Manufacturing: Made in America Again

    Manufacturing gets a bum rap when it come to the economy. Too often we hear the lament that we don't make anything in this country anymore. The talking points on news shows include these comments with no clarification and no explanation. We DO make things in America today. In succeeding posts I will identify manufacturers making things here but for now let me give you some numbers.
     The USA is the most productive manufacturer in the world. The US is second only to China in manufacturing output and we manufacture much more sophisticated stuff. In the US we manufactured roughly the same output with 11.5 million works that China produced with 100 million. They produced slightly more but at what cost?
    America has approximately 350,000 manufacturing businesses that make everything from NFL footballs to jetliners, from potato chips to barge hawsers to chemicals to plastics to electric wire. We cannot continue to denigrate a manufacturing sector that is the size of the entire economy of Germany.
    Manufacturing is the lifeblood of our economy. Every manufacturing job multiplies in the economy at least 6:1. Primary industries like mining multiply 10-12:1  If we don't support our manufacturing we will be done.
    Recently Walmart made a commitment to buy American again. They got a lot of crap about that and so did Mike Rowe for doing the voiceover. However, if we don't support the largest retailer in the world in their commitment to return manufacturing to America, we deserve what we get.

Boston Bombing

In the aftermath of the Boston Marathon bombing we should all hug our kids a little tighter and thank God we live in the greatest country in the world. Not only did law enforcement quickly find and capture the perpetrators but the public at large did their part to identify these criminals and help law enforcement run them to ground. We will not be terrorized by these animals. Islamic Jihadists are criminals first and their mad version of their so-called religion is so far from main stream religious faith as to be unrecognizable. There is no true religious faith that believes that anyone not of the faith should be killed. To call this ideology a religion is such an affront to religious people that I am truly surprised that more Muslims don't stand up and loudly proclaim that this is NOT what their faith is about. Sadly, they either do belive that the infidels should be killed or they are so afraid of the radical Islamists that they keep quiet out of fear.
    Now the gun control nuts are wondering why these criminal terrorists didn't have gun permits. After all Massechusets has gun control laws. These guys should have applied for a permit to have the guns they used to shoot it out with the police. I am sure they would have put on the application under "Why do you want/need a gun" "To shoot it out with police". And for the background check they would have entered. "I am a Chechnian Muslim Extremist, please call my mosque's radical immam for a reference"
    We live in the most free nation in the world. As such, people are free to be extreme in their speech, their religion and their personal behavior. However, with freedom comes responsibility and your freedom does not mean you can deny my freedom. Therfore freedom of speech and religion means you have a responsibility to make this a better place, not degenerate to a place that you think it should be.

Marcellus Development

The development of the Marcellus Shale and now Utica Shale underneath has resulted in an unexpected economic benefit for the people in the Philadelphia area.  Schramm Inc of West Chester County south of Philly got it's 15 minutes of fame when it's drilling rig rescued the miners in Chile in 2010. Schramm is in the process of delivering it's first Marcellus Horizontal Drill Rig. This $7.6 Million dollar, 102 foot high, walking rig is being delivered to Ohio as we speak. Schramm hired 50 new employees last year to reach 235 employees making drilling rigs. This is just one of a number of companies hiring employees in the area. A Lorain, OH steel mill is making pipe, countless pipeline companies are laying downstream infrastructure to get the gas from the wellhead to the processors. Compressor stations have to be built to move the gas downstream. Fractionating plants are built to separate the Natural Gas Liquids from the "wet " gas. In addition, there are proposals for "cracker" plants that further process the NGL and produce raw materials for other industries. Fabricators are building metering sleds, pig launchers and receivers, buying valves and pipe and steel. Trucking companies are moving everything from bulldozers and excavators to rigs to pipe to housing. Water trucks are hauling fresh water for fracking and produced water for disposal. Chemical companies are producing various chemicals for fracking and sand producers are supplying sand for fracking. Numerous yards are springing up for transferring sand from railcars to trucks, to store pipeline equipment and to provide housing for the employees as they move from site to site.
   The basic drilling operation requires crews for construction. Site clearing and right of way clearing, pad construction which usually requires lining pad with plastic to contain any spill, covering liner with felt to prevent rock base from compromising the liner and building access roads. Once the rig arrives it consists of 6-8 truckloads of equipment including power, control room and the physical rig itself with a 102 foot boom and the equipment necessary to lift 250 tons of pipe and drill more than 15,000 feet deep. Before the drill rig is set and the BOP (Blow Out Preventer) stack is in place the "Rat Hole" crew must drill a large bore pipe down below the water table and cement in place to prevent any contamination of the local water table. Once the top casing is set and cemented the drill rig can move on site and commense drilling.
     As you might imagine, all this requires billions of dollars of investment. Drilling leases on the property mineral rights, capital equipment, supplies and payroll all have to be paid before before the first piece of drill pipe begins to turn. The average well takes about 30 days to finish drilling and another 30 days to frack. Drilling crews, cementing crews and fracking crews all work 24/7 to finish the process which requires relief crews at every level.
    This is no small impact on our region. We must do everything we can do to support this business and the resulting jobs it creates.
   

