May 03, 2012
When something that “can’t” happen does happen, it’s important
to take notice.
We’ll get to the disproven impossibility in question soon, but
first, some history. In 1979, manufacturing employment in America hit an all-time high of 19.6
million. In the three decades since, protectionists, populists, and nostalgists
have subjected the citizenry to relentless wailing. The nation, their story
goes, “doesn’t make anything anymore.” Foreigners are “stealing American jobs,”
and turning the Land of the Free into the United States
of Burger Flippers. It’s only a matter of time until the descent to full-bore Third World status -- the process of
“deindustrialization” has become so severe, it cannot be reversed.
The ain’t-it-awful chorus enjoys considerable success with its depressing
narrative because most people associate the health of a business, industry, or
economic sector with the number of workers it’s hiring. That’s a violation of
elementary economics. Wealth is created by doing more with less. Since the Carter era, that’s exactly what manufacturers have accomplished.
U.S. factories’ value added, which the Census Bureau says
is “considered to be the best … measure available for comparing the relative
economic importance of manufacturing among industries and geographic areas,”
rises nearly every year. Recessions cause occasional downticks, but the overall
trend is undeniable. Even during the fiscal and monetary blunderfests of George
W. Bush and Barack Obama, production has grown. As economist Mark J. Perry
noted in The Wall Street Journal, “In
every year since 2004, manufacturing output has exceeded $2 trillion (in
constant 2005 dollars), twice the output produced in America’s factories in the early
1970s. Taken on its own, U.S.
manufacturing would rank today as the sixth largest economy in the world, just
behind France and ahead of
the United Kingdom, Italy and Brazil.”
Globalization’s haters aren’t interested in a dispassionate
analysis of data. They’re certain that “slave labor” abroad will inexorably
reduce our smokestack jobs to zero. The assertion is easily dismissed. Some
manufacturing is labor-intensive, but much is not. A 2011
paper by the Center for American Progress explained that firms have many issues
to weigh when deciding where to invest, including “proximity to engineering and
design centers, access to raw materials, avoiding currency fluctuation risk,
knowing their intellectual property will be safe, [and] the … cost of
transporting some goods across long distances.”
Now back to the it-can’t-be-true phenomenon. Since manufacturing
employment’s rock-bottom point of January 2010, American factories have created
a net 470,000 jobs. And no, the growth hasn’t been confined to Texas. The Lone Star
has picked up 43,500 positions since its Great Recession nadir. But Indiana (54,600) and Ohio (43,600) have fared better. Other
winners, and their job gains, include:
• South Carolina:
Why the good news, in states both red and blue? No one can provide
a perfectly complete answer. Wages are rising in China. Cap-and-trade
is kaput. Expensive petroleum has sent transportation costs soaring. And cheap
natural gas is a windfall for many manufacturers. (Particularly
Whatever the causes, factories are hiring. The
Seattle Times reported that since
December, “Terex Aerial Work Platforms has hired about 500 workers in Washington amid
rebounding demand for its lifts.” In April alone, Kentucky
welcomed a Japanese auto-parts company (100 jobs), a
subsidiary of Israel Aerospace Industries opened an office in Maryland (100
expanded its operation in North Dakota (200 jobs), a
pharmaceutical corporation announced a new facility in Georgia (1,500 jobs),
picked Texas for the site for a hydrocarbon cracker (150 jobs), Deere
& Co. disclosed a new project in Iowa (125 jobs), and Cummins
chose to invest more in Indiana (290 jobs).
As for the future, The
Boston Consulting Group believes that “the underlying math of global
manufacturing is starting to swing in America’s favor,” and “600,000 to 1 million direct factory jobs” could be created this
Perhaps. But with the U.S. possessing so many assets -- a
tradition of innovation, vast natural resources, hardworking immigrants, a sizable
supply of affluent consumers, a work ethic that hasn’t been entirely
obliterated by welfarism -- one thing is certain: Whether it’s hiring or
firing, manufacturing will continue to thrive here.
The terrifying tale of post-industrial America gets plenty of legacy-media
attention, but it has never contained much truth. And with factories bringing
on workers at a rate that hasn’t been seen in decades, the vanishing-jobs
argument has collapsed.
That pesky manufacturing decline. It’s been just-around-the-corner
for ages. Won’t it ever arrive?
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
# # # # #