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    Default Deindustrialization

    Anyone have thoughts on this?

    Is US Manufacturing Losing Its Toolbox? | IndustryWeek

    It's an analysis of employment and number of businesses in specific manufacturing segments from 2002 to 2018 using NAICS data.

    Machine shops: number of businesses down 20% and employment down 11%

    Industrial mold shops: number of businesses down 43% and employment down 12%

    Semiconductors: number of businesses down 12% and employment down 28%

    The author makes the case that we can't have strong manufacturing without the foundational industry to support it.

    I'm interested to hear peoples' take on this. There's a lot of talk about trade, automation, and consolidation of industry through mergers/acquisitions, but how much has each of these things contributed respectively to these declines?

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    Going back to 2002 is probably quite misleading. In the 2000's a lot went to China, and made for a hell of a hole to climb back up. Some are trying to finally change that.
    What I look forward to seeing is the 2015 to 2025 data.

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    Depends on how you define the "declines". Vertical integration is not included in these numbers nor the actual quantities being produced nor the total value.

    Just because some more inefficient shops close does not mean total volume decreased. Just means that there are fewer business owners.

    Agriculture has been going through this for 100 yrs. and yet the total acreage tilled has not changed significantly. Most of the farmed acreage decrease has come from housing development, infrastructure development, and governmental set asides for various reasons not from any actual reduction in farming. Fewer farmsteads and farmers, bigger tractors, combines and fields.

    Same thing applies to the rest of manufacturing, fewer worker bees, more parts per hour.

    There is also the issue that automation has replaced many jobs in manufacturing but there is also the section of manufacturing that is actually designing, building, installing, supporting the automation. I think the raw data that is being used does not give a realistic view of what is going on.

    The steel industry is a prime example. Number of actual man hours going into a ton of steel is only a fraction of what it once was yet the annual tonnage that is produced is equal to or slightly greater than what was produced 20 yr.ago.

    I do not think that we are using good metrics in trying to understand what is going on. When you look at the Dept of labor stats and especially the U6, it appears that we do not have enough available labor to fill the existing jobs.

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    The market demands what it wants... trust me if suddenly you could open a shop and toss a few machining centers in and just print money it would be done.

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    Quote Originally Posted by kustomizingkid View Post
    The market demands what it wants... trust me if suddenly you could open a shop and toss a few machining centers in and just print money it would be done.
    Actually I think it would be easier to use the machining centers to build a printing press and the press plates and literally print your own money. Of course the Feds take a very dim view of that kind of business venture but from a business viewpoint, it is a more direct route to get the money by eliminating all of the middle people.

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    Quote Originally Posted by Ziggy2 View Post
    Actually I think it would be easier to use the machining centers to build a printing press and the press plates and literally print your own money. Of course the Feds take a very dim view of that kind of business venture but from a business viewpoint, it is a more direct route to get the money by eliminating all of the middle people.
    Or, more amusingly, make the dies to stamp out Bitcoins. Not illegal, and you can buy "Bitcoins" from Ebay. Not actual currency, just a physical coin, some plated for more "value". All made in China, I presume.

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    either way you look at it there are TRILLIONS sitting around in the US alone waiting to find a worthy venture... if machining and industry were it they would be doing it.

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    More to the first post, I know some don't like government intervention, but I would like to see a "Manufacturing Czar" at the national level to coordinate with states on ways to improve support for manufacturing initiatives.

    Some basics would be improving training of potential workers, best ways to run a "Green" manufacturing business (in the sense of both money making, but also generating minimal trash and pollution), and creating strategies for efficiency and meeting the challenge of foreign competition.

    If nothing else, a viable manufacturing base in the country is a true strategic element for security - could we churn out massive numbers of planes now as we did in the 1940's? While modern wars won't have the same needs as WW2, having no capacity is a sure way to lose quickly.

    [Aside from that whole ICBM and nukes thing...]

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    Mike Rowe of Dirty Jobs fame is one of several people trying to address the issue.

    For too many years young people were pressured to go to college instead of "working with their hands" (in jobs that actually require quite a bit of thinking). Now we face a situation of needing more skilled people if we are to expand.

    The deindustrialization of America was planned. Advocates of it worked very hard to convince people that manufacturing was "dirty" and best moved offshore to be replaced with cleaner jobs. They failed to mention that most of the lost jobs would be replaced with lower paying service jobs.

    Although some warned of the consequences years ago I think we are only now reaching a wider realization of just what deindustrialization means for a society and that a once rapidly growing middle class is now shrinking.

    Much of our social ills stem from this loss of manufacturing jobs. In cities like Detroit and many others the descendants of people who moved there for a better life are now mired in poverty and violence.

