There's been a lot of talk about the decline of industrial employment in the US, particularly in the Rust Belt. However, our real competition isn't necessarily China, but rather the EU.
We can compete. The demand for high-value manufactured products is out there and is growing. We can pay family wages and still make a profit.
More after the jump...
As of 2006, the US was the world's top producer of manufactured goods. Here are the 2006 manufacturing output figures for various countries (in value, billions $), gratuitously stolen from the UN via Curious Cat:
USA 1,725
China 1096
Japan 929
Germany 620
Italy 313
UK 308
France 275
France is closely followed by Brazil, Korea, and Canada.
What does this tell us? First of all, while China is growing extremely rapidly, the US is still increasing industrial capacity. Second, if you look at the value, the EU is a bigger competitor than China. So much for the value of low wages, huh? The key IMHO is to compete on quality and high-end manufactured goods. It's true that the US will probably never compete with China for manufacturing cheap plastic toys. However, we can still compete for engines, gears, and bearings.
Here's a couple of examples:
One of our clients told us that there is a worldwide shortage of roller bearings. These aren't exotic, but they're just as necessary for the modern economy as bolts and screws. Every engine and transmission in the world has at least a few roller bearings. Every wheel on every car, truck, and train car in the world turns on roller bearings. If there's a shortage, there's room to make more.
The big name in roller bearings was Timken. Timken still makes bearings in Ohio. As recently as the early 1990's, they were building new steel and bearings plants in the US. This isn't meant to be a commercial for Timken, but it's an example of a company manufacturing high-quality products in the US and making good money while doing it. This is the kind of industry that we need to encourage.
Another example from another client who wanted to spend a large chunk of money on a new boat. The boat would be fitted with Z-drives, which are propellers that hang below the hull and can turn in any direction. The problem was that the Z-drive manufacturer couldn't deliver the drive units until mid-2010, and that was if the order and deposit were received in early 2008. The problem? GE had just ordered 3,000 large ring gears for their power windmills. The gears came from the same German manufacturer that the drive manufacturer uses.
So now we're left with a situation where a tugboat operator who's used to getting his $8-10 million boat in 9-12 months now has to wait 27 months. His clients want these tugs built, but he can't get the machinery. Add to this that all tugs trading inside the US have to be built, owned, and crewed by Americans. The delays in building the new boats mean that we aren't getting local jobs for the crews or the shipyard workers. All because we don't have enough big ring gears.
You can bet that if there was a Michigan, Ohio, or Wisconsin company that could step up and build these gears, they could sell every unit they could build. Nobody wants to wait once they commit money to buying a piece of equipment. You can also bet that there won't be a letup in the windmill market. Green power programs and mandates are already here, and more are coming. Heck, my uncle would put a windmill on his farm in Minnesota if he could get someone to return his calls. The industry is so busy, he can't even get someone to call him back about putting a test tower on his property.
Finally, an example that's local to Seattle. Between 1998 and 2006, the manufacturing economy doubled in size in Seattle. Manufacturing in Seattle is bigger by far than software, telecom, and biotech. The main reason companies are thinking about moving out? They can't get enough skilled workers here.
I'll repeat what I said at the top: There is a huge demand for high-value manufactured products out there. We just need to tap that demand. I don't know how else to get this message out, but I know that Kossacks have friends in high places.