Manufacturing: Making Stuff

Manufacturing in America is all about making stuff. We make stuff all the time and the more we make the better our economy is, the better our lifestyle is, the more jobs there are and the easier it is to find a job.
    In this new economy we are making things smarter, smaller, stronger and cleaner. Two thirds of all the research and development money is spent by manufacturing companies.

Boston Consulting Group has recently published an article about the resurgence of manufacturing in America. Rising wages and currency rates, among other factors, have dramatically narrowed the gap between manufacturing costs in China and the United States, with the result that several US companies are now bringing manufacturing jobs home to America. In The US Manufacturing Renaissance: How Shifting Global Economics Are Creating an American Comeback, authors Harold L. Sirkin, Justin Rose, and Michael Zinser provide historical perspective on why the death of US manufacturing has often been predicted—but failed each time. And why the present will be no different.

The impact of the changing math of manufacturing will be felt the most in seven industry sectors that our analysis predicted would reach a tipping point in around five years, when the rising costs of producing in China will make it more economical to shift the manufacture of goods consumed in the U.S. to the U.S. These sectors are;
1) Computers and Electronics computers, wireless phones, and televisions
2) Appliances and Electrical Equipment. Small appliances such as fans, vacuum cleaners, and microwave ovens and big appliances like refrigerators, freezers, and dishwashers
3) Machinery. Leading Chinese exports in this broad category include air conditioners, heaters, pumping equipment, office machinery, power tools, optical products, photocopiers, and farm equipment.
4) Furniture
5) Fabricated Metals plumbing fixtures, hardware, hand tools, cutlery, and pots and pans
6) Plastics and Rubber   tires, floor coverings, and bottles
7) Transportation Goods car and truck components, motorbikes, bicycles, and aircraft parts.

Our manufacturing sector will continue to change and adapt to the new world order. We will continue to be on the leading edge of innovation, productivity advances, automation and new products.

Manufacturing: Made in America

Why the optimism toward a manufacturing comeback? Here are five reasons:
1) Cheap U.S. natural gas and other increased energy production are helping to power U.S. factories more efficiently, with gas especially providing inexpensive raw materials for U.S. manufacturers of plastics, tires, certain pharmaceuticals and other petrochemical products.
2) Higher wages in China and other foreign export markets are making outsourcing less profitable to U.S. firms.
3) Congressional approval in 2011 of trade agreements with South Korea, Colombia and Panama and other agreements being negotiated now with Asia and Europe are promising to open more foreign markets to U.S. products.
4) Major technology advances have steadily boosted factory efficiency and worker productivity.
5) High U.S. unemployment is relieving pressure on factory owners to increase wages, helping to make U.S. labor costs more globally competitive.
    Yet, while many industries are doing more with fewer workers, more than half a million new manufacturing jobs have been added in just the past few years. Now we just need to get our educational system in line with the manufacturing jobs being created.
    U.S. manufacturing companies have as many as 600,000 jobs that they cannot find workers with the proper skills to fill, according to a survey by Deloitte and the Manufacturing Institute.
The survey found 5 percent of current manufacturing jobs are unfilled due to lack of qualified candidates, 67 percent of manufacturers have a moderate to severe shortage of qualified workers, and 56 percent expect the shortage to increase in the next three to five years.
   "These unfilled jobs are mainly in the skilled production category — positions such as machinists, operators, craft workers, distributors and technicians," said Emily DeRocco, president of the Manufacturing Institute, part of the National Association of Manufacturers in Washington.
"Unfortunately, these jobs require the most training and are traditionally among the hardest manufacturing jobs to find existing talent to fill."
    Getting the workforce educated in key skills will be the catalyst that we need to really get manufacturing growing at a rate that we need to grow and sustain the economy.

