America is making things again

[Chuckanut]

It seems that America is making more things again. And one of the things we are producing a lot of is factories to make other things.

https://www.wsj.com/articles/american-manufacturing-factory-jobs-comeback-3ce0c52c?mod=hp_lead_pos7

Since the article is behind a paywall I will post a few quotes.

Production at U.S. factories rose last year, but few things were produced at a more furious pace than factories themselves.

Construction spending related to manufacturing reached $108 billion in 2022, Census Bureau data show, the highest annual total on record—more than was spent to build schools, healthcare centers or office buildings.

But last year U.S. production capacity showed its strongest growth since 2015 after pandemic-driven shortages and delays caused manufacturers to rethink their far-flung supply chains, said UBS industrials analyst Chris Snyder.
“Covid kind of pulled the covers off and showed everybody how much risk they were exposed to,” Mr. Snyder said.

The plant under construction belongs to Ultium Cells, a joint venture between GM and LG Energy Solution Ltd., and it aims to start producing EV batteries in late 2024.

Ultium said the factory will create more than 1,700 jobs. That’s not a huge number by local standards—the state government, Michigan State University and local hospitals each employ far more people—but Bob Trezise of the Lansing Economic Area Partnership said the suppliers that cluster around factories create a multiplier effect, making them worthy of public support.

Tennessee-based nutritional supplement company Vireo Systems Inc. imports one of its key ingredients—creatine, an energy-boosting natural compound popular with weightlifters and athletes—from China. After the Covid-19 pandemic interrupted the flow, Chief Executive Mark Faulkner decided to build a plant in Nebraska.
“We want to be masters of our own destiny,” he said.

California-based eyewear vendor Zenni Optical Inc. exclusively used its own Chinese manufacturing facilities during much of its 20-year existence. In May, the company opened its first U.S. plant near Columbus, Ohio, to better serve the Midwest and East Coast, where most of its sales originate.

 

[mickj]

Nice

 

[Midpack]

I've known about this reading Rana Foroohar - I am surprised (and not) there hasn't been more media coverage about it. There have been quite a few other examples, and some significant industrial policy changes that have helped.

 

[pacergal]

That is good news

 

[Masquernom]

I have no idea where they are going to find enough workers here in Kentucky in the next year or so. They are building factories around the state as fast as they can. Louisville is the main UPS hub, and warehouses are going up faster than Dollar General stores! A Ford battery plant going up will hire 5,000. Support plants for it are going up nearby. Another battery plant in the West of the state with 2,500 jobs or so I think.
The bourbon trail marketing seems to be working. New distilleries are popping up around the state too.
They're going to have to pay waiters and fast food workers a lot better in the near future I expect.

 

[CaptTom]

Nice! I've read and seen a few stories like this lately. I'm certainly no expert on international trade, but the macro trends seem to be pointing in the right direction. Maybe the pandemic supply chain issues, coupled with a more assertive Chinese government and the war in Ukraine have convinced American (and Western European) companies to rethink their business models.

Good point about labor though. It sure will be interesting to see how this all goes.

 

[Ronstar]

Great! I try to always buy American made, but it’s getting harder to find things made in the US.

 

[Markola]

The price we pay for the dollar being the global reserve currency is the strong dollar, which makes imports cheap but has slowly decimated our exports. It would be interesting to know if a) those new production lines are largely automated and b) the products are generally consumed in the US.

 

[Car-Guy]

I generally try to buy American made but when I'm looking for something specific of higher $ value, if I find "it" was made in some other country, and it is better quality, I certainly won't ignore it. The US doesn't have a monopoly on top quality on everything.

 

[MichaelB]

I think this is a great news report and a real economic trend. It probably won’t generate lots of jobs, but the jobs it does create will be high paying.

As for trade, US exports as a % of GDP have been growing steadily since the 1950’s, so it’s hard to make the case the strong US$ has a significant impact. Not so for imports, which have risen over the same period. Still, our imports to GDP is the 3rd lowest in the world.

Imports as an % of GDP is also overstated. Technology and pharma companies have relocated their IP in tax haven countries (like Ireland), and that creates the illusion (and value) of an import that really doesn’t exist. Adjusted for that, imports would be substantially lower.

 

[Markola]

^^^^ Both trends since 2009 are concerning but, yes, let’s hope the more recent upturn continues.

 

[jazz4cash]

I always HATED the old trope ‘nothing is made in America anymore’. A lot of people will take it literally. The sole source, dedicated supplier, just in time delivery procedures went too far. I actualIy worked in a plant where we made machinery, maintained 70% market share and exported globally.

 

[CaptTom]

...The sole source, dedicated supplier, just in time delivery procedures went too far...

Agreed! Before the pandemic proved the folly of that approach, my best answer was look at Amazon. At it's core, Amazon does the exact thing that every other company tries to avoid: Keep inventory. Put another way, they are what every other company doesn't want: a warehouse.

Think about it. They have, in stock, just about everything a customer might want to buy, ready to sell it whenever the customer wants it.

Inventory is not always the evil it's made out to be.

 

[gamboolman]

great news !
This is a good thing
Like a lot of folks here, I remember growing up and for most all my adult life, and seeing factories close and hated it.
Glad to hear this news.

ms gamboolgal go out of our way to buy American made products, and we will spend more money to do so.

