> Marvin Gandall wrote:
>
>> how the record $200 billion US trade deficit with China is not a
>> reflection of the decline of US industrial capitalism - a fiction
>> shared by demagogic US politicians and parts of the left - but of its
>> resurgence since the opening of the Chinese labour market in the
>> past quarter century.
>
> What resurgence? The US machine-tools industry is in a coma, GM is
> spitting blood, Ford can't even keep up with Hyundai, let alone Honda, and
> Boeing continues to invest in guns while Airbus powers up with the A380.
>
>> Plants in Taiwan, Hong Kong and the former "Asian tigers" as well as to a
>> lesser extent, in Japan and the West, have increasingly becoming parts
>> suppliers for assembly in China.
>
> The rest of East Asia is also buying lots of stuff from China, though. The
> Chinese developmental state has been very, very savvy about balancing
> imports with domestic production.
>
>> migrant laborers, who earn about 75 cents an hour. But so far, Chinese
>> companies in these industries have generally been unable to climb from
>> basic manufacturing to design work and beyond.
>
> They're climbing alright. China produced $4 billion in machine-tools in
> 2004, and the US produced $2.8 billion. (Data:
---------------------------------------------
I think the unexpected accessibility to China's massive pool of cheap labour
and, latterly, the growth of Chinese demand has lifted the US-led world
capitalist system out of the doldrums it was experiencing in the low
growth/high inflation 70s - at least for now. The revolution in technology
and communications in the past quarter-century has been the other major
factor contributing to improved productivity and renewed growth and
profitability. Obviously, development is always uneven, and some traditional
sectors and companies are not able to compete in the changed environment. As
you note, China is not a victim of imperialist exploitation but a willing
participant in the capitalist global economy which is increasingly
developing its home market and producing higher-quality goods to compete
with the OECD countries abroad. All of these developments aren't
inconsistent with each other.
Here is another look at the general "resurgence" of US manufacturing as a result of technological change and the new global labour market:
* * *
Parts of U.S. Manufacturing Thrive By KRIS MAHER Staff Reporter of THE WALL STREET JOURNAL February 9, 2006; Page A2
Not all of U.S. manufacturing is going the way of the Detroit auto makers. In fact, a good chunk of the industry is thriving.
Heavy-equipment makers, factory automation producers and steel companies have thick order books and busy U.S. factories. So do makers of packaging, cement, and bricks. Profitability isn't where many would like it to be at this point in the business cycle, but many manufacturers have boosted output through a combination of process improvements such as automation, outsourcing of basic parts and customers' desire for quick deliveries in a time of lean inventories.
Many industries face heavy legacy costs associated with pensions and health care similar to those burdening the domestic car makers, but sectors such as tires, steel, and textiles have been grappling with that for years, making changes that are only now starting to sweep Detroit. Costs for energy and raw materials are rising, but many manufacturers are passing them on to their customers, especially other manufacturers.
One measure of the industry's health is manufacturing output, which has increased steadily for the past several years, surpassing the peak of the last boom, which was reached in June 2000. Overall, manufacturing output is up 12% from 2002, according to the Federal Reserve.
Some sectors are clearly doing better than others. Business equipment is up 26% from 2002, information-processing equipment is up 47%, and defense and space equipment is up about 31%. "Manufacturing is on the upswing again, despite the woes in the Detroit-based auto industry," says Diane Swonk, chief economist of Mesirow Financial in Chicago.
Ms. Swonk said even within the auto sector, there is strength -- it just isn't in the U.S. car giants. Rather, car makers such as Toyota Motor Corp. of Japan and Hyundai Motor Co. of South Korea are investing in U.S. plants and helping to consolidate and reinforce U.S. auto suppliers that have faced declining demand from Detroit.
In recent years, production has been weaker in nondurable goods, including apparel and leather, which in December even enjoyed output gains of 1.9%.
Manufacturing has continued to produce more, while using fewer workers, thanks largely to automation and other process improvements. "Not only does the equipment allow you to be more efficient, but it gives you a quality edge," says Mike Nowak, president and chief executive of Coating Excellence International LLC, a Wrightstown, Wis., packaging manufacturer. The company has been able to expand since it was founded in 1997 by investing in technology, and Mr. Nowak said he expects sales, which were $120 million in 2005, to increase about 35% this year.
One machine helped the company win back business from a South Korean competitor to produce sugar pouches. Another has let it compete with a Chinese company that still stitches the string across the tops of fertilizer bags by hand. "We pay a good wage but use technology to lower the labor costs per unit produced." Mr. Nowak says.
Such automation has even led to greater demand for skilled machine-tool operators and other specialty trained workers among some companies, even as General Motors Corp. and Ford Motor Co. look for ways to cut their work forces.
Thomas J. Duesterberg, president and chief executive of the Manufacturers Alliance, says many U.S. manufacturers have survived by shifting low-margin products overseas, while keeping production of their most advanced products in the U.S., often in scaled-down but highly productive production facilities. Mr. Duesterberg said that most other manufacturers have grappled with the worst of their health-care problems by shifting more of the cost to workers or cutting back entirely.
Many customers of Nordson Corp. in Westlake, Ohio, are other U.S. companies with overseas production facilities that purchase its precision-dispensing equipment to coat circuit boards, or apply adhesives to cereal boxes. Edward Campbell, chairman and chief executive, says Nordson's business in the Asia-Pacific region rose by 34% in the past four years. During a recent 12-week period orders were up 45% over a year ago.
"There's a recognition by U.S. manufacturers that they can make significant progress if they source components from low-cost regions," says Mr. Campbell. "We're able to support those moves."