‘Made in the USA’ still means something
Despite downturn, the nation remains the world’s leading manufacturer
Ted S. Warren / AP
Even in the midst of a global recession, the U.S. exported an estimated $1.377 trillion worth of goods last year, according to the authoritative CIA World Factbook. Nearly half of the exports were capital goods such as aircraft, computers, electric power machinery, office machines and telecommunications equipment.
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By Harold L. Sirkin
updated 12:25 p.m. ET April 19, 2009
A few weeks ago, my wife asked me why the U.S. doesn't make anything of value anymore. Everything, she said, is made in China or Mexico or other faraway points on the compass.
Welcome to one of the destructive side effects of the "woe is me" times we live in: Along with the legitimate and serious problems that face our economy, we seem to have convinced ourselves that we're powerless to do much about the downturn because we've already become a second-rate economic power.
In fact, as I told my wife, the U.S. is still the world's leading manufacturer and in most of the world, "Made in the USA" is still synonymous with quality and high value.
This isn't what many people want to hear. Daily headlines about big companies in big trouble and monthly job-loss figures coming from the Bureau of Labor Statistics provide plenty of ammunition for those who see U.S. industry in decline. And yes, there are big companies in trouble. But recessions eventually end. If the conversation I had with my wife is any indicator, the real difficulty U.S. business and political leaders may face in the months ahead is restoring America's confidence. And that's where some healthy honesty would help.
Many of those who talk economic Armageddon intentionally paint an overly pessimistic picture. They claim U.S. factories are outdated. They complain U.S. products are overpriced. They claim that U.S. workers are lackadaisical and overpaid. They warn U.S. companies are unsuited for 21st-century competition in a global marketplace where everyone from everywhere is competing for everything. They claim a lot of things. And much of what they claim isn't true.
As Stephen Manning of the Associated Press acknowledged in a rare "just the facts" story in mid-February, the U.S. "by far remains the world's leading manufacturer," producing goods valued at a record $1.6 trillion in 2007 — nearly double the $811 billion produced a decade earlier. Indeed, the AP writer noted, "For every $1 of value produced in China's factories [in 2007], America generated $2.50." Not bad for a country that doesn't produce anything anymore.
Not only is the U.S. still the world's leading manufacturer, but there are many good reasons that companies will continue to manufacture here and invest in new plants and equipment. According to the Census Bureau's 2007 Annual Capital Expenditures Survey, released on Jan. 22 of this year, U.S. nonfarm businesses invested $1.36 trillion in new and used structures and equipment in 2007, a 3.9 percent increase over 2006. More than $484 billion was spent on new structures alone.
Yes, the recession and credit crunch have derailed this engine of economic growth, just as the recession has put the brakes on consumer spending. The NAM/IndustryWeek Manufacturing Index for the fourth quarter of 2008, for example, reported that large manufacturers were anticipating a 4.2 percent decline in capital expenditures during the next 12 months; small respondents were anticipating a 2 percent decrease.
But these are hardly the kinds of numbers that should make us want to jump off a cliff.
The high-value goods leader
So why is our country, admired worldwide for its optimism, now enveloped in self-doubt and defeatism? One explanation is politics: Politicians and interest groups find it much easier to move their agendas forward during times of angst. Many of them therefore deliberately fuel the public's anxiety.
Another reason is the fact that there is a kernel of truth in some of the naysayers' claims. Some of our factories are outdated; but many are among the most modern in the world. Wage and legacy costs — retiree health benefits, for example — have made some companies less competitive. By the same token, U.S. multinationals are generally among the most productive and innovative in the world. And, yes, U.S. companies have ceded production of men's dress shirts that retail for $12, microwave ovens that retail for $69, and boom boxes that retail for less than half that price to low-cost developing countries.
But the U.S. leads the world in many high-value fields, producing more than half of the $175 billion in health care technology products purchased worldwide each year, for example. The U.S. also ranks as the world's largest producer of chemicals, selling 11 percent of the global total. And, as the AP reported, we "sold more than $200 billion worth of aircraft, missiles, and space-related equipment in 2007."
In fact, even in the midst of a global recession, the U.S. exported an estimated $1.377 trillion worth of goods last year, according to the authoritative CIA World Factbook. Nearly half of the exports were capital goods: aircraft, computers, electric power machinery, office machines, telecommunications equipment, and the like. Industrial supplies, such as organic chemicals, accounted for another nearly 27 percent. And consumer goods, including pharmaceuticals, and agricultural products accounted for 15 percent and 9 percent, respectively.
A third reason for our collective funk (and there are certainly other reasons) may be the nostalgia factor, particularly prevalent among the baby boomers: the fact that much of what was "Made in America" in the past — think clothing, radios, televisions, telephones, sewing machines, toys, tools, housewares, small appliances, baby furniture, bicycles, even the legendary Oldsmobile "Rocket 88" that was so much a part of the America in which many baby boomers came of age — isn't made here anymore. (The Rocket 88, in fact, isn't made at all.) Seeing so many iconic Made in America brands disappear seemingly overnight has caused pain and anxiety for many Americans.
CONTINUED : A normal course of events