"Most Americans, I suspect, believe we're losing manufacturing because we can't compete against cheap Chinese labor. But Germany has remained a manufacturing giant notwithstanding the rise of East Asia, making high-end products with a workforce that is more unionized and better paid than ours. German exports came to $1.1 trillion in 2009 -- roughly $125 billion more than we exported, though there are just 82 million Germans to our 310 million Americans. Germany's yearly trade balance went from a deficit of $6 billion in 1998 to a surplus of $267 billion in 2008 -- the same year the United States ran a trade deficit of $569 billion. Over those same 10 years, Germany's annual growth rate per capita exceeded ours."
The quote above comes from a very interesting article by Harold Meyerson in the Washington Post on Thursday July 1st, 2010 that was titled:
In recession battle, Germany and China are winners
The bottom line with manufacturing is cost. How Germany has been able to remain a manufacturing giant is by being more productive and thereby reducing cost. This is where technologies such as MTConnect is so important. As a manufacturing plant increases its productivity of its manufacturing equipment, the human cost becomes a smaller factor with other costs such as power becoming a larger slice of the pie. In the US we have significant advantages in the power area. The average machine tool is only in cycle 25% of the time. As the number continues to increase, the cheap labor becomes less and less relative.
Loosing manufacturing is a slippery slope, because there are so many industries that manufacturing touches. Below is from the same article:
"In 1960, manufacturing accounted for a quarter of our gross domestic product and employed 26 percent of the labor force. Today, manufacturing has shriveled to 11 percent of GDP and employs a kindred percentage of the workforce."
Manufacturing is the tail that wags the economy....
