- The Washington Times - Saturday, April 22, 2006

Showcased on the Web site of The Washington Times is the highly informative four-part series, “Made in the USA,” by Jeffrey Sparshott, this newspaper’s international trade reporter. In a time of soaring trade deficits and declining manufacturing employment, these provocative articles deserve to be perused by all interested parties in both the private and public sectors.

In the first installment, “Companies close up shop; U.S. industries increasingly lured abroad,” Mr. Sparshott reviews the history of “sunset industries,” such as the manufacture of televisions. Citing data from the International Trade Commission, Mr. Sparshott reports that it costs more than three times as much to produce a color television in the United States ($558) as it does in China ($181).

Clearly, China enjoys an enormous comparative advantage in this industry; so it would make little sense for the U.S. government to impose huge tariffs on Chinese televisions in order to penalize all American consumers for the benefit of a relatively tiny portion of the U.S. workforce making a product whose unit labor cost dwarfs China’s. Meanwhile, the price of color televisions has plunged by more than 50 percent since the mid-1990s.

In the early 1950s, U.S. manufacturing employment exceeded 30 percent of the workforce. In his second installment, “Flexible companies change to stay put; many have kept their plants in America,” Mr. Sparshott reports that total manufacturing employment peaked in 1979 at 19.6 million workers, who comprised 22 percent of U.S. nonfarm employment. Today there are 14.3 million manufacturing workers, or 10.5 percent of the total U.S. nonfarm workforce. The decline in manufacturing employment of more than 5 million since 1979 reflects a reduction of more than 28 percent. However, over that same time period, from 1979 to the present, U.S. total employment has increased by a staggering 45 million jobs, or 50 percent.

As Mr. Sparshott’s series makes clear, the decline in U.S. manufacturing employment has not coincided with a decline in U.S. manufacturing output. Quite the contrary. In fact, manufacturing output has soared since 1979. According to the Federal Reserve Board, overall manufacturing output has more than doubled since that year. The manufacture of durable goods, which are products expected to last three years or longer, has expanded by more than 180 percent since 1979, while the production of nondurable goods has increased by more than 40 percent.

“The productivity story in manufacturing is the real one,” Thomas J. Duesterberg, president and CEO of the Manufacturers Alliance/MAPI, a public-policy and business-research organization, told The Washington Times. Last year was typical for the manufacturing industry. Output increased by 3.9 percent, while employment fell by 1.1 percent. Thus, manufacturing productivity, or output per hour, soared by 5 percent in 2005. In 2004, it jumped 5.5 percent. Since 1987, when the Department of Labor began compiling data on manufacturing productivity, it has soared by nearly 100 percent.

In the third part of his series, “Jetting parts around the world; American inspiration, but manufacturing efficiently outsourced,” Mr. Sparshott provided a real-world example of these soaring productivity numbers. Since 1999, Boeing has dramatically improved its efficiency by cutting in half, from 22 days to 11, the time it takes to assemble the Boeing 737 aircraft, the best-selling commercial jet in history. Meanwhile, Dell, arguably the world’s most successful computer company, employs nearly 25,000 U.S. workers, but manufactures few of the components that go into its desktop and laptop computers.

In his final article, “America’s cutting edge; innovation creates industry, opportunity,” Mr. Sparshott explains how incomparably entrepreneurial and innovative American firms exploit the U.S. model of university-industry collaboration and government-funded basic research to maintain America’s long-term comparative advantage as the world’s most creative society.

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