Tags: Matthews | manufacturing | export | work

Fortune's Matthews: Hello Mr. President, What Manufacturing Revival?

By    |   Thursday, 08 January 2015 01:54 PM

President Obama is bragging about his record on boosting America's ailing manufacturing sector, but proof of an actual manufacturing resurgence at all on his watch is hard to find, according to Fortune columnist Chris Matthews.

As part of his bid to encourage factory jobs, Obama set a goal of doubling American exports between 2009 and 2014. He got halfway there on exports, but total manufacturing employment is still far below levels of a decade ago.

That did not stop Obama from going on a victory tour of auto plants this week in the Detroit area.

"While the president might deserve credit for preventing the liquidation of General Motors and Chrysler, there's little evidence that his policies have helped spawn a manufacturing renaissance in America," Matthews wrote.

He noted that manufacturing remains a key factor in the balance of trade. "And while trade isn't a zero-sum game — Americans aren't necessarily worse off because they have access to cheap foreign products — importing more than you export leads to a gradual erosion of wealth."

In fact, it's the share of workers employed in manufacturing that has declined in recent years, not the share of GDP that comes from manufacturing itself.

There is some evidence that manufacturing is going through the same transformation that agriculture underwent 100 years ago, according to research uncovered by Matthews.

"At the beginning of the 20th century, roughly 40 percent of Americans worked on farms. Today, less than 2 percent do. But it's not like we've stopped growing massive amounts of food; it's just that we've figured out how to do it with far fewer workers."

Almost all of the manufacturing growth the U.S. is experiencing is in the computer and electronics industry, Matthews noted. And they are not the skilled, high-paying jobs that once characterized the sector.

"The single biggest problem facing the American economy today is stagnant wages for the median worker," Matthews argued.

He cited a recent Brookings Institution report that concluded wages for workers in the manufacturing sector fell faster than did wages in the private sector overall from 2009 to 2011.

"Even if you set the issue of employment aside, the U.S. trade deficit over the past five years increased, meaning that the rest of the world was more successful at selling us more stuff than vice versa," Matthews proclaimed.

"So, while politicians might enjoy scoring cheap political points by making speeches at manufacturing plants, the data show that there are no easy solutions to the country's persistent trade deficit or its stagnant wages," he wrote.

A weak December report from the Institute for Supply Management, a gauge of manufacturing strength, came amid concerns about how a slowing global economy might affect demand for U.S. goods, The Wall Street Journal reported.

"It makes sense that manufacturing activity should be coming off the boil when global demand has eased and the dollar has risen," Paul Dales, senior U.S. economist at Capital Economics, told The Journal. "But the strength of domestic demand will ensure that industry and the wider economy still perform particularly well in 2015."

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President Obama is bragging about his record on boosting America's ailing manufacturing sector, but proof of an actual manufacturing resurgence at all on his watch is hard to find, according to Fortune columnist Chris Matthews.
Matthews, manufacturing, export, work
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2015-54-08
Thursday, 08 January 2015 01:54 PM
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