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10 States Where Manufacturing Still Matters

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manufacturing, made in usa, made in america, american made movement, made in america movement

Factory manufacturing output increased for the second straight month. Overall industrial production has increased 0.8%. (Photo: Mike De Sisti, AP)
While some experts are predicting a revival, manufacturing has lagged the economy for years. The country has lost nearly 2.5 million manufacturing jobs in the past 10 years.

Last year, the manufacturing sector was responsible for 12% of the nation’s total economic output. In Indiana, the state where manufacturing contributes most, the figure was 28.2%. 24/7 Wall St. reviewed the 10 states where manufacturing represented the largest total share of the state economy.

The states with the biggest manufacturing economies specialize in different industries. In Oregon, nearly $38 billion of the state’s $50 billion manufacturing sector came from computer and electronic product manufacturing. In Louisiana, more than 10% of the state’s entire economic output in 2011 came from the manufacturing of petroleum and coal-based products. Michigan and Indiana both have sizable auto industries, with Michigan’s auto industry accounting for slightly less than a third of all its manufacturing output in 2011.

During the recession, and in many cases before the recession even started, many states’ manufacturing employment faced steep job losses. Between January 2007 and mid-2009, Indiana lost more than 100,000 manufacturing jobs. In Michigan, nearly 125,000 manufacturing jobs were lost between January 2008 and January 2009 alone.

Now, many of these states have seen employment rebound. Michigan had the fastest job growth in the nation from the end of 2009 to the end of 2011. According to Chad Moutray, chief economist at the National Association of Manufacturers, “the auto sector has been one of the driving sectors in the economy, pardon the pun, over the course of the last couple of years.”

In addition to Michigan, many parts of the Midwest benefited as well, he added. In Indiana, employment has risen more than 3.5% a year for each of the past three years, especially impressive in the context of the nation’s slow job growth overall.

While some believe that the benefits of a potential manufacturing renaissance are largely a myth, Moutray told 24/7 Wall St. that investments in the sector have a positive impact on the economy overall. He also noted that the prospect of added jobs may appeal to many Americans because it jobs pay well.

To identify the 10 states where manufacturing matters, 24/7 Wall St. used state gross domestic product (GDP) figures published by the Bureau of Economic Analysis. We determined from these data which states had the largest percentage of output attributable to manufacturing. Data on specific industries within the manufacturing sector from 2011 represent the most recent available figures. Employment figures for each state come from the Bureau of Labor Statistics and are seasonally adjusted.

Seasonally adjusted manufacturing job totals were not available for Alabama and Oklahoma.

These are the 10 states where manufacturing matters.

10. Alabama

  • MFG share of output: 16.3%
  • MFG output 2012: $30 billion (22nd highest)
  • 2012 Unemployment rate: 7.3%

More than 16% of Alabama’s $183 billion worth of total output in 2012 came from manufacturing industries, about $30 billion. Last year, much of this output — $16.6 billion worth — came from the manufacturing of durable goods, which in 2012 accounted for 9.1% of total GDP, the ninth-highest percentage in the country. This includes the manufacturing of wood products, nonmetallic mineral products and so forth. News reports suggest a strong tradition of manufacturing in Alabama. Mobile County, for example, will now be the site of Airbus’s new A320 jetliner final assembly line, which will likely be the company’s first U.S.-based production facility. The project, which is scheduled to begin in 2015, is expected to create thousands of jobs, a welcome prospect in the wake of declining manufacturing industries this past decade.

9. Michigan

  • MFG share of output: 16.5%
  • MFG output 2012: $66.2 billion (8th highest)
  • 2012 Unemployment rate: 9.1%

Each of the “Big Three” U.S. auto manufacturers — Chrysler, Ford and General Motors — is based in Michigan, and car sales are trending upward. This likely will be critical for the state: motor vehicle manufacturing accounted for nearly 5% of the state’s total GDP in 2011, far more than any other state. Michigan also led the nation with $18.8 billion in motor vehicle manufacturing output in 2011. The resurgence in the auto industry has not only boosted output but also led to job growth. Manufacturing employment in Michigan rose 7.9% between the ends of 2010 and 2011, leading all states, and then by an additional 3.9% between the ends of 2011 and 2012, also among the most in the nation. But this did little to help Detroit avoid a bankruptcy filing since extremely few auto manufacturing jobs exist within the city limits.

