Thursday, November 5, 2009

US Still the World's Largest Manufacturer

Reports of US manufacturing's death have been greatly exaggerated. Despite China doubling its market share in the last 10 years, from around 4% of global manufacturing (1995) to 8% (2005), the US has held steady at a little over 22% of the global market.

Total manufacturing output has been increasing steadily over the last 20 years, yet we never stop hearing complaints about jobs moving to China. While this is true in some cases, in many places automation and production technology are reducing the need for employees. In 1987, 16.5% of American workers worked in manufacturing. Now that figure is around 11%.

Look out though, as American manufacturing could be experiencing a renaissance as the falling dollar increases our global competitiveness. Companies who have offshored their production to save money many times find hidden costs through lower quality facilities and suppliers. These companies may see our current economic climate as an opportunity to bring those jobs back home.

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