|
Published: August 18, 2010
It's a common lament
to say that U.S. manufacturing is in decline. It's received
wisdom that the U.S. doesn't make anything anymore. In fact, I
myself have repeated it.
I am here to correct the error of my ways and to dispel this
common myth.
In truth, there is a lot of stuff made in the U.S., which is
still a mighty giant in manufacturing.
The broom sweeping away the old cobwebs is research from a group
called Turner Investment Partners. This is a firm out of Berwyn,
Pa. It manages $18 billion. Turner put together the eye-opening
report called, U.S. Manufacturing: Still the One.
"The U.S. remains the world's leading manufacturer, by far," the
authors write. "Indeed, if the U.S. manufacturing industry were
a national economy, it would be the eighth largest in the world,
worth $1.6 trillion." All by itself, the U.S. is 22% of global
manufacturing. As an exporter, it ranks third behind only China
and Germany, with an 8% market share.
That is a pretty big blow to the idea that the U.S. doesn't make
anything anymore. But how can this be? We all see the same
headlines, such as the big failure of U.S. autoworkers. We see
the "Made in China" label slapped on nearly everything. We know
Japan makes all kinds of electronics that the U.S. no longer
makes. We hear about companies moving plants overseas.
This is where things get more interesting.
Since 1983, manufacturing output in the U.S. has more than
doubled. (This, in inflation-adjusted dollars, by the way, makes
the feat all the more impressive.) But it did so with about 26%
fewer workers. As a result, 50 years ago, about 28% of all
workers got their paycheck from manufacturing. Today, only 8% of
the work force does.
That work force, though, is very productive. It's doing a lot
more with less. As Turner reports, "U.S. manufacturing workers…
are the most productive — 50% more productive than workers in
the 11 next-best nations."
So it's like the headlines about shark attacks that were common
some summers ago. It made it seem as if shark attacks were more
common than they were. The public failures of big manufacturers
and the headline-grabbing job losses have obscured the real
story.
The real story is that the services sector has grown much faster
than manufacturing. So when you look at manufacturing's share of
the U.S. economy, it has fallen from 28% in 1953 to only 12%
today.
We may weep over the fact that the U.S. economy is so service
driven, but that's not the same as saying that U.S.
manufacturing is in decline. The U.S. is still the world's
largest manufacturer.
The nature of that manufacturing base is also changing. One way
is that the companies populating the forest now tend to be
smaller. There are fewer giants. "According to the Cato
Institute, for every one U.S. manufacturing industry that's
suffering a decline in revenue and profits, two U.S. industries
— led by small companies — are growing"
The above are just some highlights from Turner's report. My main
goal here is to leave you with a different perception of
American manufacturers. They are not like dinosaurs on their way
to extinction. In fact, some of them are great investments.
Ed. Note: Fewer manufacturing giants means that there are ample
opportunities for small-cap and penny stock investors to get in
on. One example is American Apparel (AMEX: APP), a clothing
company that produces sweatshop-free apparel at their Los
Angeles factory. Another is Raven Industries (NASDAQ: RAVN), an
industrial manufacturer with a hand in everything from flow
control systems to GPS devices.
-- Chris Mayer
Contributor
Penny Sleuth
Note: This article originally appeared on
Penny Sleuth |
