chief U.S. economist for the research firm Capital Economics, is willing to go a step further. “The offshoring boom,” he says, “does appear to have largely run its course.”

On 3-D printing: ]No longer just about printing plastic toys. When they talk about it at ExOne Corp., they’re describing something a lot bigger. ExOne’s employees are ramping up production lines to make 3-D printers at a price of about US$400,000. Would-be manufacturing entrepreneurs can buy the devices and begin turning out high-tech metal parts for aerospace, automotive and other industries at lower cost and higher quality faster than offshore suppliers.

ExOne’s 3-D-printing machines, like a lot of new technology, will displace some labor. A foundry, for instance, no longer needs workers carting patterns around a warehouse; it can print molds and cores stored on a thumb drive, and no patterns are needed. An ExOne shop with 12 metal-printing machines needs only two employees per shift, supported by a design engineer–though they are higher-skilled workers. Rockwell envisions a thousand new industrial flowers blooming. “There’s a world of guys out there who say, If you can deliver parts in six or seven days, hey, I don’t need the machines. That’s where job creation is going to come from.” Overseas competitors will not be able to deliver that quickly or at the same level of quality.

Manufacturing in US today: Computer skills and specialized training are in, since the new made-in-America economics is centered largely on cutting-edge technologies. The trick for U.S. companies is to develop new manufacturing techniques ahead of global competitors and then use them to produce goods more efficiently on superautomated factory floors. These factories of the future have more machines and fewer workers–and those workers must be able to master the machines. Many new manufacturing jobs require at least a two-year tech degree to complement artisan skills such as welding and milling. The bar will only get higher. Some experts believe it won’t be too long before employers expect a four-year degree–a job qualification that will eventually be required in many other places around the world too.

Based solely on wages, of course, American workers aren’t a bargain compared with workers in emerging economies; they still make 7.4 times as much per hour as their Chinese counterparts. But increasingly, the cost arbitrage done by companies when deciding where to put jobs isn’t just about hourly pay. It’s also about relative labor productivity–which has been rising sharply in the U.S. over the past decade while remaining flat in China–as well as how flexible a workforce is, how close factories are to customers (which reduces the time needed to meet orders), what kind of subsidies states can offer companies for manufacturing and how well a company can leverage all that to cope with quickly changing customer demands. Add the effect of those higher oil prices worldwide–ratcheting up long-distance shipping costs–and there are sound economic arguments for buying American.

Source:
http://business.time.com/made-in-the-u-s-a/?iid=gs-article-moreontime

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