The Decline of US Manufacturing. Not!

[pianodoctor]

Re: The Decline of US Manufacturing. Not!

it's archived

http://web.archive.org/web/200501120...fastfood.shtml

I don't know if I'm not expressing myself clearly or not understanding you, but the article I linked to is not the article that disappeared from Wiki. The Wiki article was basically a dry encyclopedic description of what compromises the official "manufacturing sector". The article I linked to was just an article that referenced the fast food thing.

[pianodoctor]

Re: The Decline of US Manufacturing. Not!

maybe this is what I'm remembering (or maybe not): http://en.wikipedia.org/wiki/Manufac...ing_categories

Scroll down to Manufacturing category "Food & Beverage", click on it and read description.

[c1ue]

Re: The Decline of US Manufacturing. Not!

We all know what's happening with Autos...

As for computer hardware: outside of a couple of small specialty fabs like PolarFab, Intel's plants, and AMD's plant, there is NO computer hardware manufacturing nor assembly in the US.

In this particular sector the data is conflating company headquarters of Broadcom, Qualcomm, etc with manufacturing when in fact these are design houses.

Still not necessarily bad unless you have the present situation: a collapse in consumer spending.

[MulaMan]

Re: The Decline of US Manufacturing. Not!

America did "manufacture" billions recently - everything from granite, to drywall, to pre-formed trusses, to backyard water fountains.

I bet Intel "manufactures" a huge number in dollar terms for each year.

also - minimum wage, zero beneifts, sweat shops filled with illegal workers. American Apparel forced to lay off 1,800 illegals while millions in Southern California seek jobs, your taxes pay for thier unemployment, and the owner not in jail? go figure.

http://www.huffingtonpost.com/2009/0..._n_223790.html

also lots of high-tech H1-B sweatshops - they push the wage rate of highly educated engineers down so low over a decade that no American in their right mind would go into engineering. Imagine being a US computer engineer from Standford and getting job offers of $15 per hour with no health care and forced to work 80hrs per week. Ooops, back to law school. LOL.

Best case scenario you go into "project management" and oversee a bunch of sweat shop engineers that can't speak english - you need to learn the whip and keep them working overtime and weekends to push wages down further.

http://www.msnbc.msn.com/id/33145705...sinessweekcom/

[Starving Steve]

Re: The Decline of US Manufacturing. Not!

maybe this is what I'm remembering (or maybe not): http://en.wikipedia.org/wiki/Manufac...ing_categories

Scroll down to Manufacturing category "Food & Beverage", click on it and read description.

Imagine the idiots now running the U.S. Federal Reserve or teaching in the various economics departments of universities letting manufacturing be defined so broadly as to include hamburger-flipping, deep-fat frying, fast-food preparation, counter-cleaning, dishwashing, sanitation, etc! (And it's true!) I had thought this was a joke, but it isn't!

No wonder government(s) can make statistics read any way they want to!
No wonder the Zimbabwes and the Argentinas, the Brazils, and the Mexicos. It's no accident: if the economic data looks bad, just re-define and broaden the economic terms.

If America was doing so great in manufacturing, why the bombed-out look of Detroit now? Compare a picture of Danora, Pennsylvania in the 1940s to Danora, PA now. Compare Duluth, Minnesota in the '40s to Duluth now. Compare Gary, Indiana in the '40s to what it is now. Cleveland or Buffalo in the '40s to what they are now....Pictures don't lie.

[pianodoctor]

Re: The Decline of US Manufacturing. Not!

Maybe one day they'll define eating as a form of manufacturing. After all, I'm manufacturing some potential fertilizer right now. Restaurant employees are my suppliers.

[Starving Steve]

Re: The Decline of US Manufacturing. Not!

The freeways thru Silicon Valley are empty now, even during rush hours. One can drive thru Silicon Valley at 65 MPH (105 KPH) anytime of day or night, and sometimes even faster.

Silicon Valley used to be choked with traffic because of computer and computer chip manufacturing. But not anymore..... Now the vehicles are spaced 10 vehicle-lengths apart on freeways, and they travel at the speed limit.

The only traffic nowadays in Silicon Valley is dropping kids off or picking kids up around schools. The valley's shopping centres still generate some traffic. Otherwise, the valley is empty, a shell of what it once was.

The hospitals and clinics are still busy. The banks still have lines of customers. But that is about it. The manufacturing is half-gone.

