Manufacturing Jobs Coming To The U.S.?

When will manufacturing jobs come back to the U.S.?  That is the question I get a lot when I do speeches.  It’s a good question and one that deserves some attention.  Many believe the U.S. can’t remain a super power unless it has more manufacturing and certainly the economy can’t grow without manufacturing.

It’s no big secret that big companies will manufacture their goods the cheapest way they know how.  That has mostly been in emerging markets like China the past several years.  Just turn over just about any product, and it says manufactured in China.  Naturally, the knee jerk reaction is to say all of our manufacturing jobs are going to China and we need to get those back.  But, actually China during the last several months has lost more manufacturing jobs than the United States, even on a percentage change basis.  This is because of three things.  First, the excess liquidity and easy money caused over capacity.  There were simply too many plants built and now that demand is down, not as many plants needed.  Second, the global recession caused a big drop in overall global demand for just about everything.  Less demand, no need for manufacturing.  Thirdly, humans are becoming more efficient every year.  We’re faster and more productive and we invent computers that are faster and more efficient.  These computers continue to replace workers.  So, overall manufacturing isn’t a profession I’d want to be in over the next several years.

But, for those of you who still want more manufacturing in the good ‘ole U.S.A., here’s a bit of a change.  On Monday morning, Sun Tech Power, a solar company based in China, announced they were going to build a manufacturing plant in where?  Phoenix.  No, not some town in China named Phoenix.  Phoenix, Arizona.  Here in the U.S.  As the emerging markets continue to grow, their workers are going to require more and more money.  This will cause two things:  First, products like cars made in South Korea won’t be as cheap.  Second,  some manufacturing jobs will come back to the U.S. because they may be cheaper.

Regardless of how much manufacturing is done in the U.S., it was a pleasant surprise to see a Chinese company want to manufacture goods here for a change.


2 Responses to “Manufacturing Jobs Coming To The U.S.?”

  1. 1 Tom November 16, 2009 at 11:11 am

    Karl, how can this market continue to churn higher and commodities churn higher and the bond market continue to ignore it. The Fed can not continue to ignore what is going on in the market, we are going to have a major problem if these commodities continue this move higher.

    • 2 keggerss November 16, 2009 at 11:13 am

      Not sure how long which is why I’m short treasuries. We know it can go on a little longer but it’s not sustainable to keep printing money and not have rates rise.

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