The Epic Mistake About Manufacturing that's Cost Americans Millions of Jobs

A few thoughts...

1 - With China now a (the) major player in the world manufacturing market, it is almost impossible to keep the flow of cheaply made goods and services at bay. Take, for example, a widget. China might produce a widget for 2x cheaper than US or other nations and US companies that use widgets love that. More $$$ for them. Sure the quality isn't as good but hey - they're making more money.
In comes big Gov with sanctions and tariffs to help stem the influx of cheap widgets so US widget companies can thrive. The consumers of widgets in the US now pay more, have delays in getting widgets and China pays a penalty for not being able to ship them here. Enter proxy-states and tradelines. Chinese widgets now flow through the some other Pan-Pacific nation, one that doesn't have restrictions. US widget-consumers are happy again, domestic widget manufacturing suffers once again and the assembly lines in China keep on a rollin.

2 - Ridiculous expectations in the US for employment (professional sector). Jobs stay unfilled for many months simply because the expectations are set so high, the number of qualified candidates is nil. My career field is IT (programming) and during times that I've been job hunting, everybody wants a 4 year degree. Everybody wants 2+ years of experience in at least 4 disciplines and technologies and nobody wants to pay the market-rate.

What happens then is the industries (again, I only know IT. Not sure if others follow the same practices) pressure the Gov to open up the number of worker-visas (H1-B) or relax any restrictions on off-shoring work. Cheaper rates are paid for tasks that US workers are available to handle and resourcing companies are happy. Most of this offshoring winds up in India, Russia and China.

3 - A culture of entitlement. Kids graduating from college with non-specific degrees expect to land a job on day+1, earn a 6-figure salary and have a corner office. 3 months in and they ask for raises, request time-off for events such as a pet's birthday, get upset when any ideas or suggestions they have aren't acted upon and constantly feel offended and sensitized by anything and everyone at their job. This needs to end.
In the immortal words of RickyBobby's red-hot smokin wife - if we wanted a couple of pussies we'd have named them Doctor Quinn and Medicine Woman.

My 2c

So they tried to adjust for value add?

But from a labor standpoint its all about number of widgets, not their value. And value to the consumer is irrelevant....intrinsic value is all that would matter (and that matters nil in a labor calc).

Figures dont lie...but liars can figure.

Why didnt they use a model that calculated processing cycles or something to tie down value? Price has more to do with scarcity than actual value.

The ruse was, for every job automation replaces it creates four more (or seven, or whatever). They just didn't tell everyone that 99% of those new jobs would be off-shore. Corporate America knew it though...when the board room door was shut. Working America, once again, was led astray by the illustrious media. And yes, the unions were mercilessly bleeding companies dry, just daring businesses to go off-shore. The true 'need' for the unions had long passed. It was no longer about working conditions and safety, OSHA, MSHA and others take care of that now, but rather all about greed and corruption.

Business wasn't lily white either, they suddenly realized they could almost instantly dramatically increase the bottom line by going off-shore. So not only were all those new jobs resulting from automation going off-shore, but so too was the labor force being subcontracted (and direct contracted) out in places like China and India.

The unions never thought these countries could supply a sustainable work force, but they'd long since forgotten what it was like to be truly hungry, not for fortunes (they had plenty of appetite there), but for actual "food". They were blinded by their greed and didn't realize they had passed a point of no return. Those jobs would never come back, it was a one-way door. There's no way American society would reduce their standards of living down to what the replacement workforce could happily and exuberantly exist on.

So then you have this period with a giant displaced workforce, willing and able, but no jobs. The flood gates of cheap imports comes to the rescue as a result of reduced regulation. The media jumps in again and tells everyone to go get a degree, and the younger generations spend the next two decades doing nothing but that. Colleges become paper mills with political correctness and diversity...and then you wind up with MBA's asking you if you want fries with that...and they still can't count back your change on your Big Mac correctly. THEN, you wind up with situations like Mikell describes (above), jobs galore but a workforce who thinks they're above all that. They won't stoop that "low". We have the same issue, literally hundreds (thousands actually) of open positions and we can't fill them. I put a req out for an engineer recently and got a whopping (4) resumes...and one of those was a hair dresser who'd worked at K-mart for a while as a cashier (I kid you not!). But, put a req out on the street for a VP at $150k starting and 3 months vacation and you'll get 275,000 resumes...and the same hairdresser chick from K-mart.

