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Leading Manufacturing Countries from 2000 to 2010: China, USA…

chart showing leading manufacturing countries output from 2000-2010

Chart of manufacturing production by the top 10 manufacturing countries (2000 to 2010). The chart was created by the Curious Cat Economics Blog. You may use the chart with attribution. All data is shown in 2010 USD (United States Dollar).

Over the years I have been posting data on the manufacturing output of leading countries. In 2010 China finally overtook the USA to becoming the leading manufacturer (long after you would have thought listening to many news sources and political leaders). In a previous post on the Curious Cat Economics Blog I looked at the output of the top 10 manufacturing countries with a focus on 1980 to 2010.

In 1995 the USA was actually very close to losing the lead to Japan (though you wouldn’t think it looking at the recent data). I believe China will be different, I believe China is going to build on their lead. There has been some talk for several years of manufacturing moving out of China seeking lower cost countries. The data doesn’t support any decline in Chinese manufacturing (or significant moves away from China toward other South-East Asian countries). Indonesia has grown quickly (and is the largest SE Asian manufacturing country), but their total manufacturing output is less than China grew by per year for the last 5 years.

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Marketplace Looks at the Apple Economy

Marketplace looks at the Apple economy in China. Marketplace is an excellent source of actual journalism; rare in the post Bill Moyers days, sadly.

A look inside a Foxconn factory

The first misconception I had about Foxconn’s Longhua facility in the city of Shenzhen was that I’ve always called it a ‘factory’ — technically, it is. But after you enter the gates and walk around, you quickly realize that it’s also a city — 240,000 people work here. Nearly 50,000 of them live on campus in shared dorm rooms. There’s a main drag lined on both sides with fast-food restaurants, banks, cafes, grocery stores, a wedding photo shop, and an automated library. There are basketball courts, tennis courts, a gym, two enormous swimming pools, and a bright green astroturf soccer stadium smack-dab in the middle of campus. There’s a radio station — Voice of Foxconn — and a television news station. Longhua even has its own fire department, located right on main street. This is not what comes to mind when you think “Chinese factory.”

Yet it is: as you walk beyond the civic center of Longhua, the buildings begin to change.

From a management perspective there is a great deal to be desired in Apple’s manufacturing practices. The economic perspective however, for me, provides a much different picture than those in rich countries (USA, Europe, Singapore, Japan…) often feel.

The jobs provide workers a chance to earn what for them is a great deal of money. Yes the conditions are harsh – I wouldn’t want to have to work there. But I am pretty sure I would not be happier, if I lived in China, and everything else remained the same in China except now all the Apple products were made in Singapore, USA and Spain.

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2010 Deming Prize

image of the Deming Prize medal

The Union Japanese Scientists and Engineers (JUSE) has awarded the Deming Prize to 4 companies in 2010: Corona Corporation (Japan), Meidoh (Japan), GC Dental (China) and National Engineering Industries Limited (India).

Organizations receiving the Deming Prize since 2000 by country (prior to that almost all winners were from Japan):

Country Prizes
India 16
Thailand 9
Japan 7
USA 1
Singapore 1
China 1

This is the first time a Chinese company has won a Deming Prize. The parent company, GC Dental (Japan), was awarded the Deming Prize in 2000 and the Japan Quality Medal in 2004.

The 2010 Deming Prize for Individuals went to Dr. Takao Enkawa, Professor, Department of Industrial Engineering and Management, Tokyo Institute of Technology. Previous recipients include: Kaoru Ishikawa, Genichi Taguchi, Shoichiro Toyoda, Hitoshi Kume and Noriaki Kano.

Related: 2009 Deming Prize2008 Deming Prize: Tata SteelDeming Prize 20072006 Deming Prize
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California Uses More Gas than China

Amazing Stat: California Uses More Gas than China:

California alone uses more gasoline than any country in the world (except the US as a whole, of course). That means California’s 20 billion gallon gasoline and diesel habit is greater than China’s! (Or Russia’s. Or India’s. Or Brazil’s. Or Germany’s.)