    And no, it was never inevitable that we would suffer this loss. We were conned into accepting this, with political leaders helping their greedy corporate clients to outsource American jobs.

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    Articles on de -industrialisation etc etc etc or whatever some poncy know sweet FA journalist wants to call it this week, have been going around ever since I was old enough to read a newspaper, and while I'm not denying there have been massive changes, IMHO 90% of what those poncy know sweet FA journalists wrote turned out to be bollox.

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    Quote Originally Posted by Scottl View Post
    Mike Rowe of Dirty Jobs fame is one of several people trying to address the issue.

    For too many years young people were pressured to go to college instead of "working with their hands" (in jobs that actually require quite a bit of thinking). Now we face a situation of needing more skilled people if we are to expand.

    The deindustrialization of America was planned. Advocates of it worked very hard to convince people that manufacturing was "dirty" and best moved offshore to be replaced with cleaner jobs. They failed to mention that most of the lost jobs would be replaced with lower paying service jobs.

    Although some warned of the consequences years ago I think we are only now reaching a wider realization of just what deindustrialization means for a society and that a once rapidly growing middle class is now shrinking.

    Much of our social ills stem from this loss of manufacturing jobs. In cities like Detroit and many others the descendants of people who moved there for a better life are now mired in poverty and violence.

    And no, it was never inevitable that we would suffer this loss. We were conned into accepting this, with political leaders helping their greedy corporate clients to outsource American jobs.
    Your mentioning the Service sector. When this was catching on it was big and there was money to the sector. It became huge and the rise of this does seem to go hand in hand with the decline in manufacturing. Likely it at least is one factor.

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    Quote Originally Posted by Ziggy2 View Post
    Agriculture has been going through this for 100 yrs. and yet the total acreage tilled has not changed significantly. Most of the farmed acreage decrease has come from housing development, infrastructure development, and governmental set asides for various reasons not from any actual reduction in farming. Fewer farmsteads and farmers, bigger tractors, combines and fields.

    Same thing applies to the rest of manufacturing, fewer worker bees, more parts per hour.
    There's a key difference with agriculture, though. We massively protect and subsidize our agricultural markets. We don't allow imports with a system of quotas, tariffs, and other measures like SPS that keep products out by alignment of standards. We don't do this to the same degree with industrial goods from the things I've seen. Instead, we let down the barriers on industrial goods and kept protections up and even increased them in ways for agriculture. So agriculture has not been allowed to be impacted by trade in the same way. We would import a lot more agricultural products if it weren't for that. The EU spends a third of its entire budget protecting and promoting agriculture. The US does this, and so does Japan and other nations. It's mostly political because those areas heavily agrarian would see unemployment, etc. People like to point out that we only have something like 2% of the labor force in agriculture, but that's meaningless unless you break it down into where that is and how loss of that employment would affect those areas. For some areas, it could be much higher and if the agriculture dries up, the fertilizer plants, the food processing plants, the machinery dealers, and all the other businesses would also dry up over time.

    Quote Originally Posted by Ziggy2 View Post
    I do not think that we are using good metrics in trying to understand what is going on. When you look at the Dept of labor stats and especially the U6, it appears that we do not have enough available labor to fill the existing jobs.
    I totally agree with the hocus pocus numbers. People use them to draw conclusions that are inaccurate.

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    Quote Originally Posted by Scottl View Post
    Mike Rowe of Dirty Jobs fame is one of several people trying to address the issue.

    For too many years young people were pressured to go to college instead of "working with their hands" (in jobs that actually require quite a bit of thinking). Now we face a situation of needing more skilled people if we are to expand.

    The deindustrialization of America was planned. Advocates of it worked very hard to convince people that manufacturing was "dirty" and best moved offshore to be replaced with cleaner jobs. They failed to mention that most of the lost jobs would be replaced with lower paying service jobs.

    Although some warned of the consequences years ago I think we are only now reaching a wider realization of just what deindustrialization means for a society and that a once rapidly growing middle class is now shrinking.

    Much of our social ills stem from this loss of manufacturing jobs. In cities like Detroit and many others the descendants of people who moved there for a better life are now mired in poverty and violence.

    And no, it was never inevitable that we would suffer this loss. We were conned into accepting this, with political leaders helping their greedy corporate clients to outsource American jobs.