[bpr]

Re: The Decline of US Manufacturing. Not!

maybe this is what I'm remembering (or maybe not): http://en.wikipedia.org/wiki/Manufac...ing_categories

Scroll down to Manufacturing category "Food & Beverage", click on it and read description.

Imagine the idiots now running the U.S. Federal Reserve or teaching in the various economics departments of universities letting manufacturing be defined so broadly as to include hamburger-flipping, deep-fat frying, fast-food preparation, counter-cleaning, dishwashing, sanitation, etc! (And it's true!) I had thought this was a joke, but it isn't! ...

No, as I read it Food and Beverage manufacturing is the sub-categories under Food & Beverage: Agribusiness, Brewing and Food Processing on the Wikipedia site. On the BLS links provided by fliped42 click on the Food Manufacturing link on the list of subsectors:

Industries in the Food Manufacturing subsector transform livestock and agricultural products into products for intermediate or final consumption. The industry groups are distinguished by the raw materials (generally of animal or vegetable origin) processed into food products.

The food products manufactured in these establishments are typically sold to wholesalers or retailers for distribution to consumers, but establishments primarily engaged in retailing bakery and candy products made on the premises not for immediate consumption are included.
North American Industry Classification System

Here's the link.

This would include companies like ADM, Cargill, Kraft, Hershey, etc. These are surely manufacturing companies.

Aside from BLS being a better source than Wikipedia, I think the Wiki is being misinterpreted here, by clicking on the Food and Beverage link, rather than the subsectors beneath it. Food and bev. probably exists on the service page as well, and that's where McDonald's and the like are most appropriately categorized.

[pianodoctor]

Re: The Decline of US Manufacturing. Not!

You could well have the better interpretation, bpr. I was going by an old memory of something I read somewhere.... memory can be quite faulty or the original source could have been off-the-wall making the claim about fast food being counted as "Manufacturing".

Still in all, fast food or no, I think some good points have been made in this thread about the difference between U.S. Manufacturing "in name" and U.S. manufacturing in reality. For instance when we make a car consisting of a large number of sub assemblies purchased from China, is it really fair to call it manufactured in the same sense as when we made the sub assemblies here? I mean, semantically maybe it makes sense, but economically they are very different things.

What would be good to know is what precisely makes up the definition of U.S. Manufacturing when reporting economic numbers such as in c1ue's graph early in this thread. And would this be the same as BLS definition?

[c1ue]

Re: The Decline of US Manufacturing. Not!

Not true. Plenty of quality manufacturing in the US. Now the fact that we import more then we export is true. But we can thank the global powers that be for creating a total imbalance. Please see below links.

The first link has 5 companies: Caterpillar, followed by

a) 20 employee specialty wire basket maker
b) TV assembly - all parts made in Asia. 200 assembly line workers.
c) farm equipment maker - in the process of moving overseas, already with plants there
d) titanium bike maker - 100 employees and no doubt $5000 bikes

Don't see how any of this contradicts what I said: most of the computer hardware consumed in the US is not made nor assembled in the US.

The second link talks about Samsung's new plant in Austin - which has been in the works for 10 years. It doesn't talk about the Samsung operations in Korea. This new fab has a capacity of 35K wafer or so - compare with the 350K capacity in Korea plus the 2 new fabs being built there:

http://www.semizone.com/fab/atoz.tcl?cat=S&st=1

SAMSUNG	FAB 6 PHASE 1	SAN 24, NONGSUH-RI, YONGIN-KUN, KIHEUNG, KYUNGKI, S. KOREA	0.23	CMOS	GRAPHICS FLASH	30000
SAMSUNG	FAB 4	SAN 24, NONGSUH-RI, YONGIN-KUN, KIHEUNG, KYUNGKI, S. KOREA	0.45	CMOS M3	4Mb DRAM	30000
SAMSUNG	LINE 10	SAN 24, NONGSUH-RI, YONGIN-KUN, KWASUNG, KYONGGI, S. KOREA	0.15	CMOS	128/256Mb DRAM 288Mb RDRAM	32000
SAMSUNG	FAB 5	SAN 24, NONGSUH-RI, YONGIN-KUN, KIHEUNG, KYUNGKI, S. KOREA	0.18	CMOS M3	GRAPHICS FLASH	11000
SAMSUNG	FAB 3	SAN 24, NONGSUH-RI, YONGIN-KUN, KIHEUNG, KYUNGKI, S. KOREA	0.45	CMOS	4Mb DRAM	35000
SAMSUNG	FAB 6 PHASE 2	SAN 24, NONGSUH-RI, YONGIN-KUN, KIHEUNG, KYUNGKI, S. KOREA	0.23	CMOS	GRAPHICS FLASH EMBEDDED LOGIC MDL	20000
SAMSUNG	FAB 9	SAN 24, NONGSUH-RI, YONGIN-KUN, KIHEUNG, KYUNGKI, S. KOREA	0.18	CMOS	64/128/256Mb SDRAM 288Mb DRDRAM	32000
SAMSUNG	LINE 11	HWASUNG, KYONGGI, S. KOREA	0.15	CMOS	RDRAM FLASH	5000
SAMSUNG	FAB 1	SAN 24, NONGSUH-RI, YONGIN-KUN, KIHEUNG, KYUNGKI, S. KOREA	1.5	CMOS	MEMORY ASIC	35000
SAMSUNG	FAB 2	SAN 24, NONGSUH-RI, YONGIN-KUN, KIHEUNG, KYUNGKI, S. KOREA	0.45	CMOS	MEMORY	35000
SAMSUNG	FAB 8	SAN 24, NONGSUH-RI, YONGIN-KUN, KIHEUNG, KYUNGKI, S. KOREA	0.18	CMOS	64/128Mb DRAM	40000
SAMSUNG	FAB 7	SAN 24, NONGSUH-RI, YONGIN-KUN, KIHEUNG, KYUNGKI, S. KOREA	0.18	CMOS SOI M6	128Mb FLASH GRAPHICS	45000

The third link refers to blades for wind power turbines. We all know what's happening with the 'green power' bubble that's not happening.

The fourth link is a US company size list. Let's review the top 20:

2009/2008 IW U.S. 500 Rank	Company Name	Revenues ($US Millions)	Revenue Growth (%)	Industry
1/1	Exxon Mobil Corp. IW 50 Best winner	$466,278	17.85	Petroleum & Coal Products
2/2	Chevron Corp. IW 50 Best winner	$267,639	23.47	Petroleum & Coal Products
3/3	ConocoPhillips	$241,932	27.73	Petroleum & Coal Products
4/5	General Electric Co.	$182,515	5.66	Electrical Equipment & Appliances
5/4	General Motors Corp.	$148,979	-17.75	Motor Vehicles
6/6	Ford Motor Co.	$146,277	-15.18	Motor Vehicles
7/9	Valero Energy Corp.	$119,114	24.95	Petroleum & Coal Products
8/7	Hewlett-Packard Co.	$118,364	13.5	Computers & Other Electronic Products
9/8	IBM Corp.	$103,630	4.9	Computers & Other Electronic Products
10/10	Procter & Gamble Co.	$83,503	9.19	Chemicals
11/13	Marathon Oil Corp. IW 50 Best winner	$77,804	20.32	Petroleum & Coal Products
12/24	Archer-Daniels-Midland Co.	$69,816	58.61	Food
13/15	Johnson & Johnson	$63,747	4.34	Pharmaceuticals
14/16	Philip Morris International Inc. IW 50 Best winner	$63,640	15.51	Tobacco
15/14	Dell Inc. IW 50 Best winner	$61,101	-0.05	Computers & Other Electronic Products
16/12	Boeing Co.	$60,909	-8.25	Aerospace & Defense
17/19	Microsoft Corp. IW 50 Best winner	$60,420	18.19	Computers & Other Electronic Products
18/17	United Technologies Corp.	$58,681	7.16	Aerospace & Defense
19/18	Dow Chemical Co.	$57,514	7.48	Chemicals
20/23	Sunoco Inc. IW 50 Best winner	$54,124	21.09	Petroleum & Coal Products

Hmmm 6 oil/petroleum products companies.

2 nationalized or heavily government subsidized companies (GM and GE)

Dell and HP - all products made in Asia

Boeing and United Technologies: heavy defense component

IBM: heavy government component

Of the 20 above, less than half actually produce much inside the US without major government assistance:

Cigarettes, detergent/soap, Windows monopoly OS, Ford cars, food and food products, Boeing airplanes

As for the last link: Honda is losing market share in Japan so has focused on the US as their big market. Having plants in the US is necessary otherwise "voluntary" import quotas are violated. Nonetheless Honda's sales in Japan were only 750K vehicles in 2004 vs. 1376K projected sales in the US in 2004 - meaning 500K vehicles made in Japan were sold elsewhere, likely the US.

