EuroWire May 2016

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May 2016 24
Manufacturing
China the avaricious job-eater, a theme
on the US presidential campaign trail, is a
gment of the candidates’ imaginations
“They’re stealing our jobs; they’re beating us in everything;
they’re winning, we’re losing.”
The “they” here is China; and, according to Je rey Rothfeder of
the New Yorker, the sentiments are a fair summary of views held
by presidential hopeful Donald J Trump. Not only have these
struck a chord with many Americans; they have also, wrote
Mr Rothfeder, resonated so well that other aspirants to the
White House have “have felt compelled to demonstrate a
properly high level of indignation toward China’s economic
prowess.”
In particular, the notion of a ourishing Chinese manufacturing
industry, grown fat at the expense of struggling US workers,
has weight with unemployed and underemployed Americans
– including many who were pink-slipped during the 2007-2009
recession. But is it warranted? Mr Rothfeder, who thinks not,
marshalled some facts in aid of a more accurate analysis. (“Why
Donald Trump Is Wrong About Manufacturing Jobs and China,”
14th March)
Among the strong indications that global manufacturing is
trending positive for the USA, the New Yorker contributor noted
the following:
† Factory jobs are on the rise in North America; and many of
these new jobs are coming back from China, which in fact
is straining to maintain its manufacturing capacity. Since
March 2010, when manufacturing employment in the USA
hit a bottom of 11.45 million jobs, nearly a million new
factory positions have been created, most of them in the
Southern states – particularly North Carolina, South Carolina
and Tennessee.
Better still, wrote Mr Rothfeder: “The jobs are typically good
ones. Across that same ve-year period, average hourly
manufacturing wages have increased over ten per cent,
to more than $20. On the whole, US manufacturing, as
measured by the Purchasing Managers’ Index, has steadily
expanded.”
† Meanwhile, according to New York-based Quanton
Data, which tracks global job postings by industry, open
manufacturing positions in China have been dropping
steadily since 2012, and are down nearly six per cent in
that time. In January, the country’s Ministry of Commerce
reported that factory activity had contracted for six months,
falling to a three-year low.
In addition, foreign direct investment in Chinese
manufacturing was at for all of 2015, while China’s balance
of trade with the USA barely budged – despite the strong
dollar. Moreover, China’s exports tumbled in February by 25
per cent, after falling 11 per cent in January.
To Mr Rothfeder, the picture that emerges from these
statistics is much more nuanced than the one the
presidential candidates are presenting. “It reveals China to be
something less than a rapacious economic winner,” he wrote,
“and the US to be enjoying an industrial resurgence that
seemed unimaginable a decade ago.”
What is perhaps the biggest impetus to American
manufacturing? Mr Rothfeder identi ed this as the move
toward “reshoring,” and again collected some persuasive
numbers:
† In recent years, companies have increasingly been bringing
manufacturing jobs back to the USA from China and
elsewhere. The practice received a big boost in 2012 with
General Electric’s announcement that it was investing
$1 billion in an appliance plant in Louisville, Kentucky. The
plant would reshore 4,000 jobs that had been moved to
China and Mexico and add, over time, nearly 20,000 factory
positions at the plant’s regional suppliers.
† Reversals like this are apparently part of a broader trend.
According to data provided to Mr Rothfeder by the
Reshoring Initiative, over the past ve years some 100,000
manufacturing jobs have returned to the USA from overseas,
60 per cent of them from China. If new US plants opened
by companies headquartered elsewhere (ie foreign direct
investment in manufacturing) are included, the total jumps
to 250,000. An additional 50,000 jobs were saved when
companies that had planned to go o shore changed their
minds.
Harry Moser, the president of the Chicago-based non-pro t
trade organisation, told the New Yorker that, since 2007, the
annual increase in the number of American companies
o shoring has dropped from six per cent to 2.5 per cent; and
that, over the past couple of years, for every new job o ered
by US companies overseas one had been reshored.
A strong attraction for these rms is the quality of the
USA workforce – its productivity and easy familiarity with
lean-factory principles – as well as its ability to adapt quickly
to changes in domestic consumer demand.
Transatlantic Cable
Image: www.bigstockphoto.com Photographer Zsolt Ercsel