The myth of US industry's demise

[Slimprofits]

Re: The myth of US industry's demise

from the AP article cited on Ritholtz's blog:

The United States makes things that other countries cannot. Today, “Made in U.S.A.” is more likely to be stamped on heavy equipment or the circuits that go inside other products than the televisions, toys, clothes and other items found on store shelves.

U.S. companies have shifted toward high-end manufacturing as the production of low-value goods has moved overseas. This has resulted in lower prices for shoppers and higher profits for companies…

Thirty years ago, U.S. producers made 80 percent of what the country consumed, according to the Manufacturers Alliance/MAPI, an industry trade group. Now it is about 65 percent.”

No matter what number is cited, value of goods produced, profitability, etc. I have a couple of questions.

These are end of the line numbers?

For instance the New Balance sneakers on my feet were made in the USA out of imported materials.

[Slimprofits]

Re: The myth of US industry's demise

labasta, were the numbers ever actually changed? This is from 2004:

Two all-beef patties, special sauce, lettuce, cheese, pickles (and) onions on a sesame-seed bun might make an American classic, the Big Mac, but are they steps in a manufacturing process?

That's the question raised in the Economic Report of the President, given to Congress recently. In the manufacturing chapter, President George W. Bush's economists suggest that the government's definition of "manufacturing" is vague, which might affect policy-making and even provide factory tax breaks for fast-food businesses.

"When a fast-food restaurant sells a hamburger, for example, is it providing a 'service' or is it combining inputs to 'manufacture' a product?" the authors questioned.

The question led to criticism of the administration from Democrats and jokes on late-night television, but White House spokesman Ken Lisaius stressed that the report didn't suggest that making a pizza or cheeseburger was in any way manufacturing, or that fast-food jobs should be considered such.

"It raises a point that policy shouldn't be based on arbitrary classifications," Lisaius told the Portland Press Herald/Maine Sunday Telegram. "The report does not say that classification should be changed, only that it's a slippery slope, if you will, when reviewing policy."

[ThePythonicCow]

Re: The myth of US industry's demise

Defense is almost entirely non-productive in the future sense.

"Good" weapon systems are anti-productive :eek:.

[stranger_2]

Re: The myth of US industry's demise

Last I looked there is not a single Arab nation in the top 50 highest quality militaries in the world with the possible exception of Turkey.

Turkey is NOT an Arab nation

[lurker]

Re: The myth of US industry's demise

And I would give it two weeks before all the agricultural products (over 50% of the world's grains) the US produces and exports around the world to similarly disappear. It would not be a pretty picture for other nations to engage in a trade war with the US, I imagine.

But we use an awful lot of imported oil to make our grain surplus. So we'd better be careful who we pick trade wars with.

[medved]

Re: The myth of US industry's demise

Medved,

I'm afraid I totally disagree. The cost of American weapons is so high that it is simply impossible for lesser nations to afford them.
….
….
So again, lots of little wars do benefit arms production. But who uses American equipment outside of captive protectorates like Taiwan, Japan, and Saudi Arabia? No one else does because it is too damned expensive.

That reminds me about places so crowded that nobody goes there anymore ;) . Why do you think US weapons are more expensive, than their French, German or Swedish equivalents? Check out US arms sales to some of our dynamic BRIC partners, Brazil and India. They buy a lot of stuff from both Europe and US.

Here is some worldwide data : http://www.armscontrolcenter.org/pol...ales_99_to_06/. Over the last decade US supplied almost 40% of worldwide arms exports. I don’t think, US share in this market will shrink

As for the Arab-Israeli wars - I know for a fact that the Arabs were using export quality Russian equipment. Certainly the US stuff is better in general, but equally certainly that the multiplier (number * quality) was not in the US' favor in the heart of the Cold War era. The fact that the Israelis did well is entirely a function of their using their top line equipment very well against poorly trained and coordinated enemies. Last I looked there is not a single Arab nation in the top 50 highest quality militaries in the world with the possible exception of Turkey.

Indeed, Arab armies are poorly trained and maintained. However, after 1973 when Israel airforce suffered serious damage by Russian SAMs, the situation changed. In 1982 Russian equipment was operated by Russians in Lebanon and Syria, American systems fared much better. Russian avionics (if such a thing still exists) is ages behind American equipment. This applies to most advanced weapon systems with very little exceptions.

Sorry, there is nothing normal about this. Previously 'X' worldwide manufacturing capability was reduced to 'X' minus 'Y' by destruction of European capacity (and manpower). US share of Z (postwar worldwide manufacturing capacity) thus grew not just due to filling wartime demand, but also to rebuild the 'Y' portion.

Today we don't have a minus in a worldwide sense. What we have is a giant black hole of demand for product in the US, and a massive manufacturing and labor capacity in the ROW.

The point I've been continuously stressing is that this manufacturing capacity does not have to always feed the US black hole - it can go instead to filling demand in the nations with the capacity.