8. Iowa

  • MFG share of output: 16.7%
  • MFG output 2012: $25.4 billion (25th highest)
  • 2012 Unemployment rate: 5.2%

Iowa had the 30th largest state economy in the nation last year. However, relative to its GDP, Iowa is still one of the nation’s largest manufacturers. This is especially the case for non-durable goods, which accounted for 8.4% of the state’s total output in 2012, the fifth-highest percentage in the nation. In 2011, when non-durable goods manufacturing accounted for 8.3% of Iowa’s output, nearly half of this contribution came from food, beverage and tobacco manufacturing. At 4% of state GDP, this was more than any other state except North Carolina. Despite low crop yields due to drought, Iowa was the leading producer of both corn and soybeans in 2012, according to the USDA.

7. Ohio

  • MFG share of output: 17.1%
  • MFG output 2012: $87.2 billion (5th highest)
  • 2012 Unemployment rate: 7.2%

Ohio is a major manufacturer of a range of products. In 2011, it was one of the largest manufacturers of both primary and fabricated metals products, which together accounted for about 3% of the state’s output that year. The state was also the nation’s leader in producing plastics and rubber products, which accounted for more than $5.3 billion in output in 2011, or 1.1% of Ohio’s total output. Likely contributing to Ohio’s high output of manufactured rubber products, the state is home to Goodyear Tire & Rubber, a Fortune 500 company. At the end of 2012, Ohio was one of the top states for manufacturing employment, with roughly 658,000 jobs, trailing only far-larger California and Texas.

6. Kentucky

  • MFG share of output: 17.1%
  • MFG output 2012: $29.75 billion (23rd highest)
  • 2012 Unemployment rate: 8.2%

In 2011, Kentucky manufactured nearly $4 billion worth of motor vehicles, bodies, trailers and parts, the fifth-largest output in the nation. As of 2011, this manufacturing industry was worth 2.4% of Kentucky’s GDP, the third-largest percentage in the country. In 2011, electrical equipment, appliance, and component manufacturing had an output of only about $1.3 billion the 15th highest, but this may be expected to improve. Louisville is home to the GE Appliance Park, where the company has recently built two new assembly lines. The assembly lines, which cost more than $100 million, will produce high-efficiency washing machines and will create about 200 jobs, in addition to the thousands of jobs GE has created in the region over the past few years with its opening of several other factories.

5. Wisconsin

  • MFG share of output: 19.1%
  • MFG output 2012: $49.98 billion (12th highest)
  • 2012 Unemployment rate: 6.9%

Wisconsin led the nation in paper manufacturing in 2011, with nearly $4 billion in output, which was 1.5% of the state’s total GDP and the third-greatest portion of total output. In 2012, Wisconsin was a large producer of durable goods, which accounted for 11.3% of its GDP, up from 10.7% the previous year, holding on to its fourth place position. In spite of Wisconsin’s high output in the paper industry, the state’s Chamber of Commerce has expressed concerns regarding the implementation of government regulations that may hurt current and future job prospects. Officials in Wisconsin claim the new Boiler MACT regulations, for example, will have a negative economic impact on pulp and paper industry jobs in the state.

4. North Carolina

  • MFG share of output: 19.4%
  • MFG output 2012: $88.25 billion (4th highest)
  • 2012 Unemployment rate: 9.5%

Last year, North Carolina was the fourth-largest manufacturing economy in the country, losing the third-place position to Illinois. In 2011, of the state’s $84 billion manufacturing output, nearly $24 billion alone came from chemical manufacturing.Roughly 5.5% of the state’s GDP arose from chemical manufacturing alone. Another close to $20 billion came from the food, beverage, and tobacco product industry, more than any state but California. North Carolina’s tobacco economy is one of the second-largest in the country, and R.J. Reynolds, the second-largest tobacco company by sales in the U.S., is based in the state.

3. Louisiana

  • MFG share of output: 22.6%
  • MFG output 2012: $55.10 billion (11th highest)
  • 2012 Unemployment rate: 6.4%

None of the nation’s manufacturing leaders produced less output from durable goods manufacturing than Louisiana, at $7.7 billion. Similarly, in 2011, the state produced just $7.1 billion in manufactured durable goods. Louisiana was among the nation’s largest manufacturers of chemicals, as well as petroleum and coal products, that year, helping the state’s totals. As of 2011, more than 10% of the state’s GDP came from petroleum and coal manufacturing, by far the highest percentage in the nation. The state remains one of the nation’s leading oil refiners. According to the U.S. Energy Information Administration, “the Louisiana Offshore Oil Port (LOOP) is the only port in the U.S. capable of offloading deep draft tankers.”

