When IHS Global Insight revealed this week that China has passed the United States to lead the world in manufacturing output, the response from some in government and manufacturing was to quibble with the data. The correct response is to develop a national manufacturing strategy, so that we can once again lead the world in manufacturing, which is a position we've held for 110 years.
Why a strategy? Well, Germany has one. China has one. South Korea has one. In fact, every other industrialized nation has a network of currency, trade, tax, investment, innovation and skills policies that promote domestic manufacturing. We stand alone in allowing our jobs to be freely outsourced overseas. Our economic and training policies spur on a service and financial sector economy at the expense of investments in manufacturing.
First, let's consider the data on the size of manufacturing. Manufacturing accounts for one-third of China's economic output. For most of our industrial competitors, the number is somewhere between 15 and 20 percent. In America, manufacturing accounts for less than 13 percent of our GDP, and that figure is falling every year.
The rate of growth in manufacturing in China has averaged over 20 percent per annum over the past three years. In the U.S., despite a recent rebound, that figure is only 1.8 percent. We've shed 50,000 factories and 5.5 million manufacturing jobs over the past decade. Meanwhile, one company in China -- Foxconn -- created more manufacturing jobs last year than the entire U.S. economy.
So many in industry are quick to blame America's manufacturing woes on labor and regulation. They couldn't be more wrong. The fact is, average compensation of an American manufacturing worker, including benefits, is a little over $32 per hour. In Germany, the figure is $48 per hour. Yet Germany's manufacturing base is thriving. Germany has a trade surplus. German unions sit on company boards and make joint decisions about capital investments and corporate strategy. Plus, much of what we manufacture is not labor intensive; it's capital intensive. Investing in human capital will make us more productive, and it will grow manufacturing.
Why does being number one in manufacturing matter so much? First, manufacturing jobs are simply not replaceable. Workers who lose their manufacturing jobs end up in jobs that pay far less. The tax base shrinks. The demand on government services grows. Here's a startling fact: if states would have held their share of manufacturing jobs over the past decade, there would be no state-level budget crises, even in California.
Manufacturing drives innovation in our nation, because two-thirds of private sector R&D and 90 percent of patents come from manufacturing. As researchers at the Harvard Business School have ably demonstrated, when production leaves, innovation follows. It's why we we're in the embarrassing and unenviable position of importing solar, battery, and wind technologies that we invented in America a generation ago, as we seek to jumpstart clean energy manufacturing in our nation.
Finally, it is arrogant, elitist, discriminatory, and foolish to suggest that young people should not enter manufacturing, yet that's what experts tell us every day. We need an educational system that does not warehouse kids who want vocational careers. We need our business schools to teach managers how to "reshore" work rather than follow the race to the bottom.
Fortunately, there is a way forward. We've put forward a plan to keep it made in America that has broad support from the American people--right, left and center. It's common sense. This new Congress is in its third month, yet no bill to create American manufacturing jobs has been sent to the President's desk.
America likes an underdog, and that's exactly what blue collar work is these days. It's about time our political leaders in Washington discovered that. Otherwise, there may be some long days ahead on the campaign trail for the President in states like Pennsylvania, Ohio, Michigan, and Wisconsin.
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I just don't see this happening.
Even if we put excessive greed on a par with alcoholism and called it a disease you'd still have to change the mindset of people who mistakenly think that their life consists in the abundance of the things they can charge on their credit cards.
I just don't see it happening until a complete collapse of the system.
Which may not be far away since these boom and bust periods keep on getting closer and more intense every time.
It really looks like the rats are trying to buy up as much as they can each time around.
The European Union is best viewed as a county - they have one currency and one industrial policy.
In Europe, as in most of the world, their governments work hard to protect key industries because they know it is in the best interest of their country. Daimler-Benz and Siemens are not for sale. But, Chrysler is.
In the United States, our government is working hard to offshore industrial jobs to enable Wall Street to make a better profit. The inevitable result of a President and Congress that is fully owned by big company donors that really don't care about America - no matter how much they cry about it in public.
In Europe, and other countries, government, enviromentalists and business work together. Not here in the U.S.
For whatever reason, Americans believe that the gravy train is unstoppable. But, clothes are virtually no longer made in America. Jobs in manufacturing and textiles are rapidly disappearing.
It is not arrogant or elitist to tell young people to not work in manufacturing. Why go to school for manufacturing when American politicians are selling out their future for current cash payments to their campaign committee and golf membership?
Democrats and Republicans have worked hard to sell the country out so that Wall Streeters can profit on the backs of Americans. That is what Obama is doing - that's what Daley is there for. Why is that hard to see?