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In wanting to understand the global economy of manufacturing better and in particular the decline of US manufacturing, I picked up a few books on it. This one is called ‘Why manufacturing is still key to America's future’ by Ro Khanna. It’s a little old but I’ve shared some recent stats as a comparison as well. The author was with the U.S. Dept of Commerce, focusing on govt's impact, or lack thereof, on manufacturing.

Some key highlights:

1. You can’t split R&D and manufacturing. When you offshore manufacturing, you send off design with it and you lose a big chance to cultivate innovation in the US - Andy Grove, CEO of Intel.

2. Manufacturing is needed to reduce the trade deficit that started in 1971

3. U.S. exports to China are $153.8 billion, imports are $536.8 billion. Hence trade deficit with China is $382.9 billion

4. The private sector demands out-of-the-box thinking. In the gov’t, follow instructions; don’t make waves; keep your head down for career advancement.

5. Small and medium-sized businesses create about half of all manufacturing jobs and make up more than 90 percent of U.S. manufacturers

6. Cluster theory - a lot of business in the surrounding area impacts other businesses i.e. supply chain. Businesses shutting down will be like dominoes impacting other businesses - Michael Porter, The Competitive Advantage of Nations" (1990)

7. Foreign subsidy - foreign companies ie China get a lot of subsidies to build manufacturing - free land, and factory capital. Cheap labour is not the only competition

8. Corporate tax - The US charges heavy corporate tax on foreign earnings hence companies rather invest outside than bring it back - John Chambers, CEO and Chairman Emeritus, Cisco

9. < 1 percent of American businesses export and mostly to Canada and Mexico only

10. US global manufacturing share in the ’90s was >22%. It started slipping in 99’. Today it’s 16.8%. China’s global market share was 3% in the 90, 8% in 2000 - today it is 28.7%

This is just some key takeaways. I'll put up the pocket briefs on this book on Habla News for further read if interested

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Discussion

Rich 2y ago

When the USD loses its Reserve currency status, US manufacturing will come roaring back

pam 2y ago

Catching up on a lot of backlog reading this weekend, this piece by nostr:npub1a2cww4kn9wqte4ry70vyfwqyqvpswksna27rtxd8vty6c74era8sdcw83a on US manufacturing, this piece is really good

https://www.lynalden.com/reshoring/ .

I had a simplistic view of the dire situation and danger of manufacturing deprivation in the US before I started diving in, and Lyn has wrapped this up in detail, in so many different perspective, very well.

The steel industry decline that was so international and local political driven led to a cluster effect of decline of other industries, and smaller manufactures and businesses tied around it - rust-belt cities, urban decay, population migration, are all the aftermath. To boost revenue, more funding to service industries and cut backs on manufacturing. That and the rise of globalization.

There are some tax free incentives to set up manufacturing in the US, but have to be very smart about it as import tariff, labour can be high. Export cost from the US though is really cheap so that's a plus point. I think boosting nanotech and additive tech as a support mechanism for big industries would be a win but there has to be a bigger boost in reshoring / rebuilding industries.

I believe the trade deficit happened sooner though in the 80s /90s? Adding some details on another manufacturing book by Ro Khanna on US policies on manufacturing. There's also another book I read called prototype nation on how China build their manufacturing empires - pretty impressive how they went about it.

If anything, absorb all the good, learn from the bad, rebuild

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