2. Oregon

  • MFG share of output: 27.8%
  • MFG output 2012: $55.16 billion (10th highest)
  • 2012 Unemployment rate: 8.7%

Oregon manufactured nearly $38 billion worth of computer and electronic products in 2011, up from the year before, and second in the nation. That output is behind California, but its percentage of total GDP was 20%, surpassing by far second place Idaho, where computer and electronic manufacturing accounts for only about 5.8% of total output as of 2011. Recent outside investments in the state reinforce the tech-heavy industries in Oregon. In the first half of this year, for example, AT&T invested nearly $80 million in its Oregon network to improve performance for Oregon residents, according to the Portland Business Journal.

1. Indiana

  • MFG share of output: 28.2%
  • MFG output 2012: $84.15 billion (6th highest)
  • 2012 Unemployment rate: 8.4%

Indiana has added manufacturing jobs at one of the fastest rates in the nation over the past several years, with year-over-year growth in manufacturing at or above 3.7% at the end of each of the past three years. Some of this growth came from companies like Honda expanding their factories and adding thousands of jobs, which made headlines in 2011. Developments like these are critical for the economy of the state, which depends on manufacturing more than anywhere else in the nation. In 2012, Indiana had just the nation’s 16th largest economy, while its output from manufacturing exceeded all but a handful of states. In 2010 and 2011, Indiana was one of the leading states in total output from both motor vehicle-related and chemicals manufacturing. Manufacturing of chemical products accounted for 7% of the state’s GDP in 2011, at least partly due to the presence of pharmaceutical giant Eli Lilly, which has vendors throughout the state.

24/7 Wall St.com is a financial news and commentary website. Its content is produced independently of USA TODAY.

Are Manufacturing Jobs Moving Back to The U.S.?

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Many companies have moved manufacturing jobs back to the U.S. (Shutterstock)

Reposted from VOXXI:

Is there a reverse in manufacturing trends? Late last year, Apple announced that it was moving part of its manufacturing back to the U.S. Many saw this as a PR stunt by the company, as it had suffered an blow to its image after the media looked into problems with Apple’s Chinese production partnership with Foxconn. Apple users were shocked to learn that the company’s iPhone was being built in a factory that violated workers’ rights.

Apple has dumped Foxconn for other reasons and is now manufacturing iPhones with a different company, also in China. The production of Mac minis, however, will now occur in the U.S. The move is generally seen only as symbolic because the company, which has $121 billion in cash, is only investing $1 million for its production facility in the U.S.

But Apple is not alone in insourcing — and it’s not because these companies want to win a PR battle or appease American consumers.  It’s all about money.

The Manufacturing Jobs Giant

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Bringing U.S. manufacturing jobs back home. (Shutterstock)

In the 1980s, it was Japan who became the manufacturing giant. We all feared the great rising sun of Japan; its economy was expanding at a dramatic rate, just like China’s is now. And just about every product in the U.S. had that ominous mark: Made in Japan. When Japan became too expensive, manufacturing moved to Mexico, Taiwan and Korea. Korea is still relatively cheap, but Korean companies have actually gone off shore to cheaper places like Guatemala and Haiti.

The International Labor Organization claims real wages in Asia between 2000 and 2008 rose by 7.1 – 7.8 percent per year. Continuing on this trend of rising real wages, the 2012 National Bureau of Statistics of China report estimated that wages in the urban areas of China experienced an increase of 17.1 percent in 2011. This trend is not good if you’re looking to hire workers in Asia to build something for you. But there are other problems, too.

According to an article in The Economist, Chinese workers are organizing. When they strike, they get pay raises — and not just the small 5 or 10 percent raises we get in the U.S. Wages sometimes double overnight after the government demands companies meet workers’ demands, as happened recently to Honda. The company had to give a 47 percent raise to workers at its Chinese auto plant.

