From SCDigest's On-Target E-Magazine
Jan. 17, 2013
Supply Chain News: Despite Optimism Around Manufacturing Rebound, US Still Losing Share to Imports Even in Advanced Manufacturing Industries
Research from US Business and Industry Council Finds Imports in 106 Advanced Sectors Rose 1.33% in 2011, Leading to US Output Loss of $89 Billion
SCDigest Editorial Staff
Over the last couple of years, there has been much talk about a US manufacturing renaissance, based on several studies showing the US coming to near cost parity with China soon (albeit in the most expensive areas in China versus the lowest cost regions of the US), and a few high profile announcements by companies such as NCR, Caterpillar, Whirlpool, Apple and others that they would either move some production back to the US, or keep domestic production after considering offshore alternatives (See New Study from Boston Consulting Group Says 50% of Large US Manufacturers will or Are Considering Returning at Least Some Production Back to the US.)
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"Import penetration that is still rising indicates that U.S.-based industry is losing, not gaining ground relative to foreign-based competitors.," Tonelson says. |
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Still, as JC Penney supply chain executive John Singleton said during a panel discussion at last year's CSCMP conference in Atlanta, "it seems like the reshoring is coming back in drips and drabs, and while the offshoring happened very fast."
At a major conference on US manufacturing held by MIT in May, it was clear most of the speakers believed that the future for US manufacturing would be of an "advanced" variety - meaning both more complex products (machinery, automotive, aerospace, robotics, etc.) and/or advanced production techniques heavy on automation.
And while all that may be true, some modestly contrary news last week out of the US Business and Industry Council, a research and education group focused on US competiveness and business interests.
Alan Tonelson, a research fellow at the organization, released report that showed that across 106 sectors defined as advanced products, imports share of the total rose in 2011, and it appears will be shown to have risen yet again in 2012. The research was based on combining data from a number of government sources, such as manufacturing output numbers and import data.
"The analysis strongly indicates that, contrary to widespread optimism about an American industrial renaissance, domestic manufacturing's highest value sectors keep falling behind foreign-based rivals," Tonelson says.
Imports share of the 106 sectors rose to 37.57% in 2011, up from 37.07% in 2010. That may not look like much, but in fact it represents and increase of 1.33% year over year, and resulted in lost US manufacturing output of about $89 billion versus if the percentage had just stayed flat.
In 1997,the share of imports in these same sectors was just 24.5%.
Tonelson says that this output decrease dwarfs by nearly 36.34% the $56.80 billion total increase in exports recorded by these industries in 2011, viewed by as a banner year for U.S. overseas sales.
The analysis also showed that the growing foreign gains in high value U.S. manufacturing markets also contributed to absolute reductions in US production levels - and therefore almost certainly jobs - in 11 individual advanced industries that the nation relies on heavily for innovation and high wage employment. These include printed circuits, household refrigerators and freezers, and electronic resistors. Higher import penetration rates also held output growth below 2% in sectors such broadcast and wireless communications equipment, electro-medical devices, and industrial gases.
From 1997 through 2011, only 8 of the 106 industries examined for each of these years
gained in share of the U.S. market against import competition: semiconductor machinery; saw mill
products; paperboard mill products; motor vehicle stamping operations; transformer, inductor, and coil manufacturing; electron tubes; computer storage devices; and heavy duty trucks and chassis.
(Manufacturing Article Continued Below)
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"Import penetration that is still rising indicates that U.S.-based industry is losing, not gaining ground relative to foreign-based competitors.," Tonelson says. "These results are all the more troubling because these USBIC findings focus not on labor-intensive industries that largely vanished from American shores decades ago. Instead, these findings focus on the capital- and technology-intensive sectors rightly seen by nearly all U.S. leaders and commentators as keys to maintaining national prosperity, technological leadership, and national security."