An article on Reuters - Is America the sick man of the globe? - caught my eye as a continuation of what went wrong with the industry in North-America. This debate is more acute after the financial meltdown but people are not analytical as they should be and as always the numbers are partially telling the truth.
“From the 1980s onward, manufacturing jobs and the sector's contribution to U.S. GDP declined, a process accelerated by productivity enhancements and increasing competition from lower-cost markets. Now there are just over 8 million manufacturing workers in a population of 300 million.”
Special Report: Is America the sick man of the globe? by Nick Carey, Thu Dec 16, 2010 Reuters
The whole mess is politically driven. The decision to compensate the unemployment in industry with jobs in services and finance industry leads to decimation of an entire generation of tradesmen.
Bill Gross (Pimco): "“We forgot that the more stable and safe way to go is to make things...We have seen the end of the magic era of finance as opposed to making things."
Just to understand the pull towards a “de-industrialization”, a person who was buying and selling machinery from defunct American manufacturing plants declared:
"We figured we could have maybe anywhere up to 25 plant closings around the country per issue," Clark said. "It turns out we grossly underestimated the scale of the closures."
Since then Plant Closing News (PCN), as the publication was named, has regularly featured 75 or more plant closings per issue, or 150 per month. Clark said PCN has seen around 10,000 plant closings since 2003, which is "probably not even half the real total."
The industrial tide of manufacturing crested in 1960s and started to crumble from 1980s.
According to U.S Census Bureau, there are 6.3 million vacant homes on the market for sale or rent (see the article with condom renters in Miami). According to real estate website Zillow.com, in the third quarter nearly 1 in 4 single-family homes in America had negative equity, with the home worth less than the mortgage. Housing market used to be an advantage of the US workforce as they could have moved with their job. Right now it impedes labor velocity.
For the middle class, most of the jobs are paying minimum wage and the only way to keep up is to have a few of them. "Overtime is the only way to get by," he said, with barely contained frustration. "But it gets very tiring very quickly."
A widely accepted definition holds that wages of about $20 an hour -- $41,600 a year -- is the minimum needed for a family of four to obtain middle-class rank in America.
Before, the jobs were appealing for the next generation, due to the job benefits and security. Fathers were pulling their kids in the same trade. Now, as the industry is crumbling, there is no attraction for the new generation and there is no future as well as cheap labor overseas is competing with US labor market. The skills needed to operate in industry are also lost and buried with the last waves of the workforce in some industries - manufacturing steel, auto parts, furniture, pulp mills, etc...
Due to the export of the manufacturing process to cheaper markets, there is a sacrificed generation which has three options - retire, accept lower paying jobs or going back to school in order to re-qualify.
Is the manufacturing industry successful anywhere in the world, for the labor force? Germany is an interesting example. There is an incredible fabric of small and medium companies specialized in high-tech manufacturing. Realizing they cannot compete with Asia's labor cost, Germany decided to support companies adding high level of technical expertise to manufacturing. They export the old products with many features of the new developments - embedded systems, chips controlling processes. The jobs are in high demand because they export know-how added to the old manufactured products.
Why Germany is a good example? They started to have a better workforce and benefited from China’s demand for high quality manufactured products. What are the sectors that will benefit from a global demand?
1. Manufacturing is one of them, for high-end machinery
2. health and drug development is another
3. alternative energy or maybe solutions to the existent pollutant energy solutions
4. smart agriculture solutions adapted to each area (desert, rainy zones)
The political parties in power are reluctant to put in place a plan to re-educate the workers or train them for the future jobs. It requires a long commitment and a shake-out in the existent educational system (which is the next on the list of being wiped out by a “black swan event”)
“From the 1980s onward, manufacturing jobs and the sector's contribution to U.S. GDP declined, a process accelerated by productivity enhancements and increasing competition from lower-cost markets. Now there are just over 8 million manufacturing workers in a population of 300 million.”
Special Report: Is America the sick man of the globe? by Nick Carey, Thu Dec 16, 2010 Reuters
The whole mess is politically driven. The decision to compensate the unemployment in industry with jobs in services and finance industry leads to decimation of an entire generation of tradesmen.
Bill Gross (Pimco): "“We forgot that the more stable and safe way to go is to make things...We have seen the end of the magic era of finance as opposed to making things."
Just to understand the pull towards a “de-industrialization”, a person who was buying and selling machinery from defunct American manufacturing plants declared:
"We figured we could have maybe anywhere up to 25 plant closings around the country per issue," Clark said. "It turns out we grossly underestimated the scale of the closures."
Since then Plant Closing News (PCN), as the publication was named, has regularly featured 75 or more plant closings per issue, or 150 per month. Clark said PCN has seen around 10,000 plant closings since 2003, which is "probably not even half the real total."
The industrial tide of manufacturing crested in 1960s and started to crumble from 1980s.
According to U.S Census Bureau, there are 6.3 million vacant homes on the market for sale or rent (see the article with condom renters in Miami). According to real estate website Zillow.com, in the third quarter nearly 1 in 4 single-family homes in America had negative equity, with the home worth less than the mortgage. Housing market used to be an advantage of the US workforce as they could have moved with their job. Right now it impedes labor velocity.
For the middle class, most of the jobs are paying minimum wage and the only way to keep up is to have a few of them. "Overtime is the only way to get by," he said, with barely contained frustration. "But it gets very tiring very quickly."
A widely accepted definition holds that wages of about $20 an hour -- $41,600 a year -- is the minimum needed for a family of four to obtain middle-class rank in America.
Before, the jobs were appealing for the next generation, due to the job benefits and security. Fathers were pulling their kids in the same trade. Now, as the industry is crumbling, there is no attraction for the new generation and there is no future as well as cheap labor overseas is competing with US labor market. The skills needed to operate in industry are also lost and buried with the last waves of the workforce in some industries - manufacturing steel, auto parts, furniture, pulp mills, etc...
Due to the export of the manufacturing process to cheaper markets, there is a sacrificed generation which has three options - retire, accept lower paying jobs or going back to school in order to re-qualify.
Is the manufacturing industry successful anywhere in the world, for the labor force? Germany is an interesting example. There is an incredible fabric of small and medium companies specialized in high-tech manufacturing. Realizing they cannot compete with Asia's labor cost, Germany decided to support companies adding high level of technical expertise to manufacturing. They export the old products with many features of the new developments - embedded systems, chips controlling processes. The jobs are in high demand because they export know-how added to the old manufactured products.
Why Germany is a good example? They started to have a better workforce and benefited from China’s demand for high quality manufactured products. What are the sectors that will benefit from a global demand?
1. Manufacturing is one of them, for high-end machinery
2. health and drug development is another
3. alternative energy or maybe solutions to the existent pollutant energy solutions
4. smart agriculture solutions adapted to each area (desert, rainy zones)
Summary
The reality hit: unskilled manufacturing work will be done wherever labor is cheapest.The political parties in power are reluctant to put in place a plan to re-educate the workers or train them for the future jobs. It requires a long commitment and a shake-out in the existent educational system (which is the next on the list of being wiped out by a “black swan event”)
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