America is making things again

[GaryInCO]

Tesla is a good example of satisfying all of its domestic demand with US-based factories. Wikipedia says they have over 24 million square feet of manufacturing facilities in the US. That's over 400 football fields, nearly a square MILE of manufacturing. Somewhere around 30,000 employees.

By comparison, their two biggest offshore facilities (Berlin and Shanghai) are about 6.7 million sq ft.

 

[jeffmete]

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

Yeah, assembly plants are generally just that, assembly and paint. The actual manufacturing of the parts and pieces is still heavily outsourced. But any US manufacturing is a step in the right direction!

 

[jeffmete]

Tesla is a good example of satisfying all of its domestic demand with US-based factories. Wikipedia says they have over 24 million square feet of manufacturing facilities in the US. That's over 400 football fields, nearly a square MILE of manufacturing. Somewhere around 30,000 employees.

By comparison, their two biggest offshore facilities (Berlin and Shanghai) are about 6.7 million sq ft.

Yeah, I’m not a Tesla fanboy, but, they have pulled off the near impossible starting both a new car company and a new power source. If you get a chance take a look at the vertical integration at Fords River Rouge. They made steel, glass and cast iron blocks: raw materials came in and cars rolled out.
https://en.wikipedia.org/wiki/Ford_River_Rouge_complex

 

[aja8888]

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.

I spent my career in heavy manufacturing (primary metal manufacturing, rolling mills, big presses, etc) in Connecticut and Michigan. ALL the plants in that industry are closed and either boarded up or torn down. That manufacturing went to Europe and Asia. I watched it happen right before my eyes in the late 1970s and 80s. I then got into oil and gas after that. Saved my career.

 

[mcbraemer]

Chemical process industry and plastics raw material plants that I began my engineering career in back in the mid-70's have for the most part been shuttered, razed and sent to one of many offshore locations.
I presume the cost of labor and US environmental regulation compliance cost simply made it significantly cheaper for these megacorps ( i.e.Dow Chemical and BASF) to go offshore.
Broke my heart to see this happen 20 ish years ago. Hope to witness a trend reversal during my remaining life on this spinning globe.

 

[Masquernom]

I remember back in the mid 1980's I was talking to one of the executives at the mega corp I worked at. He was telling me he had been off for a few days at a management retreat. As part of the retreat, they ran a scenario where different groups managed a company. This exec was telling me his group won the scenario because they moved their mfg offshore faster than the other teams.

Unconstrained capitalism will move jobs to the location with the lowest production cost. To avoid porky on this forum, you'll have to decide for yourself how you feel about that...

 

[Koolau]

I remember back in the mid 1980's I was talking to one of the executives at the mega corp I worked at. He was telling me he had been off for a few days at a management retreat. As part of the retreat, they ran a scenario where different groups managed a company. This exec was telling me his group won the scenario because they moved their mfg offshore faster than the other teams.

Unconstrained capitalism will move jobs to the location with the lowest production cost. To avoid porky on this forum, you'll have to decide for yourself how you feel about that...

I'd like to think it's not Porky worthy to mention that moving manufacturing out of the country (for all its amazing cost-savings) makes a country more vulnerable to all kinds of issues from off-shore "partners" who occasionally disagree with our geo-political views - or just have major manufacturing issues (think natural disasters, fire, etc.)

We've certainly experienced oil issues over the years along these lines. At some point, it could be steel or chips or drugs, etc. So multiple sourcing would seem prudent at the very least. Perhaps stock-piling these items would be wise as well, but that flies in the face of JIT which seems to be the god of manufacturing these days - or at least was back when I w*rked for Megacorp (who got burned by JIT more times than I care to recall.)

Returning you now...

 

[MichaelB]

US manufacturing is a legitimate topic - as long as it doesn’t get political.

