PRESIDENT&CEO Magazine - February 2012
Interviews with IBM's Andy Monshaw and Deloitte's Tom McGee - plus a special section on Executive Business Aviation.
PRESIDENT&CEO Magazine :: 23 ers, and assembly-line workers rather than doctors, lawyers, and web designers. As for the kinds of things Americans manufacture, these out- puts are seldom found on the shelves of retailers such as Wal- Mart, Best Buy, and The Gap. Except for foods, beverages, and pharmaceuticals, most retail consumer goods are indeed made mostly overseas. So if Americans survey merely the labels on the goods they purchase on their routine shopping trips, they get the mistaken impression that almost nothing today is “made in America.” What U.S. manufacturers do churn out in large quantities are intermediate goods, often for export, used to produce final con- sumer goods and services. Perhaps the most obvious of these intermediate goods are Boeing passenger jets. But Americans also produce substantial amounts of primary metals, chemicals, electrical equipment, and other capital goods that improve the operating efficiencies of producers worldwide. This fact reveals how misleading “Made in” labels are. A pair of jeans, for example, labeled “Made in India” very likely was produced using some capital goods made in America – a reality that is obscured by a label that reads simply “Made in India.” The third reason for the mistaken impression that manufac- turing in America is declining is that manufacturing employ- ment is falling. The percentage of American workers employed in manufacturing jobs peaked at just below 40 percent in 1943 and has fallen ever since. Today only about 9 percent of Ameri- can workers hold manufacturing jobs. Falling employment in manufacturing, though, is no more a sign of ill health of the manufacturing sector than is falling agricultural employment a sign of ill health of the farm sector. Just as technology advances in the 19th and 20th centuries enabled farmers to produce more and more agricultural outputs with fewer and fewer workers, technology advances enable manufacturers to produce more and more goods with fewer and fewer workers. Gains on this front are astounding. Today’s typical Ameri- can manufacturing worker annually produces nearly 700 percent more output than did his counterpart in 1943. That’s huge. So the decline in U.S. manufacturing employment is the result neither of the decline in the U.S. manufacturing sector nor of trade with China and other low-wage countries. It is, instead, the result of technology and production efficiencies – forces that are indispensable to our still-improving standard of living. & All the data – from the United Nations, the U.S. Bureau of Economic Analysis, and ev- ery other respected source – make crystal clear that U.S. manufacturing is booming. [ [