Is there an exodus of manufacturing? I can tell you what I’ve seen and heard. A number of shop owners have witnessed the international competition for machining work first-hand. The majority of the owners of independent shops, it seems, can point to at least some work they are certain they would have won if not for a cheaper foreign supplier.
But I can also relay the findings I have read, which point to a different conclusion. The share of the U.S. economy represented by manufacturing hasn’t declined; it has been constant over time. (See Note 1.) The United States is not investing heavily in countries with cheap labor, but instead it sent 52 percent of its foreign investment to Europe last year, compared with under 4 percent to Mexico and under 1 percent to China. (See Note 2.) Finally, lost U.S. manufacturing jobs are not being offset by gains elsewhere. China, for example, lost 15 percent of its manufacturing jobs during the past several years, compared to a 7 percent loss of manufacturing jobs in richer countries. (See Note 3.) These job losses don’t come from outsourcing so much as they come from gains in productivity. (See Note 4.)
Is there a contradiction here? Perhaps not. The differences between what I have observed and what others have concluded can be explained by the difference between machining and manufacturing. Manufacturing is something larger that also includes assembly. A machined component, or a part made from a tool that was machined, is more portable than the assembly it goes into. Thus machining is easier to outsource across distances. But if U.S. manufacturing is still largely unaffected, that may be because there is still so much value in assembling higher-end goods geographically close to those who buy them.
Much of the machining work that is not being sent away, in fact, bears a close relationship with assembly. Components that have to be machined to challenging or changing requirements because of the needs of assembly, as well as parts whose production has to be documented through machining and assembly together, all are difficult to send far away. The same is true in cases where assembly requires machined parts on an unpredictable JIT basis.
Is there an exodus? It may be more accurate to say there is a change in manufacturing, and the kinds of machining work being sent away reflect that change. The work that remains in place increasingly is the work that demands some close connection to the product’s point of sale or use.blog comments powered by Disqus