Meanwhile, Mexico’s average pay in manufacturing is almost equal to that of China, and with its proximity to the U.S., it’s becoming a better deal for companies. Manufacturing costs are also coming down in the U.S. thanks to lower energy costs.

Apple’s insourcing is high-profile because it’s Apple. But GE has also brought manufacturing home in a big way — much bigger than Apple. GE is spending nearly $1 billion in redressing one of its idle manufacturing plants in Louisville, Kentucky.

This is a serious move by GE, one they expect to make money on. Nonetheless, GE will continue to build in China.

According to Charles Fishman who wrote an article on insourcing for The Atlantic, the issue of cost is not just about wages. The equation is complicated and has to take into account many things including energy costs. For some companies, the math is showing it would be better and cheaper to build in the U.S.

Manufacturing jobs in the U.S.

This is nothing new. Some foreign auto companies have been manufacturing and assembling in the U.S. for years now: Honda, Hyundai and Mercedes-Benz all have manufacturing plants in Alabama. Subaru has its plant in Indiana, and Toyota has plants in Missouri, Alabama and Tennessee.

Many companies (less than 100) have moved manufacturing back to the U.S. in the last few years. Apple’s move might be for PR purposes, and it might not be. But after the Great Recession, it appears lessons have been learned.

If more companies really studied their bottom line, they might see that manufacturing in the U.S. might yield stronger profits, and strengthen the country as a whole.

But the big question remains: Will this trend last?

SOURCE:  VOXXI

Reshoring Manufacturing: American Companies Moving Back To USA

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A growing number of American companies are moving their manufacturing back to the United States
IN 2005, A START-UP company from California called ET Water Systems decided to move its manufacturing operations to China. At the time there was a general exodus to Asia in search of lower costs, recalls Mark Coopersmith, the firm’s chief executive. ET Water Systems, which builds sophisticated irrigation devices for businesses, quickly started losing money, not least because it had so much capital tied up in big shipments of goods which took weeks to cross the oceans. Innovation suffered from the distance between manufacturing and design, and quality became a problem too.

When five years later Mr Coopersmith investigated the difference between the total cost of production in China and America, including the cost of shipping, customs duties and other fees, he was amazed to find that California was only about 10% more expensive than China. And that was just on the immediate numbers, without allowing for the intangible benefits of making the devices almost next door. ET Water Systems’ new manufacturing partner, General Electronics Assembly, is in San Jose. As it happens, the firm’s owner has a Chinese background and a large portion of its employees are of South-East Asian origin. The number of firms known to have “reshored” manufacturing to America is well under 100. Doubtless many more are doing so quietly. Examples range from the tiny, such as ET Water Systems, to the enormous, such as General Electric, which last year moved manufacturing of washing machines, fridges and heaters back from China to a factory in Kentucky which not long ago had been expected to close. Google has attracted a great deal of attention for deciding to make its Nexus Q, a new media streamer, in San Jose.

The reshoring movement has to be kept in proportion. Most of the multinationals involved are bringing back only some of their production destined for the American market. Much of what they had moved over the past few decades remains overseas. And for many of the biggest firms the amount of work that they are still sending abroad outweighs the amount that they are bringing back onshore. Caterpillar, for example, is opening a new factory in Texas to make excavators, but has also just announced that it will expand its research and development activities in China.

According to a survey conducted by Harvard Business School last year, many firms are still deciding against basing activities in America. Professors Michael Porter and Jan Rivkin asked HBS alumni who were running businesses about their choices of location and found that many of them were deciding to leave because they thought wages abroad were lower than at home. Another important reason, though, was to be near customers in big new markets, which this report does not see as offshoring in the conventional sense. Messrs Porter and Rivkin argue that firms are now ready to reconsider offshoring. They realise that in many cases they overdid it, and are discovering hidden costs in moving production a long way from home. But, the authors argue, America’s government is not making the country’s business environment attractive enough for companies to want to come back.

Given the political pressure, it is natural for companies to want to publicise anything that looks like reshoring. Lenovo says that its decision to bring back computer-making to North Carolina was a way of looking after the firm’s reputation as well as bringing direct business benefits. The Chinese firm’s global supply-chain chief, Gerry Smith, says he has received dozens of telephone calls from former university classmates to congratulate him on the move.

