World Manufacturing Status

WorldMfgTable

This is a cool table I got from the World Bank website showing the value added manufacturing rankings for countries around the world.

It is easy to do some simple analysis using the table on the website; pick a range of years you want to look at and then click on the year that you want to rank the countries. When you first open a range of years the countries will be ranked in alphabetical order, but clicking on the year arranges them in value order.

As most people know, the US is the world’s second largest manufacturing economy behind China. In 2005 China was behind both the US and Japan; they surpassed Japan in 2006 and the US in 2009.

As I travel around the US teaching and doing projects I often hear that manufacturing is leaving the US and the slack being taken up by other countries. This database unfortunately doesn’t have US data from before 1998, but since then the output in dollars has actually risen pretty consistently; its just that China’s has risen much faster.

USMfgvsJobs

I also hear that there just aren’t as many manufacturing jobs out there and that the US is becoming more of a service economy. This is confirmed by the chart above, which is extracted from the Federal Reserve, Bureau of Labor Statistics. Data shows a peak in employment in about 1978, with a fairly steep decline in the 2000’s.

It is often said that you can prove nearly anything using the right statistics. The data in the graphics above are from pretty reputable sources, so I tend to believe what they show. Veronica de Rugy, the author of the article where I got this chart from, explains that while American manufacturers are over three times as productive today than they were in 1975, US policy, taxes and regulations are the reason we are losing jobs. While I can’t refute someone who knows a lot more about the subject than I do, I believe there is a lot more to it than these statistics show.

When I started out in the automation field, machinery and controls were much simpler. It took a lot of human beings to run a typical assembly line, PLCs and other controllers could only make very simple decisions. In the past 20-30 years technology has seen the advent of much smarter, faster machines alongside access to much more data generated by the systems. Servos, robots and vision systems are just a few of the fields I have seen explode in their capabilities since the 1990s.

At the same time, many manufacturer’s will tell you they can’t seem to find skilled workers to fill their technical positions. According to a 2012 Manpower Group survey, the talent shortage has peaked in recent years. Reasons given included “Lack of Available Talent/No Applicants” (55%), “Looking for More Pay than is Offered” (54%), and “Lack of Experience” (44%). Skilled trades and engineers have been on the list of “hardest to fill” every year. Machine operators, machinists and IT personnel are usually on the list also.

Not all of these positions require a college degree. Even people who title themselves “engineers” in these surveys often only have trade or tech school training. As someone who has done hiring in the technical field over the past 20 years, I can tell you that I cared much more about what an applicant could do and how they fit into the organization than what degrees they had.

As far as those companies who couldn’t find personnel because they were looking for more pay than was offered, I believe that a free market economy takes care of those things. Unfortunately it can often take care of it by moving manufacturing operations out of the country. For most smaller companies that can’t do that, they usually come to some sort of compromise or make do with less people. Or go out of business.

At the same time, overall the US economy still seems to be doing better than most other countries, so we must be doing something right!

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Electrical Engineer and business owner from the Nashville, Tennessee area. I also play music, Chess and Go.

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