Manufacturing Redux III

The United States produces 18% of what the entire world consumes. We are a manufacturing powerhouse in spite of what you hear on the news or read in the papers (if you read papers anymore).
     Many believe labor costs are a large part of the total cost of production of most manufacturing industries and that the wage differential is too large for virtually any manufacturing to be done competitively in the United States as opposed to China, Vietnam, and other parts of developing Asia. This is in fact not the case. Consider that countries like Germany, Switzerland, Sweden, and Japan have wage and benefit costs far higher than those in the United States yet they maintain manufacturing sectors twice as large as a percent of GDP as the United States.
    In industries like semiconductors, machine tools, specialty machinery, pharmaceuticals, autos, nano technology, optical fiber, and many many more labor cost is a small part of the total cost and can easily be offset by economies of scale, transport cost, superior quality, special design, superior customer service, and lower risk and capital costs.
    Most of the value in the Apple iPad for example is in parts that are not made in China. Only about $7 worth of assembly occurs in China.
    We must overcome the notion that manufacturing cannot be done profitably in this country. Many people see a manufacturing career or starting a manufacturing business as a dead end as all manufacturing will ultimately be done in low wage countries. That could not be further from the truth or reality. We do manufacture here and there are thousands if not millions of good jobs in the manufacturing sector. Skills are critical, technology is critical, capital is critical to the manufacturing sector. Manufacturing jobs will not be replaced like agricultural jobs were replaced in the last century. Manufacturing jobs are here and will continue to be some of the best paying jobs in the economy.
     We still make paint and cement blocks and motorcycles. We still make mining equipment and aluminum. We make the silicon for solar panels and the copper for wire. We make shingles and lumber, wallboard (from recycled stack gases at power plants) and furniture. We make missles, tanks and submarines. We make bombs and rockets. We make wooden pallets to ship stuff on. We make ice cream and sour cream. We make gasoline and kerosene, diesel fuel and cooking fuel and charcoal.
We make medical devices and semiconductors. We make  actuators (motors for moving or controlling a mechanism or system); aviation restraints; fire hose nozzles; friction modifiers (additives used in lubricants to reduce the surface friction of lubricated parts); industrial band saw blades; medical cabinets; surgical face mask filters; and vinyl siding. We make air filters; airless paint sprayers; cutting tools; hard hats; lipstick; microwave containers; security access devices; and solar window coverings. We make compression latches; dental chairs; drilling rigs; electric motors; elevators; pneumatic valves and spectrophotometers.
     Look around you and the next time someone says we don't make anything in America anymore you can politely contradict them.

Manufacturing Redux II

    Manufacturing is important to this country. It is the engine that builds wealth and creates prosperity. It is the process of taking raw materials and adding value to them through intelligence, technology and capital to create something of more value thus creating wealth. Farmers are manufacturers as they take raw materials, land, equipment, seed and fertilizer and create a crop to sell. Food companies manufacture the food we eat. Either they grow it, or process it or manufacture a product for sale from it.
    Too often we look at manufacturing as a big smokestack on the edge of town. Manufacturers are everywhere we look and are necessary for the health and wealth of our society. Whether they are manufacturing chocolate candy or needlepoint kits or toys or hot salsa, the people who take raw materials and turn them into products are to be commended for driving our economy. Since the industrial revolution we have come a long way from the farm.
    We make glue and hockey pucks, tires and potato chips. We make beer and wine and whiskey. We make cars and trucks and buses. We make shoe and boots, locks and toilet seats. We make plastic parts, metal parts, automotive parts and toy parts. We make guns and dog food, cookware and flashlights and shower heads. We make crayons and chain saws, vacuum cleaners and coffeemakers, stoves and refrigerators, lawn mowers and paint brushes, Airstream trailers and Gibson guitars. We make flags and wooden bats and NFL footballs. We make Steinway pianos and Sharpie markers.
    Look for and support the manufacturers in your community. In addition, don't forget that all the money in a foreign made item does not necessarily go to the country of origin. A $70 pair of Nike sneakers has as much as $50 in domestic costs. Costs for transportation, distribution and sales are employing people here in this country. Truck drivers, warehouse personel, retail sales people owe their jobs to the consumer no matter where the product originated.
    Manufacturing is coming back. Energy prices are moderating. Our economy is coming back to life. We have much to be thankful for.