    This is how I feel. I don't think manufacturing would bring about a total, overnight sensation of economic utopia, but at the same time, I look at those cities like you mentioned with Detroit, and a lot of the time, if not all the time, these cities across the US were once industrial centers. If you really think about it, all those areas were once the export engines of growth that are now in Asia, etc. Once that left, the areas declined, and the "new" jobs did not fill out the economy as many had projected. I think the assumptions economists are making are far too simplistic

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    Quote Originally Posted by Limy Sami View Post
    Articles on de -industrialisation etc etc etc or whatever some poncy know sweet FA journalist wants to call it this week, have been going around ever since I was old enough to read a newspaper, and while I'm not denying there have been massive changes, IMHO 90% of what those poncy know sweet FA journalists wrote turned out to be bollox.
    Only 90%?
    You give them too much credit Sam...

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    I found this article makes a lot of good points in what has happened, not just the US but Canada as well: America’s Monopoly Crisis Hits the Military | The American Conservative

    Things go wonky when you only focus on financial markets.

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    Quote Originally Posted by nyc123 View Post
    There's a key difference with agriculture, though. We massively protect and subsidize our agricultural markets. We don't allow imports with a system of quotas, tariffs, and other measures like SPS that keep products out by alignment of standards. We don't do this to the same degree with industrial goods from the things I've seen.
    Agriculture is the only industry that is never allowed to fail. The coddling and outright subsidizing ensures that money goes where money is.

    For example, crop farmers here are staring down one of the worst harvests in memory, possibly the worst of modern times. Yet, John Deere stock prices have gone up 4%. The reason: Big Green expects farmers to be bailed out and to spend that bailout money on new equipment.

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    Quote Originally Posted by nyc123 View Post
    Anyone have thoughts on this?

    Is US Manufacturing Losing Its Toolbox? | IndustryWeek

    It's an analysis of employment and number of businesses in specific manufacturing segments from 2002 to 2018 using NAICS data.

    Machine shops: number of businesses down 20% and employment down 11%

    Industrial mold shops: number of businesses down 43% and employment down 12%

    Semiconductors: number of businesses down 12% and employment down 28%

    The author makes the case that we can't have strong manufacturing without the foundational industry to support it.

    I'm interested to hear peoples' take on this. There's a lot of talk about trade, automation, and consolidation of industry through mergers/acquisitions, but how much has each of these things contributed respectively to these declines?

    The exact same statistics could be explained by more automation (thus fewer workers) and consolidation (thus fewer companies). A better metric for that article would have been new investment in capital equipment.

    Haven't looked much at that, but my impressions:

    1) Foreign company investment in US manufacturing has been up in recent years (e.g. Toyota, BMW, etc.). For example:

    Manufacturing Leads as Top Sector for Foreign Direct Investment in the United States | Tradeology, the ITA Blog

    2) US company investment is down in most industries. They've been playing financial games instead, sitting on their hands and doing stock buybacks, maybe building plants in higher growth markets overseas. Apple, Intel, and GM, for example, in China.

    3) The level of investment various by industry. Ones we let go like mold making - low investment. Biggest US investment in recent years has apparently been to pull natural gas out of the ground, pipe it to liquefaction facilities, and ship it abroad.

    Overall, I think manufacturing investment is down as well, but at a magnitude better indicated by investment rather than number of firms or number of employees.

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    Quote Originally Posted by gerritv View Post
    I found this article makes a lot of good points in what has happened, not just the US but Canada as well: America’s Monopoly Crisis Hits the Military | The American Conservative

    Things go wonky when you only focus on financial markets.
    That was a really interesting article. Thanks. This is a big reason why I think managing our trade balance more proactively, with a focus on industrial goods, makes sense. Everyone laughed about steel/aluminum tariffs being called a national security issue, but it is explicitly mentioned in the relevant trade texts as a reason to raise tariffs. I remember reading in a book that we don't have the suppliers anymore for a lot of electronic equipment used in military vehicles like tanks.

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    How do you loose 43% of the mold shops, yet employment is down only 12% ?
    The numbers don't seem to add up.

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    Quote Originally Posted by nyc123 View Post
    That was a really interesting article. Thanks. This is a big reason why I think managing our trade balance more proactively, with a focus on industrial goods, makes sense. Everyone laughed about steel/aluminum tariffs being called a national security issue, but it is explicitly mentioned in the relevant trade texts as a reason to raise tariffs. I remember reading in a book that we don't have the suppliers anymore for a lot of electronic equipment used in military vehicles like tanks.
    The issue with tariffs is that it does nothing to encourage change in 'the system', it just adds costs. As long as those costs can be passed along the food chain to the end user/buyer, nothing will change. As evidenced, the tariffs have done zilch to alter Apple's manufacturing behaviour as one example, they were able to dodge the tariffs altogether so far (afaik).


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