That’s according to the California Energy Commission’s State Alternative Fuels Plan, which was posted online last Christmas Eve (pdf). The whole report makes for some fascinating reading because it’s a blueprint for a low-carbon and renewable transportation fuel future. The dominant takeaway: it ain’t going to be easy.

One more choice statistic: gasoline usage in California has increased 50 percent, that’s 10 6.7 billion gallons, since 1988.

But China’s oil thirst is growing — to almost 20 billion gallons in 2007 — and perhaps as early as this year, China’s 1.3 billion people will overtake California’s 37 million people in total gasoline and diesel usage.

Interesting data. The Curious Cat Economics Blog recently posted on the top oil consuming countries.

Related: Car Powered Using Compressed AirFailure to Increase Gas TaxCurious Cat Science and Engineering Blog – Energy posts

China Outsourcing Manufacturing to USA

Chinese firms bargain hunting in U.S.

Liu is investing $10 million in the Palmetto State, building a printing-plate factory that will open this fall and hire 120 workers. His main aim is to tap the large American market, but when his finance staff penciled out the costs, he was stunned to learn how they compared with those in China.

Liu spent about $500,000 for seven acres in Spartanburg — less than one-fourth what it would cost to buy the same amount of land in Dongguan, a city in southeast China where he runs three plants. U.S. electricity rates are about 75% lower, and in South Carolina, Liu doesn’t have to put up with frequent blackouts.

About the only major thing that’s more expensive in Spartanburg is labor. Liu is looking to offer $12 to $13 an hour there, versus about $2 an hour in Dongguan, not including room and board. But Liu expects to offset some of the higher labor costs with a payroll tax credit of $1,500 per employee from South Carolina.

“I was surprised,” said the 63-year-old president of Shanxi Yuncheng Plate-Making Group. “The gap’s not as large as I thought.” Liu is part of a growing wave of Chinese entrepreneurs expanding into the U.S. From Spartanburg to Los Angeles they are building factories, buying companies and investing in business and real estate.

True this is still a relatively small macro economic factor. However, it is growing. The primary push so far is economic – not a move to lean manufacturing (as far, as I can tell) to put manufacturing close to the customer. What is the biggest factor? The USA is spending more than $400 billion every year more than it produces. The only way to consume more than you produce is to borrow (and take an obligation to pay back those that lend you money) or sell the stuff you own to those that are producing more than they are consuming. China is producing more than $200 billion more than it consumes every year.

For decades foreigners have taken debt from Americans that promise to pay back later (to pay for what they consumed). Now many are deciding that these debts are not attractive investments and are looking to own productive assets in the USA (companies, factories…). Which is smart on there part in my opinion.

Related: The Budget Deficit, the Current Account Deficit and the Saving DeficitMoving Jobs to Silicon Valley from India$2,540,000,000,000 in USA Consumer DebtHow to Keep the USA ManufacturingTop 10 Manufacturing Countries 2006

Warren Buffett’s 2004 Annual Report:
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Top 10 Manufacturing Countries 2006

Here is updated data from the UN on manufacturing output by country. China continues to grow amazingly moving into second place for 2006. I plan to write more on this data in the Curious Cat Investing and Economics Blog. UN Data, in billions of current US dollars:

Country 1990 2000 2004 2005 2006
USA 1,040 1,543 1,545 1,629 1,725
China 143 484 788 939 1096
Japan 808 1,033 962 954 929
Germany 437 392 559 584 620
Italy 240 206 295 291 313
United Kingdom 207 230 283 283 308
France 223 190 256 253 275
Brazil 117 120 130 172 231
Korea 65 134 173 199 216
Canada 92 129 165 188 213
Additional countries of interest – not the next largest
Mexico 50 107 111 122 136
India 50 67 100 118 130
Indonesia 29 46 72 79 103
Turkey 33 38 75 92 100

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TVS Group Director on India – Manufacturing, Economy…

Gopal Srinivasan is Director of TVS Electronics Limited, Joint Managing Director of Sundaram-Clayton Limited and Director of various other TVS Group companies. TVS group companies, based in India, have been awarded 5 Deming Prizes. He discusses Deming and quality a bit. He also discusses their experiences in manufacturing in China and the strengths they have found in each country. And he discusses the Indian economy and manufacturing.

