What is the future of manufacturing?

The irony here, bg, is that you advocate "innovation," and "change or die," for the people in US manufacturing who are having the slats cut out from under them by low wages. But, when I suggest that we need an innovative idea in trade relations, you limit us to the solutions from the past, and suggest that it will take a century or two to come up with something new.

What's wrong with this picture?

-- Ed Huntress (remove "3" from email address for email reply)

statistics.

You're doing back-porch economics here, but it's easy to test. If what you're saying was true, it would show up as a decline in GDP per capita. But there was no such decline.

Ed Huntress

But getting a real analysis of things like this takes quite a bit of time. I'll defer to someone who's interested in chasing it down.

Ed Huntress

I think those aggregate Labor Dept. figures include part-time workers, but I'm not sure, because I don't spend much time with the aggregates. You can peel them off by looking at the hours/worker figures, which are available from some Labor Dept. tables.

I'm thinking of paying for Stat-USA or one of the other services to make this job easier, but I spent some time with Stat-USA at a county library and I didn't find it much easier than the system I've set up for the free sources of data.

-- Ed Huntress (remove "3" from email address for email reply)

Mmmm. So let me get this straight, in about ten years, we're all gonna be simultaneously employed by wal-mart, and do all our shopping there as well?

Somehow, someplace, there's something wrong with this picture.

Jim

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Sure there was, but you have to calculate it in *constant dollars* to see it. That's the only way you can compare actual purchasing power differences between years.

Gary

Yeah, it is your assumption that Walmart is the only service sector employer. Remember that the number of lawyers is also expanding exponentially.

Gary

This is a joke, right?

Ed Huntress

Ed,

Whats all the huff and puff for?

Look, it would be great to come up with a new economic theory that will fix all the economic disparities in the world today. But its not something that will happen tomorrow. People need solutions near-term. So if that is a given, we need to work within the systems we have available as best we can.

Only in the respect that they reinvented themselves. They were forced to adapt. I have given you cases and examples in our postings of companies that have been forced to do so and have done so successfuly.

I dont believe that at all. I am the one saying that I have confidence in our productivity. You seem to be the one throwing in the towel, not even willing to attempt innovation.

I am suggesting that we need innovation, nothing else. It is conceptual,but some people will become middlemen, some laborers, some engineers, and so on. I believe what we are seeing is a natural state of economics.

Ed, why all the huffnpuff? You did not specify you were looking for climate or low cost shipping. You merely stated geography. And in the general sense of the term, yes, they do have certain advantages. But yes, they dont have anything special over us, geographically.

Correct. But agin, you were not specific.

huffnpuffing.Why?

Innovation is not utter nonsense. Thousands of companies all over the world are planning for it everyday. How many times has IBM reinvented itself? Countless. Yes, we are the most innovative economy in the world. It is our greatest advantage, and have said/alluded so in my previous posts. That is why we should continue to put more effort in this area. How do you relate this to be self serving? It is our countries greatest economic asset!

I am talking about simple things, like instead of that 2 lane road, think big and make a 6 lane road. It is easy for countries like China to do it, because they are starting from ground zero. But we have to think along those lines. Improving roads, ports and other infrastructure. They are the foundation of any working economy.

I admit, I dont always like the free trade deal. It seems that it is never negotiated to perfection. But then I am not confident we will ever see perfection in my lifetime.

Thats true. And they would definitely fall on their faces if forced to float their currency right now. Thats why they are fighting it. But they are on the right track. I watched all the other Asian economies wait until disaster struck. At least they are doing something about it before hand, even though so much more needs to be done.

Ed, all of those mfrs are benefitting greatly. Some of them have plans in the works, now building factories for export purposes. My initial question was in regards to why they have waited so long to buy parts from China. You reply with a quote from a VW exec,which was not exactly correct.

You want to focus on the petty word "many"? Lets get on to solving the worlds problems. What are you picking at this stuff for? I think we're making progress. Its nice to discuss issues like this with someone who has a good background. I learn from it. You dont have to get snappy...

Hey, I just did a quick search. I didnt bother to think that I was reading something out of Laurel And Hardys Ghost Ship short.

bg

But I have *told* everyone what the near-term solutions are going to be. All the executives are starting to act on my proposal as we converse.

Simply fire all the US workers, and move production over to China, where they make exactly the same thing that was being made in the US, for 1/20 of the cost. Import the widgets, and sell them for more profit than before.

Continue until you run out of a) widgets b)folks to make widgets, or c) folks (with money) to buy widgets. For the head of a corporation, this is not only a no-brainer but indeed they would be remiss in their responsibilities to the stockholders if they did *not* do this in its entirety.

Jim

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OK. So we will all be either working for wal-mart or its equivalent, doing all our shopping there, and also moonlighting as lawyers - suing each other.

Somehow this seems like a rather bleak picture.

Jim

================================================== please reply to: JRR(zero) at yktvmv (dot) vnet (dot) ibm (dot) com ==================================================

My fallback position is one described by a Rutgers professor a few years ago. He said that getting hit by a car in New Jersey is treated with as much glee as winning the lottery. So I figure that, if I get laid off, I'll be crossing a lot of streets in crowded, low-speed-limit zones.

Ed Huntress

Interesting. That's a 20.69% drop for manufacturing and a 33.86% drop for retail.

I hear in the news all the time how badly manufacturing has been hurt, but it looks like retail is taking a much bigger beating. That looks like it at least somewhat supports the generalization that every manufacturing job supports several retail/service jobs.

Jon

Retail is a volatile employer today, in which wages are very low, professionalism among staff employees is out the window, and relatively few people approach it as a career. Employment in retail probably is more sensitive to the state of the economy than any other type of job. My whole family, BTW, was in retail management, with Sears, Macy's, and the Federated Department Stores group. I'm the only one in my family who never was in it.

The question of how much manufacturing supports service jobs, and how much service jobs support manufacturing, is a very interesting one. I asked a well-known economist about it a few months ago and he acted as if the question had never occurred to him. He thinks in terms of the two rising and falling together. I wish I knew more about it.

-- Ed Huntress (remove "3" from email address for email reply)

Not at all. The issue being discussed is that it now requires the purchasing power of two earners to maintain a comfortable middle class household. The reason for that is obviously inflation, and one of the main contributors to inflation over the period in question was the introduction of the two earner household, which caused both push and pull in the market, which resulted in depreciated wage rates simultaneously with higher prices of household goods and services, as I explained previously. Since inflation is integral to the argument, you have to do the measurement in constant dollars to see the changes in purchasing power from year to year as the number of women in the workforce increased.

Gary

The next question would be (if your figures are correct), where are the missing 11+ million workers now employed?

Since that number handily exceeds the total for unemployed workers (which has actually declined from a peak of 7.4 million in 1995), they must be doing something.

Gary

That's actually not a stupid suggestion. Just ask Archer Daniels Midland about how profitable it can be to be a middleman. Or ask your friends in manufacturing who made the most money, an assembly line worker, or a company commission salesman (manufacturer's rep).

Gary

You'd have to spend some time with the DoL stats to get at that one. There was an increase of 1.5 million government employees during the 1998 - 2003 period, and an overall private-sector decline in hours worked per week. That means more are working part-time. The decline in hours equivalent amounts to

Employment gains have all been in services, both private and government. You can get breakdowns at DoL that will show where the ups and downs are.

-- Ed Huntress (remove "3" from email address for email reply)