Introduction
The United
States has always managed to overcome and adapt to many problems that have
arisen. Currently, there is a major problem; manufacturing work in the United
States is going overseas and China is the main destination. This is making China
be the biggest competitor to the United States within the category of
production manufacturing. Production manufacturing facilities across the United
States are struggling to stay afloat and desperately need relief. More often
than not the only option for these facilities is to relocate to China. Within
China, there are less strict regulations and the cost to operate is much lower due
to several varying reasons. These reasons will be discussed throughout this paper.
It is crucial that the United States should be able to stop such a shift and
attract new production manufacturing facilities. The effects of losing these
valuable facilities are clear.
In 1990, the
percentage of men who worked a full year with only a high school degree was
76%. In 2013, this percentage dropped to 68% (Bonvillian 27). Manufacturing is
a field that offers competitive pay and learning opportunities without a
college education. It is clear that the loss of manufacturing facilities within
the United States has a huge impact on the economy.
Currently, it seems
to be a movement causing companies to source from China, and to solve this
problem, when there is already such momentum, seems to be a daunting task. However,
if the right approaches are taken on time, results can be seen in the near
future. A change will not take place overnight, but with a steady influence and
unrelenting application of different techniques, results can be expected.
In order for
the United States to dominate within production manufacturing, the following techniques
should be followed:
·
Incorporate
Lean Manufacturing,
·
Invest
in technological advancements, and
·
Create
technical education opportunities for young individuals.
Incorporating
these ideas at a national level would not be an easy task. However, statistics
show clearly that a change is needed. The purpose of this report is to inform
individuals of the economic state of the United States within production
manufacturing, to present ideas for creating a considerable turnaround, and to
determine the feasibility of the United States surpassing China within
production manufacturing. Information within this report will be gathered from
reliable sources and presented in a clear and concise manner utilizing the
Modern Language Association format.
Data Section
Manufacturing
within the United States
Manufacturing
jobs in the United States continued to decline for 12 years from 1997 to 2009
at a stretch (Hemphill et al 4). This fact alone shows that something needs to
change. Between the years of 2000 and 2010, manufacturing within the United
States declined severely within 4 main categories: employment, investment,
output, and productivity (Bonvillian 31-32).
Employment
Approximately
50 years ago, manufacturing had a huge share of the United States gross
domestic product (GDP ). It
constituted approximately 27% of total GDP .
A number of individuals working in this field remained constant at around 17 million
from 1965 to 2000. But, from 2000 to 2010, this number decreased drastically
and dropped to around 12 million. This has a huge impact on manufacturing in
the United States.
Investment
In 2000, total
investment in manufacturing declined by 1.8%. This happened for the first time
since data collection started in the 1940’s. This could be taken as a
significant indication of the decline in manufacturing.
Output
From 2003 to
2007, manufacturing output grew by only 0.5%. However, from the years 2007 to
2009, the United States manufacturing output witnessed a staggering fall by
10.3%. Manufacturing output has remained relatively flat from 2009 until recent
years.
Productivity
Production and
output are tied together. Along with output, production fell sharply after
2007. The stagnation of output has a huge influence on production. Suzanne
Berger noted that economists have thought manufacturing is comparable to
agriculture, where productivity allows even a smaller workforce to create a
greater output. She also noted that this is simply incorrect (Bonvillian 32).
The
inevitable myth
It has been
stated that advancement in the economy causes an unavoidable decline in
manufacturing and manufacturing jobs available within a nation. This can be
concluded as a myth with facts to support the claim. Germany is a prime
example; with 20% of total employment in the manufacturing sector, German
workers within the manufacturing sector are paid much higher than those of the United
States. Germany plays a major role in global manufacturing trade, including
trade with China. Accomplishing this with the undeniable fact that Germany
faces some of the same challenges as the United States such as stricter
regulations and employment costs while also competing with China proves that relocating
to China is not an essential choice for production manufacturers (Bonvillian
33).
Why relocate
to China
It is
undeniable that manufacturing companies that have started in the United States
sometimes relocate to China. There are several reasons behind this fact, but
essentially it comes down to only one reason - profit It is profit that motivates a company to
relocate its facilities. However, it only makes sense to do what will yield the
greatest profit. The factors that make China a profitable nation to establish a
manufacturing company are mercantilism, Chinese innovation, and unregulated
work conditions.
Mercantilism
It is widely
assumed that China applies mercantilism policies. This means that the exchange
rates that China imposes on currency create an indirect tariff as great as
20-40% of the value of the import. In order for a company to have a market
within China, it is almost essential to be established within China if a profit
is to be expected. Congress members within the United States have asked the
Department of Treasury to declare China a currency manipulator to no avail. If China
continues to manipulate currency to this extreme point, it is difficult for
American manufacturing facilities to compete within China (Beretta and Iannini
118).