But reshoring amounts to much more than public relations. It is being driven by powerful forces and will only get stronger. In a survey of American manufacturing companies by the Boston Consulting Group (BCG) in April 2012, 37% of those with annual sales above $1 billion said they were planning or actively considering shifting production facilities from China to America. Of the very biggest firms, with sales above $10 billion, 48% came out as reshorers. The most common reason given was higher Chinese labour costs. The Massachusetts Institute of Technology looked at 108 American manufacturing firms with multinational operations last summer. It found that 14% of them had firm plans to bring some manufacturing back to America and one-third were actively considering such a move. A study last year by the Hackett Group, a Florida-based firm that advises companies on offshoring and outsourcing, produced similar results. It expects the outflow of manufacturing from high- to low-cost countries to slow over the next two years and the reshoring to double over the previous two years. “The offshoring of manufacturing is now rapidly moving towards equilibrium [zero net offshoring],” says Michel Janssen, the firm’s head of research.

The crucial change that has taken place over the past decade or so is that wages in low-cost countries have soared. According to the International Labour Organisation, real wages in Asia between 2000 and 2008 rose by 7.1-7.8% a year. Pay for senior management in several emerging markets, such as China, Turkey and Brazil, now either matches or exceeds pay in America and Europe, according to a recent study by the Hay Group, a consulting firm. Pay in advanced economies, on the other hand, rose by just 0.5% to 0.9% a year between 2000 and 2008, says the McKinsey Global Institute. In manufacturing, the financial crisis actually reduced pay: real wages in American manufacturing have declined by 2.2% since 2005.

By contrast, pay and benefits for the average Chinese factory worker rose by 10% a year between 2000 and 2005 and speeded up to 19% a year between 2005 and 2010, according to BCG. The Chinese government has set a target for annual increases in the minimum wage of 13% until 2015. Strikes are becoming more frequent, and when they happen, says one executive, the government often tells the plant manager to meet workers’ demands immediately. Following labour unrest, wages at some factories have gone up steeply. Honda, a Japanese carmaker, gave its Chinese workers a 47% pay rise after strikes in 2010. Foxconn Technology Group, a subsidiary of Hon Hai Precision Industries, a Taiwanese firm that does a lot of manufacturing for Apple and other big technology firms, doubled pay at its factory complex in Shenzhen after a series of suicides. Its labour troubles are still continuing.

The pushmi…

BCG used to argue that companies unwilling to send their manufacturing to lower-cost countries were putting their very future in jeopardy. Now it says that companies will bring manufacturing back to America from China. As soon as 2015, says Hal Sirkin, a consultant at the firm, it will cost about the same to manufacture goods for the American market in certain parts of America as in China in many industries, including computers and electronics, machinery, appliances, electrical equipment and furniture. That calculation takes into account a wide variety of direct costs, including labour, property and transport, as well as indirect ones such as supply-chain risk.

After decades of complaining about American and European workers’ high pay, cushy conditions and unreasonable expectations, businesspeople now increasingly moan about Chinese workers. Their aspirations are rising and they are less willing to work long hours in boring factory jobs. A new labour law introduced in 2008 brought in more protection for workers, including the right to a permanent contract after a year of emp loyment, and workers are more aware of their rights. One consultant jokes that it is getting as hard to fire people in China as in France.

“China’s labour market is so overstretched that all the high-quality labour has been exhausted, you have to hire people with lesser qualifications, and then quality becomes a problem,” says Alain Deurwaerder, who until recently ran a factory in Thailand for Ducati, an Italian motorbike-maker. Another European chief executive complains about the flightiness of his Chinese workforce: “If someone on the other side of the road offers 5% more pay, they go.”

Lorne Schaefer, the owner of Jenlo Apparel Manufacturing, a Canadian-owned clothing company, opened a factory in Liuzhou in southern China in 2008 because he could no longer find workers at home; second-generation Chinese and Vietnamese immigrants in Montreal, he says, no longer want to work in the industry. Now he is having similar problems in China. The latest generation of workers, thin on the ground because of the country’s one-child policy, are not keen to toil in factories, nor do they want to work for companies that make goods for export, since the quality standards are far higher than for domestic consumption. So even in a labour-intensive industry such as textiles, the cost benefit that China offers is quickly eroding.