Region	Country	Automobiles	Motorcycles *	Power Products
North America	U.S.A. Canada Mexico	803,400 392,500 21,800	389,000 22,700	1,524,000
.	Subtotal	1,217,700	411,700	1,524,000
. .	.	.	.	.
South America	Brazil Colombia Peru	57,100 . .	895,400 29,100 2,100	.
.	Subtotal	57,100	926,600	.
.	.	.	.	.
Japan	Japan	1,242,500	580,000	1,728,500
.	Subtotal	1,242,500	580,000 **	1,728,500

[bpr]

Re: The Decline of US Manufacturing. Not!

You could well have the better interpretation, bpr. I was going by an old memory of something I read somewhere.... memory can be quite faulty or the original source could have been off-the-wall making the claim about fast food being counted as "Manufacturing".
...
What would be good to know is what precisely makes up the definition of U.S. Manufacturing when reporting economic numbers such as in c1ue's graph early in this thread. And would this be the same as BLS definition?

You're absolutely right.

I thought about editing my post to point out that while i agree with the spirit of the inquiry, I only found the methodology faulty.

There is no doubt in my mind that government statistics are manipulated and defined as they see fit, but it's important to seek out the best information and sources to prove the fault in the stated figures.

John Williams' Shadowstats.com does an impeccable job of this, but the reason it's so good is that it largely uses government or government-sponsored data. On the internet, the minute someone quotes Wikipedia and gets someone else to agree with it, it becomes fact. If the first source misinterprets Wikipedia, then everything after that is faulted.

Eventually, you have people telling people things about US manufacturing data that isn't true and people are spewing some garbage with faulty data, and those people get confused with the real deal, and it's very easy to refute the misinterpreted data, so the whole thing gets thrown out.

Bottom line is, does the US government lie? Yes.

Is this an example of it? Maybe. I'm not convinced yet.

This does not mean that we should not be vigilant in our search for fraudulent coverups and makeovers of statistical language, only that we must be careful to be intellectually honest when we make charges. The easy conclusion is not always the most accurate.

[bpr]

Re: The Decline of US Manufacturing. Not!

The first link has 5 companies: Caterpillar, followed by

a) 20 employee specialty wire basket maker
b) TV assembly - all parts made in Asia. 200 assembly line workers.
c) farm equipment maker - in the process of moving overseas, already with plants there
d) titanium bike maker - 100 employees and no doubt $5000 bikes

Don't see how any of this contradicts what I said: most of the computer hardware consumed in the US is not made nor assembled in the US.

...

Of the 20 above, less than half actually produce much inside the US without major government assistance:

Cigarettes, detergent/soap, Windows monopoly OS, Ford cars, food and food products, Boeing airplanes

This is interesting.

I'm not convinced, however, that your determination of "actually produce much" is accurate.

Must every piece of the assembly line originate and end within US borders?

Let's say I have an idea for a singing fish. It sings a different song every time you walk past it. We buy the light sensor from a Chinese company, the chip and circuit from a Korean company, the wood from an Indian company company, the wire frame from a Japanese company, and the rubber from a Brazilian company. Our largest expense per unit is the rights to songs, which we pay to US companies. We set up a manufacturing facility in Skokie, Illinois, and pump these fish out by the tens of thousands.

We are, no doubt, a net importer of goods, since all of the end product will be sold in the US, with some weird Canadians buying these US novelties. But does that mean we are not a manufacturer? This is a pile of rubber, wood, circuit boards and wires without the manufacturing part of it.

While my example is ludicrous, it's not much different from your contention that autos and computers are not US-made unless every component comes from within the borders.

You even point out that AMD and Intel have plants in the US, and they design and produce the most important part of every computer. So what if Dell is pulling hard drives and plastic shells and optical drives from Asia while coupling them with US chips to be assembled in Mexico?

The problem has little to do with the location of the actual manufacturing, but everything to do with whether the company is a net importer or net exporter.

That's how I see it now, but I can be convinced.

[bpr]

Re: The Decline of US Manufacturing. Not!

Still in all, fast food or no, I think some good points have been made in this thread about the difference between U.S. Manufacturing "in name" and U.S. manufacturing in reality. For instance when we make a car consisting of a large number of sub assemblies purchased from China, is it really fair to call it manufactured in the same sense as when we made the sub assemblies here? I mean, semantically maybe it makes sense, but economically they are very different things.

Good points, indeed.

But I think we're talking about net-importer versus net-exporter issues, not manufacturing vs. service issues. Apple employs a ton of people in the United States and probably none of them actually assemble a computer or iPod, excepting the designers that put together prototypes. What's important is not how we classify them (manufacturing or service, which many, if not most of Apple's US employees are), but whether they are a net importer or net exporter.

