U.S. No. 1, but for how long?

February 2, 2011

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Yesterday I was happy to read an article that said the U.S. is No. 1 in manufacturing, out-producing China — No. 2 — by more than 40 percent. It's an interesting article that chronicles what's happening in manufacturing: U.S. factories are closing; American manufacturing jobs are reappearing overseas; and China's industrial might is growing each year."U.S. manufacturers have abandoned products with thin profit margins, like consumer electronics, toys and shoes. They've ceded that sector to China, Indonesia and other emerging nations with low labor costs. 

"Instead, American factories have seized upon complex and expensive goods requiring specialized labor: industrial lathes, computer chips, fighter jets, health care products." 

U.S. manufacturers also are doing more with less labor, which means that manufacturing is creating fewer jobs than it did in the past. I think it's entirely possible that although China seems to be catching up in terms of global manufacturing (15 percent compared to the U.S.'s 18 percent), the U.S. could retain the No. 1 position for some time, particularly if trade and currency imbalances are addressed (a big if), and provided we don't fall farther behind in another important area. 

A second interesting article about how the U.S. ranks also crossed my desk yesterday, and the picture it painted was not all that rosy. The article, "Ten Industries in which the U.S. is no Longer No. 1," appeared on 247wallst.com. Some of the 10 items on the list were no surprise. Come on, did anyone really think that the U.S. was No. 1 in rice production? I don't think so. 

However, some of other items did surprise me — in varying degrees — and China bests the U.S. in seven of the 10, including beer production, high-technology exports, coal production, lettuce production, wind energy generated, rice production (who knew?), and pork production. The U.S. ranks second in all of these categories, except for rice production, where we're No. 11. 

The other areas mentioned in the analysis are:

Autos — Japan leads with 17 million produced in 2009; the U.S. is No. 2 with 12 million produced that year. 

Commercial Aircraft Production — Airbus (Europe) is the leader based on 574 orders in 2010; Boeing is second with 530 orders in 2010. 

Oil Production — Russia leads with 10 million barrels produced each day, followed by Saudi Arabia at 9.7. The U.S. is third with 9 million barrels per day. 

Much more troubling to me than these statistics are the facts noted early in the article, but not discussed in depth: "American children are no longer the best-educated in the world. America's health care system no longer produces the healthiest population. U.S. GDP no longer grows as quickly as it once did, particularly in the recoveries that follow recessions." 

Unless we address the first of these — education — we stand to fall behind in many areas, including manufacturing. Only high-quality education can provide the specialized labor needed in today's factories.

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Vicki Bell

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