- 1. The Return of Manufacturing to the United States and its
Impact on New York State By: Jason Madison ENG 302.51 Intro to
Business Writing Summer 2014
2. Historical Trends 3. On a national level jobs in
manufacturing amounted to just less than fifty percent of all
private industry employment after World War Two, only to fall to
about eleven percent in our present time. In the summer of 1979
United States employment in manufacturing peaked at 20 million
people only to continuously decline to 11 million in 2010. 4. This
trend is further reflected by the decline in the number of
factories that employ a large amount of workers. In 1977 there were
2,061 factories in the United States that had more than 1000
workers employing 5.1 million people. By 2007 the number of large
factories fell to 1,014 employing 2.1 million people 5. The North
American Trade Agreement (NAFTA) created the first big wave of job
relocation from the U.S. to Mexicos cheaper labor pool. Then China
entered into the world stage and opened its vast population to
manufacturing companies. According to Steve Maurer, managing
director of the consulting firm AlixPartners, "If you go back to
2005, it was pretty common for landed cost from China to be 25 to
30 percent less than the cost of manufacturing in the United
States. 6. After a 35% decline in the number of manufacturing jobs
between 1998 and 2010, the tally has since risen by 489,000, or
4.3%, to 11.9 million. IHS Global Insight, an economic research
firm, forecasts that the number of manufacturing jobs will climb
3.2% this year compared with a 1.6% increase in all jobs 7. Reasons
For This Trend 8. In 2006 the unit labor cost was approximately $17
in favor of China over the USA. Now the gap is much closer to $7
making the USA much more competitive (Trade Finance Magazine,
2014). Wages in the USA have stayed stable or have lowered some
compared to a 12% annual wage growth in China while at the same
time Chinas currency has appreciated by 25% against the US Dollar.
9. On top of the smaller gap in wage costs, there is also the
effect of worker productivity. American workers due to their higher
skill training, experience and technological innovation tend to be
more productive then their Chinese counterparts. This increase in
productivity among US workers is also shown that despite the loss
of almost 50% of the manufacturing workforce, labor productivity
growth in the manufacturing sector has increased by an average of
3.7 percent per year since 1995 10. Another big factor in the
return of USA Manufacturing is the recent natural gas production
boom due to hydro fracking of shale in this country. In late 2013,
the Boston Consulting group did a study that indicated that 50% of
the 600,000 to 1.2 million new manufacturing jobs between now and
2020 are the result of the shale energy boom 11. Nearshoring is the
practice of importing product components from regions that have the
lowest cost per unit, to be assembled in the home country. This is
especially useful when the final product is heavy and bulky. 12.
Impact on New York Yay for us! 13. At one time New York State was a
huge manufacturing state at one time with over 2 million employees
working in factories. By 2009 that number had dropped to under
500,000 workers. And despite the overall growth of manufacturing on
a national level, the employment rate in the manufacturing field in
New York still continues its downward trend. If one was to only
look at this fact, it would seem that New York is a manufacturing
has been with no hope of a return to economic good times. 14.
Despite the amount of job losses overall on a State level, actual
manufacturing output has risen indicating an increase in production
efficiency. Manufacturing rate of growth to the New Yorks GDP grew
by 20 percent, the same rate as the rest of the nation from 2003
through 2008. Manufacturing in New York is also a high-value
enterprise, with value added per dollar of final shipments 27
percent above the national average. 15. Another key point is that
New York manufacturing plants tend to be small and medium-sized
businesses with the average employment in the 18,888 establishments
is 25 jobs. Computers and electronics represent the largest
manufacturing subsector in the state with more than 64,000 jobs 16.
New York manufacturing is becoming based on small entrepreneurial
endeavors that require highly skilled and educated employees that
demand a high salary. Although this seems to be mostly driven by
high tech industries, I have personally seen much growth,
especially in upstate, in the manufacture of specialized foodstuff,
such as yogurt, wineries, and small breweries, all of which utilize
the strength of upstate agriculture. 17. In a survey done by the
New York Fed in July of 2014, New York manufacturers said business
conditions in July were the most favorable in four years, and The
Empire State's business conditions index increased to 25.6 in July
from 19.3 in June 18. In Conclusion New York is still in a position
to remain a leader with using its strengths in education,
innovation, and it tradition in world leading entrepreneurialism.
But in order to do that it must be willing to make the governmental
policy adjustments needed in todays changing global manufacturing
environment and to shake off the negative mindset that became
prevalent during the time of industry losses in the past. 19.
References Economic Trends in New York State. (n.d.) Office of the
State Comptroller. Retrieved May 1, 2012, from
http://www.osc.state.ny.us/reports/economic/economic_trends_in_nys_22013.pdf.
Trade Finance Magazine (March 2014). The tide turns for American
manufacturing. Trade Finance, Retrieved from
www.lexisnexis.com/hottopics/lnacademic. Aeppel, T. (2014, Jul 17).
The hard business of restarting U.S. factories; wal-mart's
made-in-america initiative takes it one memory board at a time.
Wall Street Journal (Online) Retrieved from
https://ezproxy2.drake.brockport.edu/login?url=http://search.proquest.com/docview/1545673951?accountid=26985
Dobby, Christine (May 6, 2011 Friday). Outsourcing to decline by
2015: study; China more costly. National Post's Financial Post
& FP Investing (Canada), Retrieved from
www.lexisnexis.com/hottopics/lnacademic. Hagerty, J. R. (2012, May
22). Remade in the USA: Once made in china: Jobs trickle back to
U.S. plants. Wall Street Journal Retrieved from
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Holmes, T. J. (2011). The Case of the Disappearing Large-Employer
Manufacturing Plants. Region (10453369), 25(3), 6-17. Jacoby, T.
(2014, Jul 18). This way up: Mobility in America; economic mobility
is alive and well for Americans who pursue technical or practical
training. Wall Street Journal (Online) Retrieved from
https://ezproxy2.drake.brockport.edu/login?url=http://search.proquest.com/docview/1545885820?accountid=26985
Kliesen, K. L., & Tatom, J. A. (2013). U.S. Manufacturing and
the Importance of International Trade: It's Not What You Think.
Review (00149187), 95(1), 27-49. LeBeau, P. (2013, April 18). By
2015, Producing in China Will Be as Costly as US. CNBC. Retrieved
August 3, 2014, from http://www.cnbc.com/id/100651692#. Timiraos,
N. (2014, Jul 16). Industrial production rises modestly in June;
indicator points to steady improvement in consumer, business
spending. Wall Street Journal (Online) Retrieved from
https://ezproxy2.drake.brockport.edu/login?url=http://search.proquest.com/docview/1545261586?accountid=26985
Ward, Robert B.. & Dadayan, Lucy (2010). Manufacturing Research
Institute of New York State: Twenty-First-Century Manufacturing:.
Albany, NY: The Nelson A. Rockefellar Institue of Government
University at Albany. Wessel, D., & Hagerty, J. R. (2012, May
29). Remade in the USA: Flat U.S. wages help fuel rebound in
manufacturing. Wall Street Journal Retrieved from
https://ezproxy2.drake.brockport.edu/login?url=http://search.proquest.com/docview/1016822155?accountid=26985
