Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.
April 3, 2013 at 1:21 PM
Bertha’s dig at U.S. manufacturing
The arrival of “Bertha,” the giant machine that will bore the tunnel for Highway 99 is a super-sized reminder to take the meme about a renaissance of American manufacturing with plenty of salt. The world’s largest tunneling machine is made in Japan by Hitachi Zosen Corp. We once made such machines here. American machines bored the (second) Cascade Tunnel for the Great Northern Railway, an engineering miracle for its time, which opened in 1929. American companies made all the components for the Hoover Dam. Those days are gone.
The most startling evidence of withered American industrial power is the new San Francisco-Oakland Bay Bridge, whose suspension portion was manufactured in China and merely assembled here. Former Reagan administration trade negotiator Clyde Prestowitz raised pointed questions about the project’s quality and long-term costs — however inexpensive it appeared to decision-makers:
I wonder how the Chinese got these capabilities that Americans apparently no longer have. It was by building their own projects for themselves and developing the capabilities. Twenty years ago China didn’t have companies that could do most of this kind of work. But the Chinese didn’t call the Americans in to build their bridges for them. They invested in developing the capacities necessary to build their own bridges. That’s what we did when we built the Golden Gate. People and corporations learn by doing and if they don’t do they don’t learn and they don’t invest and then they can never do.
Over the past 30 years, America has seen a dramatic decline in manufacturing — not just in employment, but in capability, not just at the low end but at the high. The high-end, highly complex machine-tool industry was once a bulwark of the Midwest, one that experts in the 1980s and 1990s assured us was too sophisticated to move offshore. Yet much of it has. And all the textile mills lost in the Southeast, taking with them hundreds of thousands of jobs? Most were high-tech marvels, not the Dark Satanic Mills of Norma Rae.
We are still the world’s largest arms manufacturer, and special government treatment for companies such as Boeing and Caterpillar helps. But as the February data makes clear, outside of transportation products, factory orders would have risen 0.3 percent after a 1-percent drop in January.
The decline of American manufacturing was not an act of God or even a result of that murky word “globalization.” It has followed bad trade deals and Uncle Sam wearing a “kick me” sign while nations from China to Japan and Germany protected their manufacturing sectors. CEOs may justify their offshoring decisions by pointing to the growth potential in the developing world. But Japan and Germany are developed nations. What does that make us? A post-developed nation? If so, the ride is going to be unpleasant.
And Don’t Miss: Eurozone jobless rate hits record 12 percent | The Guardian
Today’s Econ Haiku:
Did the Dow wake up
To crazy North Korea?
Right on top of things