Is North America Selling Itself Down The Proverbial River Without A Paddle
Posted on Tuesday 2nd October 2007 by Roy MacNaughton. Hits: 73
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
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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