“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.”

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Interesting Associated Press article about US manufacturing prowess. Far from being the disaster that its so often thought of, the United States remains a global superpower in manufacturing and industrial design.

How is that possible, given that so much stuff comes from China? Its mostly the easy-to-make, low margin stuff. The higher end, much more profitable stuff is made in the USA.

Indeed, the stat about the US being the world’s leading manufacturer looks not to total unit volume, but to value. If we looked at it by profitability, it would be even more lopsided.

AP:

“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…

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.”

Fascinating stuff . . .

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Source:
Is anything made in the U.S.A. anymore? You’d be surprised
Stephen Manning
Associated Press, February 20, 2009

http://www.iht.com/articles/2009/02/20/business/wbmake.php

Category: Markets

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23 Responses to “US Remains World’s Leading Manufacturer”

  1. VennData says:

    We make plenty of stuff, I wonder if the decline in manufacturing as a percentage of the economy will accelerate in this downturn. The pay cuts doled out by the likes of FedEx and now HP…

    http://www.dailytech.com/article.aspx?newsid=14354

    …will make more manufacturing profitable on the margin. I wonder if they’ve come up with a name for this phenomena? …Wage-sizing? Income-Re-characterization? Pay Waylay?

  2. beyond the fact that this art. is Prole Feed, at it’s finest grade of processing, and, to me, should be filed under the ‘agitprop/disinfo’-Tab of TBP 2.0, this: “This has resulted in lower prices for shoppers and higher profits for companies…” is a ‘factoid’ that could only have been developed on a Polaroid substrate.

    Freeze-Frame Economic analysis without the sharp-relief provided by noting the, coincidentally, existing NPV U$D ~66 Trillion Hole, and Massive, and seemingly perpetual, Trade Deficits our Economy currently enjoys..

    After one realizes that our Manufacturing Base, as it stands, couldn’t support many of the demands, so readily taken for granted, we place on our Economy, then, maybe, we wouldn’t be so flip about this subject…

  3. flipspiceland says:

    I dispute the numbers.

    Wouldn’t believe them until every widget in every doodad inevery thingamabob, in every bowgang is examined for manufacturers’ origin of inputs and it too is vetted.

  4. Greenewabe says:

    Neither peak oil nor Japan’s push toward hybrids have been a secret to the US auto makers. For that reason I invoke Jack Kilpatrick the character talk show host from the movie airplane for this one: “They bought their tickets, they knew what they were getting into. I say let ‘em crash!”

  5. Crabbybill says:

    In a country that can’t/won’t accurately measure unemployment or inflation, why would you give any credibility to mfg numbers? Consider the impact of the systemic problems currency manipulation, subassembly importation etc.. . The US may mfg a considerable amount, but the ‘lead’ is a dangerous myth — overestimating one’s strength only benefits the politicians and ideologues.

  6. Marcus Aurelius says:

    “. . . 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 . . .”

    . . . I already have closets full of this shit – especially fighter jets. Don’t even get me started on fighter jets – I can’t find a pair of shoes without having to back a jet out, negotiate my way around a turbine, and unplug and move my IBM InfoPrint 6700 thermal printer. Jesus H. Christos, enough rank consumerism, already.
    _____________

    “. . . are among the largest manufacturers by revenue.”

    We have an overcapacity of large revenue production facilities.
    _____________

    Central Planning says tractor production is up. Waaaay up.

  7. bizprof says:

    This number strikes me as legit; too often we confuse manufacturing employment with manufacturing output in dollar terms. Of all the plants I’ve seen in the US (including auto, steel, heavy machinery, components) the one thing that is striking is how few people actually work in these plants relative to those in Asia. It’s mostly as a result of automation but also it’s a function of improved inventory management relative to 1980. Indeed, it seems that the heavier/more expensive the good, the fewer the people that work on it. So while we see manufacturing “failing” in the US, it’s actually falling manufacturing employment that’s creating the disconnect. We see fewer people (every day) working in manufacturing and think that we don’t make anything anymore.

  8. GB says:

    I believe the numbers but I also believe that things are made/forged overseas and the final assembly is done in the US. Are the numbers broken out in any way?

  9. jash says:

    Associated Press has officially joined the twilight zone…
    WTF! The title says it all!

    Perhaps we need a few more Wilmington Ohio’s before we look in the
    mirror!

    The MSM is increasing its toxic asset value!

  10. franklin411 says:

    AP–”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.”

    The AP is actually a very conservative outfit. Apparently their reporters still hold to the famous maxim attributed to George Bush Sr:

    “What difference does it make if we produce computer chips or potato chips?”

    As Mr. Bush discovered, it makes a hell of a difference!

  11. Broken says:

    Heh.

