Does the loss of manufacturing jobs bother you? It sure
bothers me. Some of the statistics related to this
phenomenon are shocking to put it mildly.
For instance, read the Congressional Research Service
Report for Congress, titled: China's Trade with the United
States and the World, published on January 4th of this
year. U.S. manufacturing jobs declined in the 10-year and
7-year periods ended this past July, by approximately 14
and 18 percent respectively.
At the same time, in the ten-year period ended July 2007
jobs in the U.S. Service Industries increased by
approximately 22%. Given the comparative labor rates
between the U.S. and the emerging economies do you really
expect this dismal trend to be reversed?
I know of one American company that produces a wonderful
product that assists in the "green revolution" that is
taking place in most western democracies. I really didn't
think the price for this "made-in-America" item was so bad.
Heck, it did a great job, conserving energy and solving a
nasty problem at the same time...it was worth the price
...and then some.
However, I was perturbed and saddened to hear that the
price of this equipment would be coming down drastically
because it would soon be made in China. That might be good
'competitive news' to the small American firm making this
product in the U.S. It sure was not good news to me.
Obviously this firm will then be more price-competitive.
But this then starts a chain of dominos falling - in my
opinion - backwards. In the short run, this firm, (being
copied by others who will produce their products in Asia),
will be forced to do likewise in order to survive. We as
consumers of this product will go along, happily paying
much less for this product, so we can then brag about
generating more earnings per share for us personally, or
our stockholders.
But in the long term....don't you think we are selling
ourselves down the river of no return?
Maybe I'm all wrong here; but if we're going to export most
of our manufacturing jobs, who the heck is going to provide
employment for all the displaced workers? Who is going to
have the money to buy the inexpensive (read: cheaper)
products that are produced in countries with much lower
labor costs? If there are not jobs, there will be no
disposable income to buy the "hamburgers we will be selling
to ourselves" as paraphrased from Thomas Friedman's The
World is Flat. I've been involved in the services industry
my entire career and from my own experience, I believe
services cannot possibly replace the manufacturing sector
in this economy.
The unhappy conclusion of all of this might just be that
America's dependence on the economies of other nations is
continuously increasing. Historically, if a country or
society is not strong enough, economically, it usually is
not be strong enough to protect itself. Speaking of all
those manufacturing jobs, do you remember just how the
United States and Canada were able to arm themselves
quickly and efficiently in the early 1940s? They each had
a heavy manufacturing sector that was quickly transferred
over to wartime equipment and materiel production to
provide the items necessary to take on the
'Rome-Berlin-Tokyo Axis'.
If we keep exporting our industries and our jobs, what
happens if we run into a group of enemies who can
out-produce us? What if we have almost 'forgotten' how to
produce heavy equipment, ships, aircraft, vehicles,
armaments or even soldiers' army boots? What if the average
consumer has so little buying power, he can no longer
afford even the cheap goods flowing in from Asia? Can you
see where this might be going?
Food for thought, I'm sure.
©Copyright, Roy MacNaughton, 2007
----------------------------------------------------
If you'd like to read more regarding this and the effect
that other countries like China might have on North
America's economy and society, see the blog at:
http://stockresearchddblog.com
For further comments on
markets and marketing in this arena, please go to my blog
at:
http://www.UmarketingU.com
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