As we and many others have reported, the clamor to rebuild US manufacturing sectors is growing, as it is in many other countries across the globe. Much of that sentiment relates to persistently high levels of joblessness, and the belief that the decline in US manufacturing is a chief driver of high unemployment.
Not that we need a lot of proof for the belief, but nonetheless, it is interesting - if a bit depressing - to see the sad but true tail illustrated in the graphic below, from a recent article by consultants at Booz & Company, which we summarized this week. (See Turning the US Manufacturing Inflection Point in the Right Direction.)
As can be seen, until about 2000, while both direct and indirect manufacturing employment was trending down a bit, the pace of decline, largely attributable to automation and productivity gains, was very modest (average of about. -5% and -.2%, respectively).
But things have changed dramatically in the past decade. Now the trend line is averaging a decline of some 4.3% in direct production workers, and 3.4% in indirect workers.
The direct numbers took a sharp dive, as can be seen, from 2000 to 2005 - the period when China entered the WTO, and global offshoring started in earnest. Obviously the recession starting in 2008 also had a big impact, especially on direct production jobs.
On a positive note, Booz & Company believes the trend can be reversed, as labor costs become less of a determinant of where products are made in many sectors - but only if the US government and business make smart decisions.
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