I don't know what the solution is. It's a vicious circle. Makes me just shake my head sometimes.

I know one thing, if I was hungry, or needed to make a payment, I'd go back and pick up my tools again in a NY second. I certainly wouldn't be sitting around on the couch playin' X-box in Mom's basement waiting for that VP slot to open up. Not ashamed of that one bit!

I always had a thought that Unions played a pivotal role in the in the downing of American manufacturing jobs.

It was the Lima Declaration of 1975. Western countries were forced by the Oil crisis of 1975 to arrange for a more equal spread of wealth across the world. So countries handed over manufacturing to the Far East.

originally posted by: AugustusMasonicus

originally posted by: MorpheusUSA

I always had a thought that Unions played a pivotal role in the in the downing of American manufacturing jobs.

The source material makes a very compelling case that the bulk of it is due to unfair business practices and protectionism by the Chinese.

China taking care of China is not why America lost it's manufacturing jobs.

Poor trade agreements and pay for play politicians are the reason. Blaming China for protecting China is ridiculous.

I wish our politicians would protect our economy from global interests as well, but it was more profitable for them to sell American to anyone with a few bucks.

originally posted by: TXRabbit
A few thoughts...
2 - Ridiculous expectations in the US for employment (professional sector). Jobs stay unfilled for many months simply because the expectations are set so high, the number of qualified candidates is nil. My career field is IT (programming) and during times that I've been job hunting, everybody wants a 4 year degree. Everybody wants 2+ years of experience in at least 4 disciplines and technologies and nobody wants to pay the market-rate.

3 - A culture of entitlement. Kids graduating from college with non-specific degrees expect to land a job on day+1, earn a 6-figure salary and have a corner office. 3 months in and they ask for raises, request time-off for events such as a pet's birthday, get upset when any ideas or suggestions they have aren't acted upon and constantly feel offended and sensitized by anything and everyone at their job. This needs to end.
In the immortal words of RickyBobby's red-hot smokin wife - if we wanted a couple of pussies we'd have named them Doctor Quinn and Medicine Woman.

My 2c

#2 is the same in the UK. Companies advertise for a software engineer with at least two years experience with each of a number of different techical skills (C++, C#, OpenCV, OpenGL, Python, Java, Windows). Then when you get to the interview, you find out they are really looking for a project manager, and you won't actually be getting to do any of the programming work. But they will still pay you the salary of a software engineer. And even if they do offer you the position you'll find yourself bumped and nudged between these different areas.

So it's better to work as a contractor/consultant on the one area that really interests you.

With #3, the problem is that there are so many people trying to work in particular geographic locations that rents have gone sky-high. The only way to afford a one-bedroom studio flat renting out at $3000/month is to look for a salary that pays $120K/year. Landlords think that the going rate of a flat is 30% of that persons salary. That's been going on since the 1950's - I can quote the reference - "The Exploding Metropolis, Editors of Fortune magazine".

hard to compete when Chinese companies are playing people a dollar an hour
and dumping all their waste and trash into the river with no treatment etc.

I'm all for capitalism but that's a bit much.

originally posted by: DBCowboy
Hate being a Debbie-downer but this is a discussion we should have had 30 years ago.

It's like discussing smoke detectors while watching the house burn.

That's kind of the point of the Original Post, the numbers used were not accurate and instead of addressing the issue we got sidetracked with false narratives that manufacturing was being lost to automation and service-based jobs. Now that the cat is out of the bag we're actually behind on automation and still haven't addressed unfair Chinese economic policy.

originally posted by: Isurrender73
China taking care of China is not why America lost it's manufacturing jobs.

Poor trade agreements and pay for play politicians are the reason. Blaming China for protecting China is ridiculous.

No one is blaming them for doing what they did, the issue at heart is we never bothered to address their practices because we were being told that they weren't the main cause of job loss.

originally posted by: bigfatfurrytexan

So they tried to adjust for value add?

Correct.

And in doing so over-inflated the sector they were applying it to, computer processing, and by virtue of that over-inflated the entire overall manufacturing figures.