In the second part of the podcast he talks about the growth of the economy of Tamil Nadu and the inclusive approach required to help India grow. via Gopal Srinivasan of TVS Group of Companies on Entrepreneurship

Related: Hopeful About India’s Manufacturing SectorToyota Chairman Comments on India and ThailandIndian Deming Prize Winner Expanding2005 Deming Prize Awardees2004 Deming Prize

Top 10 Manufacturing Countries

The newest data from the UN confirms most of the recent trends in manufacturing output – most notably that China continues to grow dramatically. The data also shows a stagnation in USA manufacturing output over the last several years, though the USA remains by far the largest manufacturer. The most significant news from this latest data, I believe, is that that manufacturing output growth in the USA has been slower than global manufacturing output growth from 2002-2005. This was not the case prior to 2002. I will be writing more on this data in the Curious Cat Investing and Economics Blog. UN Data, in billions of current US dollars:

Country 1990 1995 2000 2001 2002 2003 2004 2005
USA 1,040 1,289 1,543 1,460 1,471 1,488 1,545 1,493
Japan 809 1,217 1,033 857 807 886 962 964
China 143 299 484 527 573 664 788 895
Germany 437 517 392 389 407 490 566 594
United Kingdom 207 221 230 218 222 239 283 no data
Italy 240 226 206 205 218 259 295 291
France 200 233 190 185 192 228 256 253
Korea 200 233 190 185 192 228 256 253
Canada 92 100 129 119 120 149 170 196
Brazil 117 149 120 102 95 109 130 171
Spain 108 107 98 100 108 134 153 160
Mexico 50 55 107 110 111 104 111 122
Russia 201 104 73 77 54 64 92 117
India 50 60 67 68 72 84 100 116

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Manufacturing in Asia

The Economist explores the trend to manufacture in Vietnam, Indonesia, Malaysia… instead of China in: The problem with Made in China:

helping China’s share of the world’s exported goods to triple to 7.3% between 1993 and 2005. In comparison, every member of the G8 group of rich nations, with the exception of Russia, saw its share fall. It is a similar story with manufacturing output. Whereas China doubled its share of global production to almost 7% in the decade to 2003, most of the G8 saw their shares fall. Interestingly, only the United States and Canada saw their shares rise

It is nice to see this reported properly. The USA manufacturing share of global output has risen, not fallen, as we have stated numerous times: Manufacturing Value Added Economic DataManufacturing Jobs Data: USA and ChinaGlobal Manufacturing Data by Country. The most fundamental facts of global manufacturing – Global output is increasing. Jobs are decreasing (everywhere, not moving from one place to another – decreasing everywhere). China’s output is growing rapidly. The USA is still by far the largest manufacturer, USA output is growing faster than global output and much slower than China’s output. Japan is the second largest manufacturer with China third, by a fairly large margin though China is growing very rapidly.

Related: Manufacturing JobsChina’s Manufacturing EconomyAmerica’s Manufacturing Future
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Womack on Lean in China

From the Lean blog another valuable podcast: Lean in China with Jim Womack. He is not impressed with the state of lean in China yet. Lean Enterprise China has been established to aid the adoption of the best management practices in China.

