After dominating the globe for over 60 years as the world\u2019s largest, most productive, and technologically advanced in the world, America\u2019s manufacturing sector is in a decline in nearly all industries. America\u2019s lead in a number of industries vanished years ago, and nearly all industries are facing potentially dangerous erosion.<\/p>\n
No single indicator represents manufacturing capabilities or trends.\u00a0 But several key indicators, when taken together, provide strong evidence that America\u2019s manufacturing has greatly weakened in the last decade.\u00a0 These are:\u00a0 industrial output (as measured by share of Gross Domestic Product), industrial capacity, employment, number of manufacturers, balance of trade in goods, and import penetration rate.<\/p>\n
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The trend in employment and number of manufacturers is dramatic \u2013 5.5 million manufacturing jobs and over 50,000 manufacturing companies gone since 2000.\u00a0 \u00a0The balance of trade in goods has grown steadily since 1979, growing from a deficit of $25.5 billion in 1980 to $645.8 billion in 2010, which was down from a high of $835.7 billion in 2006 (Balance of Payment basis.)\u00a0\u00a0 Manufacturing\u2019s share of the Gross Domestic Products had taken a serious downward trend \u2013 dropping from a high of 28% in 1965 to 11% in 2010.<\/p>\n
What about capacity and important penetration?\u00a0 They are tied together because the capacity of American companies to manufacture products is impacted by the import penetration of the products of other countries in the U. S. market.\u00a0\u00a0 \u00a0There has been an across-the-board increase in the import penetration rate for 114 high-tech and capital-intensive manufacturing sectors – from 21.4% of domestic consumption to 34.3 percent between 1997 and 2007.<\/p>\n
Let\u2019s take a look at a few industries.\u00a0 For example, if you were to go to a store to buy a set of glasses, you would have trouble finding a set made in the U. S.\u00a0 That\u2019s because America\u2019s oldest industry, glassware, is down to two companies that manufacture in the United States: \u00a0Libbey Glass Inc. of Toledo, Ohio, and Anchor Hocking of Lancaster, Ohio.\u00a0 In 2009, nearly every major domestic competitor was either out of business, in Chapter 11, or up for sale.\u00a0 Corning Consumer Products and Oneida had already changed to outsourcing offshore instead of manufacturing their own product lines.\u00a0 Beginning in late 2003, Oneida closed five factories in the U. S., Mexico, Italy and China.<\/p>\n
Libbey Glass<\/a> CEO John Meier blames \u201cunfair trade\u201d and the fact that the U.S. government is allowing foreign governments \u201cto get away with subsidizing their producers and not enforcing their laws . . .\u201d The U.S. glass industry\u00a0has been swamped by imports. \u00a0In 1996, imports from China and Turkey accounted for 12 percent of the U.S. market, but by 2006, imports were up to 53 percent of the U. S. market.<\/p>\n According to the U.S. International Trade Commission\u00a0(ITC), another U.S. industry has virtually disappeared \u2013 the industry that makes travel goods<\/a> out of textiles. \u00a0In 2006, the total U.S. market for travel goods with an outer surface of textile materials was estimated at approximately $3 billion wholesale. \u00a0The nine remaining U. S. firms identified by the ITC in this industry reported totaled revenues of $37 million in 2006. \u00a0Thus, U.S. producers commanded only a one percent share of the U.S. market. \u00a0This primarily reflected a decline in shipments to commercial markets. These nine companies said that at least 70 percent of their business goes to the U.S. military and government, but this market represents less than five percent of domestic production of such goods. \u00a0China has become the preferred source for offshore production, since the removal of U.S. import quotas on textile travel goods in 2002, because of its low-cost labor, fabric, and accessories. \u00a0In 2006, China accounted for 80 to 90 percent of imports of textile travel goods to the United States.<\/p>\n This same International Trade Commission\u00a0report stated that the United States has completely lost the capability to make high-tech warm and water-resistant clothing for the commercial market often called performance outerwear. \u00a0Skiers, hikers, mountain climbers, bikers, firemen, policemen, military personnel, and those in hazardous environments use performance outerwear. The ITC identified 13 companies making high-tech jackets and pants, but six said they produce strictly for the U.S. government and military. \u00a0Only two said they produce solely for the commercial market. \u00a0Conflicting estimates for the U. S industry share of the commercial market range from less than five percent to 1.3 percent of the U.S. commercial market for performance outerwear. \u00a0The report noted that most companies in this industry had moved production offshore\u00a0primarily to Asia, namely China and Vietnam, where the technology used to produce such garments, such as seam sealing and laser cutting, is prevalent.<\/p>\n The air conditioning industry is facing the same challenges from China that the machine tool industry is facing. \u00a0The September 28, 2008 issue of Manufacturing & Technology News<\/em> reported that \u201cthe last U.S. manufacturer of air-conditioning window units is moving its production to Mexico. \u00a0Frederich Air Conditioning Company has announced its intention to close its San Antonio manufacturing plant and move the work to Monterrey, Mexico . . . The company says that low-priced air conditioners from China are forcing it to move out of the United States.\u201d<\/p>\n This was only two months after Lennox International announced that it would shift production of Lennox air conditioners from two U.S. Plants (Marshalltown, Iowa and Grenada, Mississippi) to a new plant in Saltillo, Mexico. Lennox CEO Todd Bluedorn said, \u201cWe must produce quality products at lower costs to compete and grow our business.\u201d<\/p>\n