There is only one thing that you can rely on economists for - being incorrect. It's an utterly useless profession usually populated by people who have zero idea about life.

As far as manufacturing in the USA goes, here's my take (which could, of course, be completely wrong).

It takes skill and/or quality machine design and manufacture to make quality products. Consumers have, however , been weened onto cheap sh*t from China that lasts less than half the time. It's a race to the bottom in product quality terms.
If Western consumers woke up and rejected the false economy of cheap prices and regular replacement cycles to get the latest shiny (cheaply made) widget, they could once again learn to demand quality and keep their purchases for years on end. In the long run it would actually be cheaper. Countries like China can't compete with quality made goods. They rely on the "must have the newest thing now mentality" of Westerners.

There is really no value anymore - hence Western manufacturing companies have to compete against cheap sh*t and they simply can't do it.

My view is to not only take a nationalist view on products, but to take a local view also. I buy as much as I can from local, British, companies (which, unfortunately, is far less than I want to).

a reply to: UKTruth

There is only one thing that you can rely on economists for - being incorrect. It's an utterly useless profession usually populated by people who have zero idea about life. ...

LOL...isn't that the truth!! I can speak from personal experience too...my BIL and nephew are both economists (one a Dean even), both with PhD's. For 50 years I've listened to predictions, and not one of them has ever come true (or even been close). It's like they live on a completely different planet far away from reality...in a completely separate universe. I've consciously avoided asking them if the Sun will come up tomorrow...for obvious reasons!

I know many are against protectionist measures (in theory), but when you're competing with societies where 3 and sometimes 4 generations live in the same household, and can exist for centuries on less than a dollar a day, you have to take some protective measures.

A good start would be to increase tariffs on finished imported goods (with some minor exceptions) and sub-assembly's, and increase export tariffs on raw materials, especially metals.

a reply to: AugustusMasonicus

Its really an interesting situation.

I do think there are some weaknesses too, though. Counterfeit products are one area that I find interesting.

A counterfeit product that equals, or betters, the original creates an interesting conundrum. Do you continue to ride the brand power of the original, or strike out on your own?

In the US, it seems most would tend towards creating a brand themselves and overtaking portions of the market from the flagging "big names." In truth, creating a counterfeit product probably wouldn't even enter the conversation and I don't think this is solely due to legal ramifications.

In China, however, they will ride that original brand name into the dirt. In the guitar industry, Gibson is becoming known for everything from dropping quality control to massive financial issues. Some of the Chinese produced knock offs have actually exceeded the quality of the original, for a fraction of the price.

Yet, there doesn't seem to be even a moments consideration given to establishing a new brand.

I think that weaknesses like this, along with focusing on decentralized automated manufacturing, could turn the entire "game" around. I don't think the fat lady has sung, but only because of some uniquely odd tendencies and habits of the players involved.

oh I thought everyone knew China purposely devalued their currency so that foreign financial interest had more purchasing power thus increasing foreign investments and trade

guess that was as well known as I thought

oh I thought everyone knew China purposely devalued their currency so that foreign financial interest had more purchasing power thus increasing foreign investments and trade

guess that was as well known as I thought

a reply to: Serdgiam

The only way I can see to deal with counterfeits in a world where individual manfacturing can happen in garages and around dining tables is to knock off your own stuff and turn margins as best you can.

Presumably no one can knock off your stuff better than you, right? So make the best knock offs and control as much market share as you can (under a different LLC).

ETA: or simply license to third parties to try to cash in on their market share instead while helping to legitimize them legally)

a reply to: AugustusMasonicus

Its a problem of people trying to assess value with something they know nothing about.

Its not about cash value, its about processing capacity. That is the true value indicator (and even that would skew market values without first devaluing the processing cycle itself first using an inflationary model)

a reply to: bigfatfurrytexan

if we devalue the dollar foreign investors will move their manufacturing here because they will have more purchasing power with their dollar

a reply to: toysforadults

WHAT??? Are you serious??????

Okay, so (10) manufacturer's move their facilities here and create 10,000 jobs...BUT 100% of the American public now just had prices raised on...EVERYTHING!

No, that's NOT the answer!

Plus, you're talking about pegging now too. (unless I misunderstand what you are suggesting).

ETA...it's a lot easier to do that when your citizens have nothing to begin with.