Read articles by Jim Womack

Related: China’s Lean JourneyManufacturing Jobs Data: USA and ChinaToyota in China: Full Speed AheadGlobal Manufacturing Data by Country

China’s Lean Journey

China’s Lean Journey by Dennis J. Stamm:

The lean initiative in China is still in its infancy, and not every company in China is inclined to invest in the latest technology, but the challenge from China to our manufacturing base is not likely to get any easier to meet. Modernization and Lean manufacturing are trends that will gain momentum as China meets increasing challenges from other low cost producers.

Related: China’s Manufacturing EconomyManufacturing Jobs Data: USA and ChinaEngineering Education: China, India and the USA

IT Outsourcing Slowing

Outsourcing bubble getting Busted: What should India do? – commenting on the 2006 Global IT Outsourcing Study

Essentially the study says the outsourcing IT will continue to grow though more slowly than it has. It also states the benefits of outsourcing have not reached the level that was predicted for a number of reasons. The study predicts vastly increased competition from China for IT outsourcing work (which reinforces the general consensus).

Perhaps most interesting, however, is the phenomenal growth in the expectations of China as an outsourcing destination. In 2004 only 8 percent of study participants expected to be outsourcing anything to China over a 3–5 year period. In 2005 this number had grown to 40 percent and in 2006 it sits at an impressive 56 percent. We believe that the hype of the Chinese outsourcing phenomenon has potentially outpaced reality.

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China’s Manufacturing Economy

Brad Setser posts on manufacturing comparisons: Have China’s manufacturing powers been exaggerated?

I am all for pushing against over-generalizations that get repeated so often that they become conventional wisdom. The oft-stated argument that France isn’t growing is one example. In fact, France has grown faster than either Germany or Italy over the past few years, and France grew for the same reason the US grew: soaring real estate prices have pumped up domestic demand.

But I would submit that the real story here is the growth in China’s conventional wisdom to improve our understanding of the real situation. I agree with him that the growth in China’s manufacturing sector is the most important story.

But, to me, that story is so over-reported that many get the wrong impression. Continue reading

Manufacturing Jobs Data: USA and China

Manufacturing Productivity and the Shifting US, China, and Global Job Scenes-1990 to 2005 (working paper – July 2005) by William Ward, Clemson University:

Manufacturing productivity growth from 1990 to 2004 should have taken away 7.5 million of the 17.7 million manufacturing jobs that existed in the US in 1990, while GDP growth should have added back (at the new productivity levels of 2004) 5.7 million manufacturing jobs-for a net loss of 1.8 million. In fact, the US economy lost 3.3 million manufacturing jobs during that period

I find that 100% of the (3.0 million) manufacturing jobs lost since 2000 were lost to manufacturing productivity growth and that 100% of the (1.8 million) jobs that should have been added back by GDP growth in the US after 2000 were shifted to other sectors of the US economy than manufacturing.

In this paper he is examines the factors leading to a reduction in manufacturing job worldwide. He concludes that job losses are mainly due to increased manufacturing productivity (worldwide, manufacturing productivity is increasing and jobs are decreasing – including China). Continue reading

Toyota in China: Full Speed Ahead

Toyota in China: Full Speed Ahead, Business Week. Yoshimi Inaba, who’s driving the Japanese auto maker’s expansion in the Middle Kingdom, discusses the Chinese market and his goals there. Toyota’s market share is just 3.5% in China, compared to 13% in the U.S. and more than 40% at home in Japan.

We’re a minor player in the China market, with a 3.5% share, but we’re one of the few manufacturers where demand exceeds supply. Even though we see big potential for growth, we will make sure we’re not in a position of overcapacity. That will be a very key element. And as long as you retain the quality, treat dealers as partners, and avoid oversupply, the results will come. The race for the Chinese market is just around the first corner.

Lean Manufacturing Success

K&S makes first shipment to China by Buzz Ball

The award was given for K&S Wire’s continuous improvement in manufacturing excellence and its implementation of “lean” enterprise principles into its everyday operations.