Manufacturing output in the US has increased over time. It has lost share of GDP because services output has grown even faster, and manufacturing employment has declined even as output increased, the result of automation. Here’s a nice overview with chart from the St. Louis Fed https://fredblog.stlouisfed.org/201..._term=related_resources&utm_campaign=fredblog

 

[Ronstar]

I'd like to think it's not Porky worthy to mention that moving manufacturing out of the country (for all its amazing cost-savings) makes a country more vulnerable to all kinds of issues from off-shore "partners" who occasionally disagree with our geo-political views - or just have major manufacturing issues (think natural disasters, fire, etc.)

We've certainly experienced oil issues over the years along these lines. At some point, it could be steel or chips or drugs, etc. So multiple sourcing would seem prudent at the very least. Perhaps stock-piling these items would be wise as well, but that flies in the face of JIT which seems to be the god of manufacturing these days - or at least was back when I w*rked for Megacorp (who got burned by JIT more times than I care to recall.)

Returning you now...

I was getting ready to post, but Koolau's post essentially says what I wanted to post. So +1. It just make sense for the US to produce its own goods as much as possible in order to have some control over supply.

Take medicine for instance - We better be able to produce and supply medicines ourselves rather than depend on another country where we cannot control the supply. Our lives may depend on it.

 

[2HOTinPHX]

This picture I grabbed from a video on the world's Ocean Carriers container supply is scary. Matson is the only domestic owned carrier mentioned in the video linked below. Zoom in on the picture and that white Lego represents Matson. We really depend on a lot of others to get imported goods. Glad to see made in USA being thought about again.
https://youtu.be/xqh7E_LbigQ

 

[Masquernom]

I guess my point is that there is a sort of guns or butter decision when it comes to dividing up the profit from a business concern in a capitalistic system. Do you divide the profits between the labor or capital side of the business?

Say you're the only/largest employer in a village. Say almost everyone in your village is employed in your enterprise. If you close your local business and move it to a lower labor cost area, your business profit will improve. But the local labor will suffer without jobs.

That's way over simplified, but you can see the idea. Years ago companies in the US were proud of the wages they paid and their support for their communities. At a point around the 1980's, there was a mind set change that the purpose of a company was mainly to reward it's shareholders. Basically, the capital side of the equation overcame the labor side.

 

[Ronstar]

I guess my point is that there is a sort of guns or butter decision when it comes to dividing up the profit from a business concern in a capitalistic system. Do you divide the profits between the labor or capital side of the business?

Say you're the only/largest employer in a village. Say almost everyone in your village is employed in your enterprise. If you close your local business and move it to a lower labor cost area, your business profit will improve. But the local labor will suffer without jobs.

That's way over simplified, but you can see the idea. Years ago companies in the US were proud of the wages they paid and their support for their communities. At a point around the 1980's, there was a mind set change that the purpose of a company was mainly to reward it's shareholders. Basically, the capital side of the equation overcame the labor side.

Exactly. On the first day of business school, we were taught that the primary function of a business is to increase shareholder value. Generally labor is the biggest business expense. So it makes sense that businesses try to reduce labor costs.

From Forbes. com

Milton Friedman’s epochal essay, “The Social Responsibility of Business Is To Increase Its Profits,” was published in the New York Times Magazine 50 years ago this month. The piece remains as polarizing today as it was five decades ago.

 

[CaptTom]

... Years ago companies in the US were proud of the wages they paid and their support for their communities. At a point around the 1980's, there was a mind set change that the purpose of a company was mainly to reward it's shareholders...

Exactly. On the first day of business school, we were taught that the primary function of a business is to increase shareholder value...

I have a problem with this. The only reason a business exists at all is because someone smart and/or talented observed a consumer need and decided to meet it.

Some goods and services can be provided by one person, working alone. But more often, more is needed. Sometimes the demand, or the product/service, is so great that the business needs to expand.

At some point more capital may be needed. Investors see the opportunity and want "in." The business uses that capital to increase production. Customers get more of what they want, the business owner gets more profit, and the investor gets a good return on their investment.

The investor is just the means to an end, not the purpose of the business.

