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American Manufacturing: Miraculously on the Upswing

Discussion in 'BBS Hangout: Debate & Discussion' started by Northside Storm, Dec 15, 2012.

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  1. Northside Storm

    Northside Storm Member

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    scoreboard. Don't blame the President for oil prices at the pump if you won't credit him for manufacturing success in America.
     
    #21 Northside Storm, Dec 15, 2012
  2. Cohete Rojo

    Cohete Rojo Member

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    I prefer to keep it simple: land, labor and capital. Productivity is one thing, efficiency is another, and return on capital is yet another.

    Average Hourly Earnings: Total Private/Manufacturing
    [​IMG]
     
    #22 Cohete Rojo, Dec 15, 2012
  3. Northside Storm

    Northside Storm Member

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    If you prefer to keep it simple, then you will miss key insights and relationships. Again, that the wage of manufacturing is stagnant is an observable fact but you keep on posting these things in isolation, without tying how they move together. How does the wage move in conjunction with industrial output, employment, international conditions, and the latest trend in management-think?

    If you want it really simple though, by your own charts, productivity, and employment in manufacturing have all trickled up. Yes, this is an upswing to behold in an age where none of that was happening on a consistent basis for at least a decade. As for stagnant wages, I looked at the scale of your graph and found it questionable (and possibly not adjusted for a variety of factors), so I'll repost one I already have---
    [​IMG]

    I'll leave you to judge whether relatively stagnant wages are an indication of manufacturing's weakness, or merely a failure by market agents to capture their full share of value. What amount of that is due to the incessant management-speak about outsourcing being the solution for all woes will be hard to estimate, though it is nice to see leading industry figures speak out against what had been up to this point orthodox business wisdom.
     
    #23 Northside Storm, Dec 16, 2012
  4. Cohete Rojo

    Cohete Rojo Member

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    I haven't missed one yet: land, labor and capital. These are the input costs of all businesses. Land in the US is relatively expensive. Labor in the US is relatively expensive. Capital however may not be relatively expensive in the US.

    For instance, raw materials like iron and oil are purchased on international markets, so no one country may necessarily have an advantage (outside of purchasing power, but these things are relative to the end buyer). Or domestic energy sources not traded on international markets are relatively cheap.

    If land prices in the US deflate, which they have been and still are, then it should reason that the input cost of land goes down. And the same should reason for labor (wages) which has no real growth at the moment.

    [​IMG]

    You shouldn't look soley into domestic data for which is an international enterprise. Cheap, abundant overseas labor can do much of the same type of manufacturing work that Amerians can do, for less money.

    So why build a factory in the US instead of Indonesia? Will the factory be any different in the US than in Indonesia? Perhaps political stability is a factor, but yet, one that has its own price.
     
    #24 Cohete Rojo, Dec 16, 2012
  5. Northside Storm

    Northside Storm Member

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    Looking past your analysis of a home price index as a somewhat flawed proxy for land prices (and one that doesn't consider the exact type of situation described in the article in the first place of under-utilization of already-existing factories), this question is best addressed by reading through the cited article on the first page.

    But I'll give you some key points to nibble on---increased security of investments in America given the somewhat bush-league capital market systems in the South-Eastern Asian area for FDI (Had you cited Malaysia instead of Indonesia, I might have mentioned the quick use of capital controls in that particular country as an excellent case study),hedging currency risk, reducing transportation costs, reducing culture clash, comparing productivity/output of labour rather than just pure wages (American workers are paid more but also produce a whole lot more), and etc.---part of the reason why Jeff Immelt, one of the staunchest outsourcers has changed his mind, and declared American manufacturing viable, and outsourcing obsolete.

    I don't know if you have a subscription to HBR (I'm borrowing one from an institutional account), but the actual HBR article itself is well-worth reading as well for insight on this topic.

    http://hbr.org/2012/03/the-ceo-of-g...arking-an-american-manufacturing-renewal/ar/1
     
    #25 Northside Storm, Dec 16, 2012
    Last edited: Dec 16, 2012
  6. SamFisher

    SamFisher Member

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    How many of you f-ng idiots posting short term MFG indexes actually read the damned article?

    It had literally nothing remotely to do President Obama, nonpresident Romney, or any of the garbage that is expectorated unto the conservaverse fin which you dwell. Rather it's a longer term exploration of certain economic trends.

    Please remove your idiotvision goggles long enough to read it and learn something. I read it last week- it's well worth your time.
     
    #26 SamFisher, Dec 16, 2012
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