EP5.5: Can Manufacturing Bring Jobs Back? [A Special Series On What Manufacturing Can Do For You]

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It all starred with this Twitter scribble from 2019…

Here’s a clean look at that graphic from the video. The percentages are illustrative, but echo the wage info below:

Today, it’s more relevant than ever. To manufacture a TV, phone, or router in the US—at a price consumers are willing and able to pay—companies would need to automate. Especially, given the differential in pay for factory workers. Here’s a comparison from Apollo of top manufacturing nations:

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Some industries, like textiles, pay workers so little that competing with them is inconceivable, even with automation:

The bottom line is scaled American manufacturing would create a fraction of the jobs we once had. And NOT for skilled blue collar laborers who are cheering this on, but high-end engineers and specialists with advanced degrees. The rest will be done by robots. 

Even China is no longer the cheap labor play of yesteryear. It’s paying workers more, automating, and moving low value manufacturing to even cheaper places like Vietnam or Bangladesh. 

Studies show that manufacturing will not bring jobs back. Even countries with large manufacturing sectors and trade surpluses have seen the share of employment from manufacturing decline. 

Here’s what the US chart looks like. Remember this is absolute numbers. It would be a much more dramatic drop as a share of the population, which increased a lot in that time:

You can see the huge drop after Bill Clinton signed NAFTA and other free trade agreements. Offshoring kicked in around 2000. A poorly thought out bleed of jobs that decimated entire chunks of America. Look at the wage differential with Latin America. (It was an even bigger gap then). What did we think was going to happen?

We really need to re-evaluate Bill Clinton’s legacy.

Singapore is a great case study on what we can expect. It successfully brought manufacturing back with innovative semiconductor giants like TSMC, but only as a share of GDP. The manufacturing share of employment kept shrinking. 

In 2011’s Econovation, I wrote about some successes and failures of reshoring manufacturing. These challenges persist. Craftsman tools recently tried and failed to re-shore. It faced issues with automation, equipment delays, the pandemic, foreign supply chains, persistent defects, and more. And famously, Tim Cook explained that the difficulties of bringing manufacturing back to the US go way beyond cost.

Sometimes, we forget that manufacturing *IS* automation — and automation is the future. Its sole purpose is to eliminate friction…that’s us. Eventually machines outperform us meatsacks, so we need fewer of us to produce bigger volumes of everything. And the rest can move on to teaching yoga or commemorating cheese pulls on Instagram. 

Here’s an excerpt on friction from “Why Even Musk Can’t Trump the Inevitable“

Automation is inevitable, regardless of industry or country. The best we can do is slow its roll. Maybe. But others, including China, will keep pushing ahead. So should we.

Ezra Klein’s and Derek Thompson’s book Abundance criticized Democrats for crippling good programs by trying to solve every societal ill at once. As a result, billions were wasted on programs that built nothing, like EV chargers and rural broadband. Let’s not do the same with manufacturing. If we want to bring production back for national security and sovereignty, let’s use every tool at our disposal. Worry about GDP and jobs when and if they become a separate problem. 

The good news is building factories and servicing workers in physical spaces almost always creates an ecosystem of jobs. Maintenance, shipping, distribution, warehousing, restaurants, housing, etc. I think it’s a big enough halo effect to make a difference. How big, we can’t worry about now. 

Sneak PeEk At Episode 5.6

On the next episode, I’ll do my best to explain the three pillars of Trump’s Master Plan and how well they stand up to reason. 

Here’s teaser #1: everything Trump is doing points us towards a Great Reset of America’s position in the global economy.

Teaser #2: It almost doesn’t matter what Trump does, we’re headed there regardless.

Stay tuned. Tell a friend.

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