Along with new small manufacturers who would normally be creating jobs in US but now are starting out from the get-go as offshore operations. It would be a factor in this cycle that wasn't there in previous cycles.
I'm not saying it explains it all. But it seems like it might explain some,.......
My second question had to do with your suggestion that most of the layoffs in manufacturing during the last 6 years had to do with increases in productivity in manufacturing. I thought you didn't buy that there was big increases in productivity in manufacturing outside computers over the last 6 years?....
Michael Pollak ----------
This is entirely from personal experience working on equipment. So there are no helpful numbers.
But, both off shoring and increased manufacturing productivity can be linked together. Cheaper labor and manufacturing are the obvious capital benefit to off shoring. But another trend in manufacturing itself is also added---so Doug's article accounted for this too. The basic trend in manufacturing is to move to modular sections that are designed as single units composed of multiple functional parts. This increases the complexity of the manufacturing design and fabrication, but decreases the assembly and handling time, i.e. the skill and time needed for installation. In addition just as parts can be off shored, modular units can be offshored and delivered as a finished packaged units. In the case of re-designed modular systems productivity is magnified over time: once in the reduction of production cost via re-design and once in the off-shore transfer.
Like what? The best example I can think of at the moment is a drive component in an electric wheelchair, which is made in China as a whole unit. The older model is composed of an electro-mechanical brake on one end, the electric motor in between, and a gearbox on the other end. Each of these require moderately high precision machining tolerances, and high quality assembly. The complete unit retails at about 1500 dollars. However, the so-called unit is composed of separate sub-units that require entirely different manufacturing processes. The brake parts, gearbox and motor housings are metal castings and stampings that are then machined. The motor armature and brake coil are precision windings around metal cores. The mechanical parts of the brake and the gears themselves are high precision machined parts from specialized steel alloys. So that means that the Chinese have developed industrial clusters that can coordinate and produce the finished unit from several different manufacturing plants.
Now, an increase in productivity can be had by re-designing this drive unit as a more integrated system. The newer units, or the solution has been to change from a motor design that had a fixed permeant magnet that surrounded a moving armature, to a field coil system surrounding a moving magnet. Then integrated into this field coil system are electronic circuits that control voltage to the coils. This system eliminates the need for both gears and brakes, since the strength of the field coils and the sequence from coil to coil can be modulated by the electronic circuit to speed up or slow down the turning magnet to any desired speed.
Whether you understand any of this or not doesn't matter. I only partly understand it. For example I can't figure out why it is physically easier to apply and vary torque in the new design. I suspect the reason is that moving magnet is composed of shaft attached to a large disk flywheel with a cylindrical plate as the perimeter. The diameter of the disk is about ten inches. The torque on the shaft is increased by the radius of the disk, like a lever. Therefore smaller changes in electric field strength are amplified by the mechanical advantage of the flywheel shaft assembly.
The bottom line to this motor design change is a tremendous reduction in the complexity of manufacturing this unit. It has only one moving part, the shaft-flywheel. It needs to be noted that the basic design idea is not new and not an innovation. Fixed field coil motors have been around as long as their inverse, permeant magnet types. The difference in this case has to do with the ability of the electronics to supply the individual coils in different sequences and differing electric voltages.
Translated into economic terms this is interpreted as an increase in productivity. The increase is seen in no longer requiring numerous machined gearbox parts and precision electro-mechanical brake assemblies. The cost should have gone down, way down, but of course it has gone up---at least at the retail end of the production system, since this is a `new', `technological', `improvement'. Hence the so-called `productivity' has been magnified at both ends. At the manufacturing end it now costs less to make in materials and labor, and at the delivery end, you can charge more for the `innovation.'
BTW, high end power wheelchairs now run between ten and fifteen thousand dollars. Medicare cost ceilings are around four or five thousand. So the manufacturers have responded to this ceiling by producing a very cheap power chairs that are entirely off-shore productions. These literally fall apart in a matter of months of regular use. No problem. We swap out whole assemblies on warranty and when the warranty gives out, we charge the earth for replacement parts.
But these options are fast disappearing since Medicaid and Medicare encouraged transfers of their client base to HMO's. First off the HMO's cherry pick the clients by rejecting certain categories, and HMO's use contract pricing with preferred vendors. These preferred vendors can be anybody (many fly by night) who will promise to provide service for some fixed rate per client. Whether those services are adequate or not is not monitored. Of course complaints to HMO's are handled by offshore customer service centers----lots of luck.
Chuck Grimes