“Pay for senior management in several emerging markets, such as China, Turkey and Brazil, now either matches or exceeds pay in America and Europe”
Higher labour costs alone are not enough to prompt companies to leave China. The country has the world’s best supply chains of components for industry and its infrastructure works well. Firms have already invested heavily in being there. And companies that initially came for the low labour costs now want to stay because it has become a huge market in its own right. Nonetheless, “the incremental decision to invest in new production capacity in China has become tricky,” says Gordon Orr, Asia chairman for McKinsey.

One answer is to invest in other low-cost countries, of which there is no shortage. Myanmar, for instance, is attracting interest now that the West is lifting economic sanctions. But the scale, skill and productivity of the labour force there, and in countries such as Vietnam and Cambodia, nowhere near matches China’s, argues Mr Sirkin. And workers in those countries, too, are demanding better pay and rights.

Mexico, which has the huge advantage of bordering the United States, is increasingly attracting production destined for the Americas that would formerly have gone to China. Average pay for Mexican manufacturing workers is now only slightly higher than for Chinese ones, and the time it takes for goods to travel to North America is measured in days not months. Some firms, such as Chrysler, a car company, are even using Mexico as a base to supply the Chinese market. The country has become an important production hub for the aerospace industry. But Mexico’s poor infrastructure and highly publicised drugs-related violence may deter some firms.

Even as pay is rising rapidly in China, costs in America are falling. The successful extraction of natural gas from shale has dramatically lowered the price of energy. PricewaterhouseCoopers, an accountancy firm, reckons that these lower American energy prices could result in 1m more manufacturing jobs as firms build new factories. Companies such as Dow Chemical, a speciality chemicals firm, and Vallourec, a French steel-tubes firm, have announced new investments in America to take advantage of low gas prices and to supply extraction equipment.

…and the pullyu

Not only have American wages declined or are rising only slightly, BCG points out, but the dollar has been weakening. The workforce is becoming more flexible and productivity continues to rise. High unemployment has brought a willingness to work for lower pay, especially in southern states. These are mostly “right to work” states where individuals are free to decide whether to give financial support to a trade union, so unions are less powerful there. The very threat that jobs will be outsourced will also have played a role in keeping wages down.

Alabama, one such state, received a big boost last year when Airbus, a European aeroplane manufacturer, said it would open a big new factory. Airbus also plans to expand its production in Asia beyond its main factory in Tianjin, China, to be close to fast-growing new markets. Fabrice Brégier, the firm’s chief executive, says that for skilled workers, “China is no longer a low-cost country.”

Big unions in America have sometimes been willing to let wages fall to keep jobs at home. In 2007 the United Auto Workers union (UAW) accepted a two-tier wage structure under which some new blue-collar workers are paid only half as much as longer-serving ones. In 2011, after the government had bailed out part of the motor industry, the Big Three carmakers employed more second-tier workers, reducing their overall labour costs. Ford has brought back production from China and Mexico to Ohio and Michigan, thanks to a new agreement with the UAW.

As the example of ET Water Systems showed, transport costs are playing a big part in reshoring. Rising shipping, rail and road costs are most damaging for companies that make goods with relatively low “value-density”, such as consumer goods, appliances and furniture, according to a recent McKinsey report on global manufacturing. That makes reshoring or nearshoring more attractive. Emerson, an electrical-equipment maker, has moved factories from Asia to Mexico and North America to be closer to its customers. IKEA, a Swedish firm that makes products for the home, has opened its first factory in North America as a way to cut delivery costs, and Desa, a power-tools firm, has returned production from China to America because savings on transport and raw materials offset the higher labour costs.

In the longer term reshoring will be boosted by the use of advanced manufacturing techniques that promise to alter the economics of production, making it a far less labour-intensive process. 3-D printing, a process in which individual machines build products by depositing layer upon layer of material, is already being used in research departments and factories. Disney is developing 3-D printed lighting for interactive toys, and says that in future the interactive devices inside such toys may be printed rather than assembled by hand. Additive manufacturing machines can be left alone to print day and night. For now they are used mainly for prototyping and for complex parts, but in future they will increasingly make final products too.

Robots are already making a difference to the share of labour in total costs. Cheaper, more user-friendly and more dextrous robots are currently spreading into factories around the world, and they cost just the same in America as they do in China. Relative to the cost of labour, average robot prices since 1990 have fallen by 40-50% in many advanced economies, according to McKinsey. Baxter, a new generation of robot made by Rethink Robotics, an American firm, costs $22,000 apiece and is so safe and simple that it can be taught by an unskilled worker and operate right next to real people.