Let’s try to forget for a minute about the Big Bad American Financial System. Imagine living in a perfect financial world managed by Mr. Hudson himself. Even in this perfect financial world US would lose its share of the market. The situation, when most of Europe was ruined is not “normal”. “Normal” is what we have now – half a century of relative peace and prosperity. The same applies to Asia. Over the last 50 years hundreds of millions of people joined the global manufacturing workforce. They are just as capable of mass-producing cars, ships and computer chips as the US. Nobody will even notice the demise of the Big 3 US car companies. Who needs them? Only their creditors and UAW. Why do we need IBM making PCs when Lenovo makes the same stuff cheaper? It has nothing to do with the financial system. The world is catching up with the US, and there is nothing wrong with it.

By the same token, non-stop whining I hear in the Silly Con Valley about insufficient amount of American engineers is seriously overdone. Looking back at the years of explosive hi-tech growth we can see, most of the new hi-tech development was done in the US. There is just no comparison between US and the ROW. How many personal computer architectures were designed in France? Are there a lot of Japanese SW startups? Any FPGA architectures developed in Germany? A few major hi-tech developments outside of the US are just exceptions that confirm the rule.

Many of new development project started by small companies in Europe and Asia eventually moved to the US. One of my first jobs in the US was with a small company founded by two guys from Hong Kong. The next one was with a company organized by three guys in Sweden. Eventually, all of them realised, they need to be in the US to achieve their goals. This disproportionate amount of new development requires disproportionate amount of qualified workforce. US alone just cannot supply it. The US companies I worked for had about 30%-40% of immigrants in their workforce. Nothing wrong with it either and nothing to whine about.

[c1ue]

Re: The myth of US industry's demise

Let’s try to forget for a minute about the Big Bad American Financial System. Imagine living in a perfect financial world managed by Mr. Hudson himself. Even in this perfect financial world US would lose its share of the market. The situation, when most of Europe was ruined is not “normal”. “Normal” is what we have now – half a century of relative peace and prosperity.

Medved,

I'm sorry, but I again have to disagree with your statement.

"Normal" is war.

1792–1815 Napoleonic Wars
1830 Ten Days Campaign (following the Belgian Revolt)
1830-1831 Polish-Russian war
1848-1851 First Schleswig War
1848–1866 Italian Independence wars
1848–1849 First Italian Independence War
1859 Second Italian Independence War
1866 Third Italian Independence War
1854–1856 Crimean War
1864 Second Schleswig War
1864 January Uprising
1866 Austro-Prussian War
1870–1871 Franco-Prussian War
1877–1878 Russo–Turkish War
1885 Serbo-Bulgarian War
1893–1896 Cod War of 1893
1897 First Greco–Turkish War
1911-1912 Italo-Turkish War
1912–1913 Balkan Wars
1912-1913 First Balkan War
1913 Second Balkan War
1914–1918 World War I
1916 Easter Rising
1917–1921 Russian Civil War
1918 Finnish Civil War
1918 Polish-Czech war for Teschen Silesia
1918–1919 Polish-Ukrainian War
1918–1919 Greater Poland Uprising
1918–1920 Estonian Liberation War
1918-1920 Latvian War of Independence
1919–1920 Czechoslovakia-Hungary War
1919–1921 Silesian Uprisings
1919–1921 Polish-Soviet War
1919–1921 Anglo-Irish War
1920 Polish-Lithuanian War
1922–1923 Irish Civil War
1936–1939 Spanish Civil War
1939–1945 World War II
1939-1940 Winter War
1941-1944 Continuation War
1944 Slovak National Uprising

In Europe in the past several hundred years, it is the absense of war which is unusual.

What is unusual about WW I and WW II is how the previously pre-eminent powers in the world knocked each other out.

That reminds me about places so crowded that nobody goes there anymore ;) . Why do you think US weapons are more expensive, than their French, German or Swedish equivalents? Check out US arms sales to some of our dynamic BRIC partners, Brazil and India. They buy a lot of stuff from both Europe and US.

Here is some worldwide data : http://www.armscontrolcenter.org/pol...ales_99_to_06/. Over the last decade US supplied almost 40% of worldwide arms exports. I don’t think, US share in this market will shrink

Never disagreed that the US was not a major arms exporter. What I pointed out was that the efficiency of purchased US equipment - not so clear.

For one thing - how much of the US' $123B is aircraft and aircraft related?

Just one deal with Pakistan for example was $3.5B in 2006 of which $3B was aircraft or aircraft related.

US planes are great for standoff bombing of infrastructure, but don't do squat for taking and holding land. And last I looked, you don't control anything until at 17 year old with rifle is standing on it - and sometimes not even then.

Let’s try to forget for a minute about the Big Bad American Financial System. Imagine living in a perfect financial world managed by Mr. Hudson himself. Even in this perfect financial world US would lose its share of the market.

No argument there. The only part where Dr. Hudson does swing back to Socialist/Marxist roots is the identification of labor as a strategic economic asset. And even then he has not advocated class warfare (by labor against capital) so much as pointed out ways by which capital wars against labor.