 

[Masquernom]

I have a funny example from the mega corp I worked for. Years ago the company decided to have profit sharing for all employees. It was set up to pay out X% of everyone's salary depending on meeting company targets, determined by management at the beginning of the year. After 3 years, company never met any of it's targets, so no payouts. These were not profit targets, usually some sort of productivity targets or some such. What ever the latest manager best seller said was the flavor of the year. After the 3 years, they gave up and paid a bonus to everyone.

So management decided corporate goals were too abstract. Individuals wouldn't feel connected to big goals. So, each division would set their own goals for profit sharing each year. So, some division leaders set goals they knew they would achieve. Happy employees! Other division leaders set "stretch goals" that sounded good at corporate. Unhappy employees.... That arrangement lasted 2-3 years.

Next management decided to just keep it simple. Company meets some profit target and everyone gets X% of salary. Finally everyone got something most years. Better than nothing, most folks happy.

But then, the final tweak.... X% for everyone was determined not a good idea. Low level folks should really get 0.5 X% of salary. Then each level up should get X% then 1.5 X% and so on. I don't know how high the X% reached, but I understand it was substantial.

So, everyone got something most years. Keeps the peasants happy. Just don't mention how the pie was sliced....

 

[Masquernom]

I have a problem with this. The only reason a business exists at all is because someone smart and/or talented observed a consumer need and decided to meet it.

Some goods and services can be provided by one person, working alone. But more often, more is needed. Sometimes the demand, or the product/service, is so great that the business needs to expand.

At some point more capital may be needed. Investors see the opportunity and want "in." The business uses that capital to increase production. Customers get more of what they want, the business owner gets more profit, and the investor gets a good return on their investment.

The investor is just the means to an end, not the purpose of the business.

If you look at the history of US business, it's pretty interesting. Years ago there was concern that C level salaries were getting too excessive. There was little/no check to control them. During the Clinton admin, they decided to do something about it by having a tax to the company on salaries above a certain level. This had the desired effect of stopping/slowing the growth of salaries, but with an unexpected outcome. Since it become painful to increase salaries too high, top execs began to be compensated more with stock. So, it's now everyone's top priority to increase the value of the company's stock. I haven't looked it up, but I'd expect stock buybacks have greatly increased since the Clinton salary tax was implemented.

And these comments are not to endorse the Clinton admin, or their changes. Simply to explain the outcome of the changes. Some will agree, some will disagree.

 

[Out of Steam]

I have no idea where they are going to find enough workers here in Kentucky in the next year or so.

It will certainly take longer than a year, but probably from AI and international outsourcing doing to desk jobs what automation and offshoring did to manufacturing jobs 40 years ago.

 

[Brat]

Peter Zeihan has been predicting reshoring of manufacturing out of China. Supply chain shorter, energy and labor costs lower. He predicted that the process will be inflationary during the process, that inflation is not demand driven but because of reindustrialization which is why I am not happy with the current increases in interest rates.

The other day Cramer was whining about the cost of Tiawan Semiconductor building a fab in the US, that we should station our military to defend Tiawan. EH, talk about relative cost... Tiawan Semmicondoctor is the only fab that can make the very high end chips... let's build that fab for OUR national security.

 

[ken830]

Tesla started this by bucking the outsourcing trend more than 10 years ago by increasing vertical integration, in-sourcing, and building large-scale domestic factories. They not only demonstrated that it is possible, but that it is advantageous.

 

[autonomousdog]

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

Someone should make a listing site like Amazon but only for 100% Ameican made goods. I'd buy my necessities from there.

 

[frayne]

Someone should make a listing site like Amazon but only for 100% Ameican made goods. I'd buy my necessities from there.

Great idea but would this knock out products that have foreign made components ? I think anyone would be really hard pressed to find many 100% American made products.

 

[Masquernom]

Someone should make a listing site like Amazon but only for 100% Ameican made goods. I'd buy my necessities from there.

That company would last about one day.... Everyone would say "I found that same product on Amazon for half that price!". And there would go all your customers.