Baxter and his like may mean there will be fewer manufacturing jobs overall, but those that remain can stay close to a firm’s domestic headquarters. And even if the manufacturing activity itself does not employ many people, the supply chains that spring up around it will create new work.
SOURCE:  The Economist
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94 Percent Of American Flags Imported Into The U.S. Last Year Came From China

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Millions of Americans showed their patriotism on the 4th of July by waving a product that may have come from China.
Ninety-four percent or $3.6 million worth of the flags imported into the U.S. last year came from China, according to data from the U.S. Census Bureau. American manufacturers still make up the bulk of the business — they produced more than $300 million worth of American flags, banners and similar items in 2007, the latest year for which data is available. Still, foreign-made flags present “a serious threat,” to the industry Chris Binner, the vice president of marketing and sales for flagmaker Valley Forge, told The Huffington Post.

“Honestly I think it’s growing every year. We see the trend primarily happening with online businesses,” Binner, whose company is a founding member of the Flag Manufacturers Association of America, said. “It’s understandable. A flag and stick flags in particular are very easy to ship.”

Is your flag Made in USA?  Read the rest of this article at Huffington Post: http://www.huffingtonpost.com/2013/07/03/american-flags-china_n_3540287.html?utm_hp_ref=business&ncid=edlinkusaolp00000008

Is the U.S. Manufacturing Renaissance Real?

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A worker welding the outside of a safe at the Champion Safe Co. manufacturing facility in Provo, Utah, on Wednesday, Feb. 22, 2012. – GEORGE FREY / BLOOMBERG / GETTY IMAGES

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Rana Foroohar and Bill Saporito
U.S. manufacturing is back. That’s been the conventional economic wisdom now for several months, and there’s plenty of proof to back it up – rising factory output, strong manufacturing production gains, and lower labor costs that make American workers more attractive.
Couple that with the natural gas boom underway in the U.S., which many experts believe will lower energy costs for U.S. manufacturers, and you’ve got a resurgence of a sector that has been shrinking as a percentage of the economy for several decades. “We are probably the most competitive, on a global basis, than we’ve been in the past 30 years,” says GE CEO Jeff Immelt. “Will U.S. manufacturing go from 9% to 30% of all jobs? That’s unlikely. But could you see a steady increase in jobs, over the next quarters and years. I think that will happen.”

But at least one economic seer, Goldman Sachs’ chief economist Jan Hatzius, is throwing a bit of cold water on the idea. He recently released a report, which is getting a lot of attention on the web, arguing that the U.S. “manufacturing renaissance” is cyclical, not structural – meaning, the sector is doing as well as would have been predicted under any circumstances at this point in an economic recovery, and that the gains don’t point to a real seismic shift in U.S. manufacturing competitiveness. “Measured productivity growth has been strong,” admits Hatzius in the report, entitled “U.S. Manufacturing Renaissance: Fact or Fiction?” “But U.S. export performance – arguably a more reliable indicator of competitiveness—remains middling at best.”

It’s a very interesting point, and it matters a lot to the broader economy. Nations that do better in manufacturing gain an edge in the global economy: For every $1 of manufacturing output in a community, there’s another $1.48 of wealth created. That’s why economic advisors to the President, like National Economic Council head Gene Sperling, have been pushing pro-manufacturing policies. But the Goldman report would seem to indicate that the strength in U.S. manufacturing output reflects more the relative weakness of Europe (which is mired in a debt crisis) and Japan, rather than a long-term positive shift in the U.S. itself. “Over the next few years, the manufacturing sector should continue to grow a bit faster than the overall economy,” notes the report. “But the main reason is likely to be a broad improvement in aggregate demand rather than a structural U.S. manufacturing renaissance.”

Hatzius was on holiday this week and unavailable for comment (we’ll be following up with him next week), but one immediate question is whether exports really do provide a more accurate picture, as the report suggests. It may be that more goods manufactured in the U.S. are staying in the U.S. As we’ve traveled around the country reporting on this topic over the last couple of years, a number of big industrial firms have pointed to growing demand for their products here at home – Caterpillar, which makes an increasing amount of its large earth-moving equipment for domestic mining, agriculture, and energy operations, is a great case in point.

