th<\/sup> consecutive month.\u00a0 Norbert J. Orwe, CPSM, chair of the Manufacturing Business Survey Committee said, \u201cThe manufacturing sector grew at a faster rate in January as the PMI registered 60.8 percent, which is its highest level since May 2004 when the index registered 61.4 percent\u2026New orders and production continue to be strong, and employment rose above 60 percent for the first time since May 2004.\u201d\u00a0 This wasn\u2019t just an upturn in a few industries \u2013 14 of the 18 manufacturing industries reported growth in the PMI in January.<\/p>\nThe PMI is the Purchasing Management Index, based on data compiled from purchasing and supply executives nationwide.\u00a0 A PMI reading above 50% indicates that the manufacturing economy is expanding and below 50% indicates that it is declining.\u00a0 At the very worst of the Great Recession, it was 32.5% in December of 2008.\u00a0 Lakshman Achuthan, managing director of Economic Cycle Research Institute said, \u201cGross domestic product has recovered about 70% of its pre-recession level.\u201d<\/p>\n
While the national unemployment rate finally dropped to 9.0% in January from 9.4% in December, many experts realize that this is because thousands of men and women dropped off the unemployment rolls when the last of the extensions of up to 99 months ended in December. The U6 unemployment rate that takes into account the people that have lost their unemployment benefits or taken part-time jobs while seeking full-time employment is 16.1%.\u00a0 This reflects the growing difficulty of increasing jobs of any type in today\u2019s competitive global economy.<\/p>\n
Gregory Tassey, Sr. Economist at the National Institute of Standards and Technology commented in a paper titled Rationales and Mechanisms for Revitalizing U. S. Manufacturing R&D Strategies, \u201cFor the first seven recessions after World War II, the relatively closed status of the U. S. economy meant that average employment recovery was swift and substantial (about four months to positive employment levels relative to the recession trough).\u00a0 In the late 1980s, however, the growing global competition began to promote greater investment in addition to accelerated outsourcing.\u00a0 The result was the 19 months elapsed before a positive employment level was attained.\u00a0 This significant slowing of the cyclical rebound in employment was dwarfed by the extremely slow recovery in employment from the 2000-2001 recession, which required 30 months to reach a positive employment level relative to the recession trough.\u201d<\/p>\n
Why have the last two recessions resulted in \u201cjobless recoveries?\u201d\u00a0 What is keeping unemployment so high now?\u00a0 One of the main reasons is the loss of manufacturing jobs.\u00a0 Too many manufacturers are sourcing all or most of their manufacturing offshore.\u00a0 An upturn in their business doesn\u2019t mean more manufacturing jobs for Americans if they aren\u2019t producing or buying everything for their products in the United States.\u00a0 Since 2001, we have lost 63% of the U. S. textile industry and 74% of the U. S. printed circuit board industry.\u00a0 We have lost 47% of communication equipment jobs and 43% of motor vehicle and parts industry jobs.<\/p>\n
Since manufacturing jobs create three to four other jobs, the loss of each manufacturing job causes the loss of three to four other jobs.\u00a0 Our nationwide loss of jobs in all sectors won\u2019t reverse until we stop the hemorrhaging of manufacturing jobs out of the United States.<\/p>\n
In addition, manufacturers are doing more with less for three main reasons.\u00a0 First, the United States ranks highest in productivity as measured by Gross Domestic Product per employed person at 97.1 compared to China\u2019s rate of 10.2 and India\u2019s rate of 7.5.\u00a0 James Vitak, a spokesman for specialty chemical maker Ashland Inc. said,\u00a0 \u201cYou can add more capability, but it doesn\u2019t mean you necessarily have to hire hundreds of people.\u201d<\/p>\n
Second, an increasing number of manufacturers are adopting \u201clean manufacturing\u201d based on the principle of continual improvement (Kaizen) of the Toyota Production System.\u00a0 The \u201clean manufacturing process was developed to produce smaller batch sizes and just-in-time delivery; that is, producing only necessary units in necessary quantities at precisely the right time.\u00a0 This results in reducing inventory, increasing productivity, and significantly reducing costs.\u00a0 It has evolved into a system-wide management process that continually seeks to increase profits by stripping out wasted time, material, and manpower from the manufacturing process.\u00a0 Thus, fewer people are needed to produce products.\u00a0 Manufacturers aren\u2019t building up inventory to fill orders \u2013 they are ordering materials, components, parts, and assemblies as needed to fill orders as they receive them from their customers.<\/p>\n
Third, existing salaried employees have been required to work harder and longer because manufacturers are fearful of hiring new people until they have more confidence that the upturn in business will continue, and we won\u2019t have a double dip recession.\u00a0 Manufacturers can get away with doing this because for every person employed, there are a hundred people willing to fill the job.<\/p>\n
The fear of increased taxes with the expiration of the Bush tax cuts, the cost of changes due to the Health Care Act of 2010, and the possibility of a \u201ccap and trade\u201d bill added to the uncertainty about the economy for all businesses last year.\u00a0 Passage of the bill that maintained the current tax rates without an increase just before the end of the year reduced fears somewhat, but the other two issues are still causing uncertainty about the future.<\/p>\n
The number of manufacturing jobs is a better indicator of what\u2019s really happening in the economy than the stock market.\u00a0 Many of the companies on the Dow and Standard & Poor indexes of the stock exchange are no longer American-owned companies.\u00a0 They are multinational globalist companies that don\u2019t care about providing jobs for Americans.\u00a0 They care about their bottom line of making as big a profit as possible.\u00a0 These companies may be doing well based on their worldwide business and could post profits and have their stock prices go up without creating jobs for American workers and benefiting the U. S. economy as a whole.<\/p>\n
I keep hearing that we won\u2019t create enough jobs to lower the unemployment rate until consumer confidence is restored and consumer spending increases.\u00a0 I disagree.\u00a0 Consumer spending doesn\u2019t create American jobs when most of the goods consumers buy are now made in offshore.\u00a0 We won\u2019t be able to create the jobs we need to lower the unemployment rate until business owners and consumers start \u201cconnecting the dots.\u201d\u00a0 We don\u2019t create American jobs when companies outsource their manufacturing to other countries and consumers buy products made offshore.\u00a0 To create jobs in America, we need to manufacture in America and then buy products made in America.<\/p>\n","protected":false},"excerpt":{"rendered":"
According to the National Bureau of Economic Research, and independent group of economists, the Great Recession ended in June 2009.\u00a0 It was the longest and deepest downturn for the U. S. economy since the Great Depression.\u00a0 Some 20 months later, the average American would be inclined to dispute this opinion based on the lack of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,3],"tags":[],"class_list":["post-141","post","type-post","status-publish","format-standard","hentry","category-general","category-outsourcing"],"_links":{"self":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/141","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/comments?post=141"}],"version-history":[{"count":2,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/141\/revisions"}],"predecessor-version":[{"id":143,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/141\/revisions\/143"}],"wp:attachment":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/media?parent=141"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/categories?post=141"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/tags?post=141"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}