Chinese
innovation
The Chinese are
always searching for new ways to remain competitive. Every year the country
spends upwards to 200 billion dollars on research. The only country that
invests more than this is the United States. Chinese innovation can be broken
down into four categories, as shown below (Roth et al).
|
Customer focused innovation
|
Efficiency driven innovation
|
Engineering based innovation
|
Science based innovation
|
|
China benefits from the size of the
market. Creating huge potential in even small markets. China utilizes
feedback to create the best possible product.
|
China can successfully manage the
pressure to improve performance with large demands but struggles with more
advanced manufacturing.
|
China has advantageous infrastructures to assist in manufacturing. She
claims 41% of global railroad revenues.
|
China utilizes the huge market to speed
up and industrialize data collection. This will fuel growth and
competitiveness.
|
Unregulated
work conditions
In 2011,
Chinese CO2 emissions accounted for more than 25% of
total emissions in the whole world (Cheng et al 1). CO2 emission regulation from China is weaker than most
developed countries (Cheng et al 7). Manufacturing facilities are able to
operate within China without costly emission regulation allowing for a greater
profit. Currently, China is incorporating stricter regulation for emissions and
plans to reduce emissions by up to 40% by 2020. This removal of this incentive
to manufacture in China could result in a shift of certain manufacturing
facilities to different nations. The cost to change locations could prove to be
a barrier though, and further incentives will be needed to draw manufacturing
facilities outside of China.
Solution options
Lean
Manufacturing
Lean
Manufacturing is a company’s effort to eliminate waste in a production process
(Connaughton). Waste before Lean Manufacturing can
be broken down into 8 main categories; overproduction, waiting, unnecessary
motion, processing, inventory, processing failures, and space.
Although any
tool that reduces waste within the production process can be considered part of
the Lean Manufacturing process, five major tools are most commonly used. Those
are cellular manufacturing, just-in-time, kaizen, kanban, and poka-yoke (Connaughton).
Lean
Manufacturing can reduce waste within any manufacturing facility. Utilization of
these practices increases profit.
Invest in
technological advancements
The United
States needs to have advantages that China does not have. One of these
advantages includes technology. The United States has the world’s strongest
early stage innovation system (Bonvillian 34). Although the United States has
not invested in what has turned out to be an important innovation stage;
production.
By innovating
here and producing there the United States can utilize the full spectrum of
economic gains from having innovations in different categories.
Education
opportunities
In order for
any company to succeed, there must be reliable and resourceful employees. More
than 75% of manufacturers within the United States report a shortage of skilled
workers. To add to the worse, a large portion of the workforce within
manufacturing is nearing retirement. Besides, manufacturing has a negative
image among the young generation. 2.7 million manufacturing workers are
expected to retire and 700 thousand jobs are expected to be created in the next
10 years (Meinert 46). The United States needs to invest in more technical
career centers to educate young individuals to fill up those positions in the
manufacturing sector. Kids, nowadays, do not get enough exposure to the idea of
a technical education.
Solutions can
be broken down and summarized into three categories.
|
Lean Manufacturing
|
Technological advancements
|
Education opportunities
|
|
To introduce new practices to reduce
waste within manufacturing facilities across the United States
|
To invest in new technology in order to
give the United States the advantages that China does not have
|
To create enough study opportunities for
young individuals so that they can be introduced to the manufacturing sector
|
Conclusion
Summary of
findings
China has a
huge workforce within the manufacturing sector that accounts for a large
portion of their economy. Within the United States, manufacturing is still a large
portion of the economy although the workforce is decreasing as young
individuals lose interest in the manufacturing sector. Manufacturing within the
United States fell sharply from 2000 to 2010, while manufacturing within China
grew.
Interpretations
of findings
Although the
United States may be able to outperform China with more advanced manufacturing
practices, the United States will not be able to compete with China within
production manufacturing due to the fact that China has already established such
a dominance within the category. Regardless of the United States surpassing
China, the solution options should be followed closely.
Recommendations
In order to cut
costs and increase profit, manufacturing facilities within the United States
need to adopt Lean Manufacturing. The waste that could be prevented from
utilizing these techniques could be enough to keep a company afloat and jobs
within America. Moreover, it is important to invest in new technologies that
can benefit the manufacturing process in any way, whether it be an improved
product or a shorter run time. And finally, creating a secure future for
manufacturing by creating education opportunities is important.
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