By Stephen Manning - The Associated Press - Friday, February 20, 2009
WASHINGTON: It seems as if the country that used to make everything is on the brink of making nothing. In January, 207,000 U.S. manufacturing jobs vanished in the largest one-month drop since October 1982. U.S. factory activity is hovering at a 28-year low. Even before the recession, plants were hemorrhaging work to foreign competitors with low-cost labor. And some companies were moving production overseas.
But manufacturing in the United States is not dead or even dying. It is moving upscale, following the biggest profits and becoming more efficient, just as Henry Ford did when he created the assembly line to make the Model T car.
The United States remains by far the world's leading manufacturer by value of goods produced. It hit a record $1.6 trillion in 2007 - nearly double the $811 billion of 1987. For every $1 of value produced in China factories, the United States generates $2.50.
So what is made in the U.S.A. these days?
The United States sold more than $200 billion worth of aircraft, missiles and space-related equipment in 2007, and $80 billion worth of autos and auto parts. Deere, best known for its bright green and yellow tractors, sold $16.5 billion worth of farming equipment last year, much of it to the rest of the world.
Then there are energy products like gas turbines for power plants made by General Electric, computer chips from Intel and fighter jets from Lockheed Martin. Household names like GE, General Motors, International Business Machines, Boeing and Hewlett-Packard are among the largest manufacturers by revenue.
Several trends have emerged over the decades:
The United States makes things that other countries cannot. Today, "Made in U.S.A." is more likely to be stamped on heavy equipment or the circuits that go inside other products than the televisions, toys, clothes and other items found on store shelves.
U.S. companies have shifted toward high-end manufacturing as the production of low-value goods has moved overseas. This has resulted in lower prices for shoppers and higher profits for companies.
When demand slumps, all types of manufacturing jobs are lost. Some higher-end jobs - but not all - return with good times. Workers who make goods produced less expensively overseas suffer.
Once this recession runs its course, surviving manufacturers will emerge more efficient and profitable, economists say. More valuable products will be made using fewer people. Products will be made where labor and other costs are less expensive. And manufacturers will focus on the most lucrative products.
Boeing announced last month that it was cutting about 10,000 jobs. At the same time, workers were streamlining the wing assembly for the 737, the company's best-selling commercial plane, said Richard McCabe, a mechanic for 10 years and former Machinists union shop steward.
He and his co-workers at the factory at Renton, Washington, were asked about three and one-half years ago to figure out how to switch from building wings in huge stationary jigs mounted vertically, "the way things have been done here forever," to "one-piece flow," assembling them horizontally on a moving line similar to the way automobiles are constructed. The new process is set to begin by the end of the year.
"I won't go to the wing," McCabe said. "The wing will come to me. It's going to save them millions in scrap and rework."
McCabe said there had been a lot of initial resistance on the shop floor, but Boeing's increased outsourcing - including the outsourcing of wing production for the new 787 to Japan - helped change workers' minds.
"I told the guys, it's development or die," McCabe said. "If we can get this done, it assures us the future."
About 12.7 million U.S. workers, or 8 percent of the labor force, still held manufacturing jobs as of last month. Fifty years ago, 14.6 million people, or 28 percent of all U.S. workers, were employed in factories. The numbers - though painful to those who lost jobs - show how companies are making more with less.
Still, the perception of decline is likely to grow as factories and jobs vanish and imports rise for most goods we buy at stores.
Thirty years ago, U.S. producers made 80 percent of what the country consumed, according to the Manufacturers Alliance/MAPI, an industry trade group. Now it is about 65 percent.
U.S. factories still provide much of the processed food that U.S. households consume, everything from frozen fish sticks to cans of beer. And U.S. companies make a considerable share of the personal hygiene products like soap and shampoo, cleaning supplies and prescription drugs that are sold in pharmacies. But many other consumer goods now come from outside the United States.
In the 1960s, the United States made 98 percent of its shoes. It now imports more than 90 percent of its footwear. The iconic red Radio Flyer wagons for children are now made in China. Even the Apple iPod comes in a box that says it was made in China but "designed in California."
"Some people lament the loss of manufacturing jobs we could have had making iPods - so what?" said Daniel Ikenson, associate director of the Center for Trade Policy Studies at the libertarian-leaning Cato Institute. "The imports of iPods support U.S. jobs," including engineers, marketers and advertisers.
Some U.S.-made products are hiding in plain sight. Berner International, near Pittsburgh, does not make the clothes, dishes or sponges sold at Wal-Mart, but its products hang above shoppers' heads as soon they go through the sliding doors.
The company's 60 employees make air curtains - rectangular blowers mounted on the ceiling that keep out hot or chilly air, insects and dust while keeping in air-conditioning and heat. Also called air doors, they hang from ceilings at Wal-Marts, Whole Foods supermarkets and Starbucks, and above the big factory doors at Ford Motor and Toyota Motor car plants.
The chief executive, Georgia Berner, keeps her company in the United States because she relies on her staff's deep knowledge of air blowers. Each box requires specific voltages and sizing, she said.