    I recall an article from a few years back which presented US manufacturing GDP as barely above Germany’s.

    My guess is the AP article is failing to account for outsourcing. Just because the final assembly occurs in the US doesn’t mean you can count the entire sales price towards US manufacturing GDP. Most of GM’s US cars have engines built in Mexico. Boeing’s airliners have wings built in Japan. Apple’s iPhone is mostly built with parts from Germany and Japan.

  12. me says:

    I am definitely relieved to know that everyone has a high-paying manufacturing job with health care and a pension. Here I thought the economy was contracting and millions were losing their jobs.

    Crabbybill was right about the accuracy of the numbers. If Apple sells something is that a US sale? Nothing inside was made in the US, probably not assembled in the US. same with computers. IBM? get real, they just fired 15,000 more Americans but not one of their foreigners in Brazil or India or Europe.

    I have never been convinced that American sold is American made.

  13. RangerTurtle says:

    Although the article has a silver lining and possibly the amount manufactured is more than the average person thought there was, its still not enough. When the ratio of manufactured goods to GDP is as good as the top exporting countries, THEN we can crow.

    Reduce (stop would be good) the dependence on imported oil and imported consumer goods.
    A consumer driven economy that consumes mostly imported goods, is only good the countries you are importing from, and not our own country.

  14. Greg0658 says:

    … Since the late 1970s, Henry’s Turkey Service has been shipping mentally retarded men from Texas to Iowa to work in the West Liberty plant … State officials say the 21 men who were at the bunkhouse Saturday have worked for Henry’s for at least 20 years. Keith Brown, 57, has lived there since 1979. His sister, Sherri Brown, said her brother has $80 in the bank after working 30 years for Henry’s …

    http://www.desmoinesregister.com/article/20090208/NEWS/902080344

  15. Paul S says:

    Overpriced defense/aviation industry output will also certainly skew the numbers.

  16. Winston Munn says:

    I am relieved to find out how much military hardware we make – you never know when Canada will decide to invade again. And as long as we keep pumping our GDP into bombs instead of infrastructure, it will be awfully risky to roll tanks down from Toronto across our rickity northern bridges.

  17. LinePlaneVolume says:

    If all of these products are worth so much, why do we have such a gargantuan trade deficit? Something is missing. Most of the stuff in this article is regarding products that are bought and used by governments or large corporate entities… The lions share are capital investments that are probably depreciated over many years. I would expect most of these manufacturers are not small business either. We need more small manufacturers making high quality products that are bought at the consumer level.

  18. Urkel says:

    LinePlaneVolume,

    “Most of the stuff in this article is regarding products that are bought and used by governments or large corporate entities…”
    That’s utterly irrelevant. The point is that much of what is manufactured in the US is never seen or used by the average person. If it creates jobs and adds to the economy, who cares?

    “We need more small manufacturers making high quality products that are bought at the consumer level.”
    Why? So it becomes more visible to Joe-Blow? Most consumer items are low margin, high volume stuff. Why build an manufacturing industry based on that? What the US needs are manufacturers (small and large) that produce unique, high-value, high-margin products that can sold here and abroad.

  19. eaglepilot says:

    Are these numbers misleading? Deere for one, does a TON of manufacturing offshore, mostly Japan, yet they are included in this list as domestic manufacturing.

    Caterpillar makes ONLY bulldozers in the USA, all other machinery is manufactured in Japan, with the Cat label decalled on it. Is this included in this manufacturing database?

    The USA coporations are the Best at being international in managment, yet the manufacturing is slipping to other countries. Doesn’t have to be this way, can we not compete on a level playing field with the rest of the world? Don’t go protectionist, that only increases the inefficiencies, get real and competitive.

  20. bayoustjohndavid says:

    “The United States sold more than $200 billion worth of aircraft, missiles and space-related equipment in 2007,”

    How much of that is bought by our government? How much is bought by foreign governments with U.S. aid? It looks like about an eighth of our manufacturing output is dependent on government actions and an unspoken “buy American” at NASA and the DOD.

  21. LinePlaneVolume says:

    Urkel

    So, if it’s irrelevant, why, once again, do we have such an enormous trade deficit?

    Explain to me how this data adds up to being good? What is the use of bragging about the value of our goods produced if we are still being crushed by debt?

    And I never said that we need to focus on high volume, low quality. I totally agree that we need to manufacture high value, high quality, – whatever – margin products domestically. Joe-Blow needs to discover that fewer, higher quality, things is the way to go.

  22. “Joe-Blow needs to discover that fewer, higher quality, things is the way to go.” LPV, above

    IOW: “I’ve never met Anyone wealthy enough, who could afford Not to buy Quality.”