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).
Brad Setser posts on manufacturing comparisons: Have China’s manufacturing powers been exaggerated? [the broken link was removed]
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. The constant mention of the eroding manufacturing sector on the USA I believe leads many to think it is shrinking and small. Yet output continues to increase and the share of worldwide manufacturing output is holding steady. China is gaining substantial ground but the Chinese increase has largely come from Japan and Europe. To me this understanding is important because of my felling about the misperceptions of many. But this is nothing more than my judgement.
Manufacturing Productivity and the Shifting US, China, and Global Job Scenes-1990 to 2005 (working paper – July 2005) by William Ward, Clemson University:
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 [the broken link was removed], 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.
K&S makes first shipment to China [the broken link was removed] by Buzz Ball
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.”
K&S Wire manufactures a variety of steel CNC wire forms, grills, grates, guards, display units and custom products for various other manufacturers and for consumer use.
Executive Vice President Dave Padgett said the employees manufactures 20 to 25 different items every day.
The company recently completed a 30,000 square foot addition, which is the sixth expansion in the company’s history. The work force has grown from three in 1995 to between 90-110 this past year.
It is great to see such success stories in the press.
La-Z-Boy changing production lines to compete with China [the broken link was removed]:
“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.
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).
For manufacturing output only:
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.
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|
|United Kingdom:||$1.8 trillion|
|South Korea:||$.6 trillion|
A Wake-up Call From Asia [the broken link was removed] by Patricia Panchak [the broken link was removed]:
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 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.
I just added a post, USA Under-counting Engineering Graduates, to our Curious Cat Science and Engineering Blog on a new report from Duke concerning data on engineering degrees from China, India and the USA: Framing the Engineering Outsourcing Debate. I think it is a great report. If you have any interest in this topic I strongly recommend it.