[c1ue]

Re: The Decline of US Manufacturing. Not!

You even point out that AMD and Intel have plants in the US, and they design and produce the most important part of every computer. So what if Dell is pulling hard drives and plastic shells and optical drives from Asia while coupling them with US chips to be assembled in Mexico?

A typical Intel processor design team is around 200 people.

A typical fab employs around 2000 people - and that excludes the equipment suppliers and ancillary fab support. The fab also involves more than one and a half billion dollars in construction, equipment, HVAC support, etc.

Intel makes pretty much only the CPUs in a computer. But there are dozens of other chips, hundreds if you look at the ancillary devices. Almost none of these are made in the US. Each peripheral as well as the wiring and electrical components, plus the board they are based on - is made almost exclusively outside the US.

As for value - the most valuable part in a computer these days is actually the software: windows and office. The Wintel alliance has held its portions of a computer to a higher profit margin via their monopolistic tactics.

So here's the key point: if a middle class leads to a more stable economy as is asserted by Galbraith and others, then where are jobs for the middle class?

How many Intel and Apple design teams can exist in the world much less the US?

To say that having a few designers and the sales/marketing/executive overhead be profitable and sufficient for the US economy is no different than saying investment bankers and mortgage brokers are sufficient.

To illustrate what I mean:

Intel has 83,900 employees

Broadcom has 7,200

Qualcomm has 15,400

Intel has $33.6B revenue vs. $4.32B for Broadcom and $11B for Qualcomm

The revenue per head is much higher for the fabless (Broadcom and Qualcomm) but the economic impact of Intel on the US economy is vastly larger than even a multiple of 3 of both Broadcom and Qualcomm.

That difference in impact is jobs sourced to Asia.

As another point of example: Apple

Revenue is $34.56B, number of employees is 32000. But Apple has a huge number of employees due to its retail operations as well as software/iTunes - all ultimately possible due to Apple's monster margins.

In fact roughly half of Apple's numbers are due to its retail operations:

Apple retail employees.jpg

So effectively the only difference between Apple and Broadcom/Qualcomm is that Apple has a direct consumer product which enables Apple to support a massive retail operation.

The jobs manufacturing/assembling iPods and iPhones and what not are still in Asia.

As for skill: as someone who has done design, I can tell you that the primary input to an Intel design team (or an AMD one) is a young engineer. Roughly 20 top level guys are needed; the rest are cannon fodder and can be from or at anywhere as long as they're near their technical supervisors (the 20 guys).

This is not so much different than any other manufacturing operation like autos; as the Japanese illustrated, it is very possible to recreate the top level skill set given time and money.

[Starving Steve]

Re: The Decline of US Manufacturing. Not!

What this problem in just defining manufacturing is telling me is that economists have no clue on how to measure what is going on in the economy, especially an economy that is now globalized in free-trade arrangements. National figures are rather meaningless.

And then we have similar problems with measuring money supply, even defining money, especially on a national basis.

And then we have to problem with measuring standard of living, nation by nation.

And then these economist-frauds try to take bogus data and generate economic models from it.

This reminds me of the ecology-frauds in governments and in universities trying to say that wind and solar, tidal power, even geo-thermal are a solution to the energy crisis.

And then we go to the climatology-frauds at NOAA and in universities who would have the public believe that the world is getting warmer due to CO2 from mankind. Yet the world's climate and the world's sea-level is stable, almost to the point of being boring.... Every year's odd weather is repeat of a past year's weather, buried in the climate statistics. But the world is coming to an end, how so?

And then we go to the education-frauds in government and in universities who would have the public believe that SAT scores and timed-testing in English-only are true measures of what is going on in the schools.

I could go on, but the point is clear: Happenings in all fields are complex and are very difficult to quantify, let alone model in any meaningful way.

A photo of downtown Detroit in 1945 versus one of Detroit now would render more useful information for planning purposes than anything derived from government statistics or econometric models to-day. Some interviews with workers and the unemployed in Detroit might help too.... And the same methodology in the other end of America: what do the traffic counts/speeds in Silicon Valley show now, compared to before. Same thing with pictures of Silicon Valley now versus pictures ten years ago; what has changed?.....What do interviews with valley workers and the unemployed tell you? How do people survive, and what do people plan to do next to survive?

A population of 975,000 is what the San Jose city limit sign proclaims on U.S. Hwy 101, but where are the 975,000 people? After all, the city's streets are rather quiet, so what is going on?