Wes Moss: U.S. is still world’s manufacturing superpower

Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here weekly.

Wes Moss hosts 'Money Matters' Sunday mornings on AM750 and 95.5FM News/Talk WSB

Wes Moss hosts 'Money Matters' Sunday mornings on AM750 and 95.5FM News/Talk WSB

When is the last time you bought something made in China? Today? If you haven’t, you probably haven’t been to Target or Walmart yet. It’s nearly impossible to make a shopping trip without buying something that was made in China. Or Mexico. Or Vietnam. Or Guatemala.

This concerns many Americans. They believe we are exporting jobs, undermining our industrial base and making our country dependent on others for things we should build here at home. Let me put their minds at ease: America is still the world’s manufacturing superpower. And while changes in the global economics of making things have caused some pain for low-skill and unskilled workers, consumers have benefited mightily.

The U.S. is currently responsible for 28 percent of the world’s manufacturing output. We produce more than industrial giants Britain, Germany, Japan, and China. In fact, we crush the Chinese, who are responsible for just 12 percent of the world’s products. And we’re on track to have another record year of manufacturing output.

What’s more, some of the manufacturing that appears to have gone away is still here, re-classified by economists as “service.” Example: Publix used to buy its bread from an outside bakery. Now, it has its own in-store bakeries, and the money you pay for that baguette is considered retail revenue.

True, many factory jobs have disappeared in recent decades. We don’t make hangers, plastic toy dinosaurs, or even televisions anymore. It is simply more efficient to allow that work to be done where labor costs are significantly lower — places like Mexico, China or Vietnam. It’s easy to get nostalgic for those jobs, especially in a weak economy, but we are talking about grinding, thankless work that paid low wages, offered little hope of advancement, and returned ever-thinning profits to the employer. And because these jobs have moved overseas, American consumers now pay less for “low-value” products — casual clothes, electronics, sporting goods.

Advances in technology have also reduced employment in manufacturing. But any company that didn’t take advantage of those strides would soon go out of business, costing even more jobs.

America still dominates manufacturing because we now specialize in making sophisticated products that are hard to replicate; things that require as much brain as brawn. Stuff like jet engines, locomotives, cars, iPads and Nike shoes. Hey, aren’t iPads and Nikes made in China? Sort of. The simple, repetitive task of assembling the parts is done overseas. But Americans conceive and engineer these “intellectual property” products, which are really built using imagination and brainpower. The iPhone consists of parts made by 15 foreign manufacturers. The devices are assembled – you guessed it – in China. While that arrangement creates employment in those countries, the best jobs and the biggest profits come right back to Apple’s headquarters in Cupertino, California, home of the 70 percent margin.

So the next time you hear someone whining about the end of domestic manufacturing, tell him to start using his head. That’s what America’s world-beating manufacturers are doing.

– By Wes Moss, for Atlanta Bargain Hunter

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7 comments Add your comment

alex

February 13th, 2012
6:58 am

Wes, Did the these “low-skill and unskilled workers” disappear or are these brainiacs now designers?, or are they sitting on the sidelines drawing a check from uncle Sam? How cheap are those imports in that scenario and how much have those imports contributed to the national deficit?

The Wright brothers were bicycle mechanics, and from their tinkering managed to give the world that which was reserved for the birds. Many innovations come from doing, not sitting our our collective arse.

As an investment advisor I suspect you have made a “ton of money” investing in these developing countries. But at what cost to the nation.

Have a good day.

carlton

February 13th, 2012
10:09 am

alex:

what is your point?

Phil

February 13th, 2012
11:48 am

Carlton, Alex’s point is that there is always two sides to a story. Not citing the source of the numbers with regards to percentages and anecdotally writing comments without concrete facts does not result in a well constructed argument.but a “cheerleading piece”. Wes Moss is writing just an opinion piece although I agree with many of his assertions. I think that whether people are on the “right” or the “left” of the issues we need to have an intelligent discussion without calling each names or being condescending.

Fred

February 13th, 2012
1:06 pm

@Phil: You can explain it to carlton, but you can’t understand it for him. The fact that he had to ask should clue you in that it’s hopeless lol.

Ole Guy

February 13th, 2012
2:56 pm

I am not too sure if Mr Mosses findings are based on economic fact or perhaps a little nationalistic pride. Our (US) manufacturing “dominance” is within (what Eisenhower refered to as) the Military industrial complex; we do indeed make the best war materiel in the world. As for good ole consumer goods, I would think the US falls somewhere toward the back of the herd in terms of manufacturing capabilities. One look at car dealers, home appliances, and just about any consumer item might shed a little light here.

Ole Guy

February 13th, 2012
2:57 pm

We might assemble parts here, but I don’t think we do much actual manufacturing.

Gary

February 16th, 2012
8:50 am

Ever hear of Apple? Microsoft? IBM even?

Alex has a point about needing different types of jobs , though.