It is because of these principles that Schwartz was able to make the announcement about the shipment to China.

“We took the order to construct 111,000 wire frames that will hold flip-flops,” said Schwartz. “Because of our ‘lean’ principles, our price was better than could be found in China. This is a first for us and I hope we will have many more in the future.”

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La-Z-Boy Lean

La-Z-Boy changing production lines to compete with China:

But in an attempt to better compete with the overseas market, the Neosho plant, along with six others in its division, is transitioning to the Lean Cellular Manufacturing method. In the new concept, the chair or sofa is manufactured by a team within a cell, thus eliminating separate departments. No jobs will be lost in the transition from batch-and-queue to lean cellular.

“Basically, we will have teams building the chairs from start to finish,” said La-Z-Boy Midwest Human Relations Manager Billy Meyer. “Right now, we have three cells up and running, but by the end of the transition, we will have 37 cells.”

Great news. It is good when companies take the improvement strategy to cope with changes in the marketplace.
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Global Manufacturing Data by Country

I am still looking for a good source for manufacturing data by country and year. Today I found some data from the United Nations Statistics Division. The data for the top five manufacturing economies: China, Germany, Japan, United Kingdom and United States. Figures are in current $US billion. The data used is for Mining, Manufacturing and Utilities (because China and Germany do not have manufacturing data separated out).

Country 2001 2002 2003 2004
United States 1,781 1,779 1,876 2,012
Japan 991 929 1017
China 507 551 638 754
Germany 421 449 545 613
United Kingdom 280 283 322 378

For manufacturing output only:

Country 2001 2002 2003 2004
United States 1,460 1,463 1,523 1,623
Japan 866 812 894
United Kingdom 220 223 254 298

This data shows the United States manufacturing economy is continuing to grow and is solidly the largest manufacturing economy: which contradicts what many believe. It is true manufacturing jobs are decreasing in the United States and worldwide – China is losing far more manufacturing jobs than the USA.
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China now the 5th Largest Economy

China’s Economy Grew 9.9% in 2005, Overtaking France

China’s economy grew 9.9 percent in 2005, overtaking France as the world’s fifth largest, powered by exports and investment in factories, roads and power plants.

Gross domestic product rose to 18.2 trillion yuan ($2.3 trillion) after expanding 10.1 percent in 2004, statistics bureau commissioner Li Deshui said today in Beijing. Investment in urban areas jumped 27.2 percent last year, he said.

2003 data, from Geohive (their source the World Bank):

United States: $10.9 trillion
Japan: $4.3 trillion
Germany: $2.4 trillion
United Kingdom: $1.8 trillion
France: $1.7 trillion
Italy: $1.5 trillion
China: $1.4 trillion
Spain: $.8 trillion
Canada: $.8 trillion
Mexico: $.6 trillion
South Korea: $.6 trillion
India: $.6 trillion

Related posts:

America’s Manufacturing Future

A Wake-up Call From Asia by Patricia Panchak:

China and India very aggressively are pursuing advanced manufacturing. Increasingly, China’s exports to the U.S. are composed of advanced-technology products.

J.P. Morgan said it would add 4,500 employees in India by the year 2007, mainly by setting up operations in Bangalore to support its growing structured finance and derivatives businesses globally. Such jobs are not the simple, low-value call-center work that up to now we’ve associated with this developing economy. And J.P. Morgan isn’t alone; UBS and Goldman Sachs earlier made similar announcements.

From my previous post, Relative Engineering Economic Positions:

The hope some retained that the United States would retain the highest end work and others would work on the less complex work is not what the future holds. The future will prove to be an international marketplace where the United States is a significant but not dominant player. That future can still be bright but it requires a different vision than one in which American dominance is taken as a given.

The challenges to USA manufacturing will continue. The best hope, as I see it, for retaining manufacturing leadership in the USA is through increasing the adoption of management improvement methods including lean manufacturing.
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