Then there’s the question of how to look at the productivity numbers. While U.S. productivity is up over the last several years relative to, say, China, which has been flat (and also suffers from rising wages), the big question is how much more it can go up. We feel there’s reason to be bullish on the growth potential there, given how materials science and the evolution of the “industrial internet” are fundamentally reshaping manufacturing in the U.S.’s favor. The once separate steps of designing a product, making or buying the parts, and then putting everything together are beginning to blend — a consequence of technologies such as additive manufacturing and 3-D printing. It means that manufacturing wants to be closer to engineering and design — a dynamic that would likely benefit the U.S., which still rules those high-end job categories. Add the ability to include sensors in every part and process, and you’ve got a whole new manufacturing ecosystem that allows companies to accelerate product development cycles and deliver more variety and value more quickly to ever more fickle consumers.

Of course, the jobs that are being created aren’t your father’s (or grandfather’s) factory jobs of knocking in four bolts a minute for eight hours a day. The new economics of Made in the USA are built in large part around acquiring cutting-edge technologies ahead of global competitors and then using those new techniques to produce more efficiently on super-automated factory floors. And while all the technology will translate into higher end jobs, it will also mean — barring dramatic growth — fewer jobs overall, especially in the middle. Positions will either be high end, or lower paid, since workers still have to compete with cheaper overseas labor (even with wage inflation in China, it will be years before the Chinese are on par with U.S. wages). It’s no accident that many of the new manufacturing clusters in the U.S. are in the South, where unions hold less power. “Yes, manufacturing is coming back, but it’s evolving into a very different type of animal than the one most people recognize today,” says James Manyika, says James Manyika, director of McKinsey Global Institute, which recently did an exhaustive study on this shift entitled “Manufacturing the Future.” “We’re going to see new jobs, but no where near the number some people expect, especially in the short term.”

It’s a sentiment that stands in sobering contrast to President Obama’s second term goal of creating a million new manufacturing jobs in four years. Some of the difference may lie in semantics. As Manyika points out, labor statistics underestimate the reality of manufacturing, since they count mainly jobs inside factories. Related positions in, say, Ford’s marketing department, or small businesses doing industrial design or creating new software for big exporters don’t get tallied. Yet these jobs wouldn’t exist but for the big factories. The official 9% of U.S. employment represented by manufacturing belies the importance of the sector to our overall economy. Manufacturing represents a whopping 67% of all private sector R & D spending, as well as 30% of the country’s productivity growth.

In short, manufacturing’s value can be measured in many different ways. “The ability to make things is fundamental to the ability to innovate things over the long term,” says Willy Shih of Harvard Business School and co-author of Producing Prosperity: Why America Needs a Manufacturing Renaissance. “When you give up making products you lose a lot of the added value.” That’s as good a reason as any to care about the future of manufacturing.

Walmart to Boost Sourcing of US Made Products: Hiring 100k Veterans

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Walmart announced bold commitments to increase domestic sourcing of the products it sells and help veterans find jobs when they come off active duty. Speaking at the National Retail Federation’s annual BIG Show, Walmart U.S. President and CEO Bill Simon also announced the company is helping part-time associates who want to be full time, make that transition.  Read more

Walmart to Boost US-Made Products

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Walmart to Boost US-Made Products

Walmart today announced bold commitments to increase domestic sourcing of the products it sells and help veterans find jobs when they come off active duty. Speaking at the National Retail Federation’s annual BIG Show, Walmart U.S. President and CEO Bill Simon also announced the company is helping part-time associates who want to be full time, make that transition.

Read more

Is Manufacturing Making A Comeback In The U.S.?

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We all know the story: American manufacturing is in decline, its jobs sent overseas where cheap labor and lax regulations reign. The demise of domestic manufacturing looms large in the American consciousness, with lost jobs and emptying Rust Belt towns a frequent political sawhorse.
But hope may be on the horizon. For the first time in decades, the future of American manufacturing looks promising.

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President Obama Touring K’NEX Manufacturing Facility at The Rodon Group

President Obama Touring K’NEX Manufacturing Facility at The Rodon Group

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When President Obama comes to Montgomery County on Friday, he will speak in front of a two-foot-tall toy helicopter, a toy roller coaster, a toy grandfather clock, a motorized toy carousel, and an American flag made of 49,000 K’Nex pieces.
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