 

[Koolau]

I always HATED the old trope ‘nothing is made in America anymore’. A lot of people will take it literally. The sole source, dedicated supplier, just in time delivery procedures went too far. I actualIy worked in a plant where we made machinery, maintained 70% market share and exported globally.

I guess the issue to me is that things we would find difficult to live without (think pharma products and chips) have been outsourced to folks who aren't necessarily our friends. Suddenly deciding that we again need to ferment Penicillin doesn't make it happen. No one knows how to do it anymore and the tanks that used to be filled with the stuff are all gone.

I still recall when some countries dictated to us the price of oil. It wasn't very comfortable. We've trusted our future to others at our peril.

 

[SecondAttempt]

I generally try to buy American made but when I'm looking for something specific of higher $ value, if I find "it" was made in some other country, and it is better quality, I certainly won't ignore it. The US doesn't have a monopoly on top quality on everything.

What does "American made" mean. Back in the late 80s there was a 60 Minutes report that showed a company importing machines from China, opening the crates, installing an American brand nameplate, tripling the price for the branding, and it was "American made" because more than half the value was added in the US.

I'm not saying this still happens or is common. But American made could just mean an accountant or lawyer figured out a way to apply that definition to a foreign-made product.

 

[JBTX]

The death of US manufacturing has been overstated. Manufacturing, if real dollar terms, has continued to grow over the decades (although not relative to GDP). It’s just that there is so much more automation that manufacturing jobs have decreased.

 

[JBTX]

I always HATED the old trope ‘nothing is made in America anymore’. A lot of people will take it literally. The sole source, dedicated supplier, just in time delivery procedures went too far. I actualIy worked in a plant where we made machinery, maintained 70% market share and exported globally.

I worked for a logistics company years ago that supported a Toyota JIT facility in the US. The Toyota facility did not carry inventory, but we had tons of trailers full of inbound materials parked in the parking lot - waiting to be backed up to the facility “just in time “.

 

[Markola]

The death of US manufacturing has been overstated. Manufacturing, if real dollar terms, has continued to grow over the decades (although not relative to GDP). It’s just that there is so much more automation that manufacturing jobs have decreased.

Agree. American higher education, intellectual property rights and other business protections and taxpayer subsidies facilitate lots of manufacturing. I think we’re #2 in the world, which is not exactly failing. Flip side is, labor is relatively expensive, hence growing automation. And the perpetually strong dollar makes our exports expensive.

 

[Timeisprecious]

That is good news

GREAT news, in fact.

 

[Koolau]

What does "American made" mean. Back in the late 80s there was a 60 Minutes report that showed a company importing machines from China, opening the crates, installing an American brand nameplate, tripling the price for the branding, and it was "American made" because more than half the value was added in the US.

I'm not saying this still happens or is common. But American made could just mean an accountant or lawyer figured out a way to apply that definition to a foreign-made product.

Ah, yes. Good old American ingenuity and know-how at its finest. Anyone can make a law. It takes a real expert to make the law w*rk to your own favor while violating the spirit, but not the letter of the law.

 

[NameTaken2]

Good development -also an inflationary one.
The 2% inflation goal is a big challenge.

 

[Fermion]

I needed a screwdriver type torque wrench and had the choice between a $60 Chinese version which probably would have done the job before it broke and a $150 CDI made in the USA with a certificate of calibration. Zero regrets choosing the CDI, you can feel the quality instantly.

 

[jeffmete]

The death of US manufacturing has been overstated. Manufacturing, if real dollar terms, has continued to grow over the decades (although not relative to GDP). It’s just that there is so much more automation that manufacturing jobs have decreased.

If you look at mfg as a percentage of gdp it’s been going down for a long time. Take a drive through the Midwest to see the results of this. Detroit, flint, Saginaw, Gary, all areas decimated by maufacturing going away. Genessee county (Flint, Mi) had the highest per capita income in the US back in the early 70’s, now nor so much. ….I spent my career in heavy manufacturing and it didn’t become automated, it went away. First was the southern strategy, then Mexico, then China, Africa, Brazil…automation taking jobs is a talking point. Foundries, steel mills, forge shops are all hard to find in the US now.

 

[Koolau]

If you look at mfg as a percentage of gdp it’s been going down for a long time. Take a drive through the Midwest to see the results of this. Detroit, flint, Saginaw, Gary, all areas decimated by maufacturing going away. Genessee county (Flint, Mi) had the highest per capita income in the US back in the early 70’s, now nor so much. ….I spent my career in heavy manufacturing and it didn’t become automated, it went away. First was the southern strategy, then Mexico, then China, Africa, Brazil…automation taking jobs is a talking point. Foundries, steel mills, forge shops are all hard to find in the US now.

In general, I agree with you. The apparent bright spot is that many OUS car makers are building their cars in the USA now. Some really high-output assembly plants are in the midwest all the way into the deep south.

Here is Wikipedia summary of such plants.

https://en.wikipedia.org/wiki/List_of_automotive_assembly_plants_in_the_United_States

As you might guess, there are significant differences between legacy plants (think Detroit) and these newer, sleeker assembly plants. I've toured both types. It seems to be a paradigm shift. I hope it bodes well for "made in America" even though the label still says Toyota or Subaru or Mazda or M-B. YMMV