Monday, June 10, 2024

Vaclav Smil's Made in the USA: The Rise and Retreat of American Manufacturing Is A Humbling Warning

The 20th century has been proclaimed by many to be "The American Century" because of its surprisng rise as a powerhouse in the wake of Britain's decline after 300 years of global dominance. For many, this premise is unchallenged, accepted as fact. And many see the next 100 years as more of the same, with the U.S. remaining on top of the heap as the world's top dog. 

Vaclav Smil sees things differently, hence ths book about what he calls as The Rise and Retreat of American Manufacturing.,the subtitle of his 2013 assessment of the USA today. 

It's easy to see how America became a manufacturing powerhouse after WW2. Our competitors' industrial capabilities, infrastructure and populations were decimated by that war, and many had not yet fully recovered from the earlier global conflict.

For Smil, America's ascent began with the Industrial Revolution in the 1800s. Advancements in technology, infrastructure, and workforce skills turned the U.S. into a manufacturing powerhouse. These advances were mega-amped by the rise of mass production techniques (hence Huxley's A.F. in Brave New World) that boosted productivity and economic growth. 

However, from the late 20th century onward, several factors contributed to the sector's decline. (1) The rise of global competition (esp. Japan, China and Germany) eroded the U.S. manufacturing base. (2) Many American companies relocated production to countries with lower labor costs. This outsourcing lead to job losses and deindustrialization in the U.S. (3) Automation and advancements in technology reduced the need for manual labor, changing the nature of manufacturing jobs. 

And how has this played out?

Smil shows how the loss of manufacturing jobs contributed to economic inequality, regional disparities, and the decline of the American middle class. The shift away from manufacturing has also affected communities that were once heavily reliant on factory jobs (eg. Detroit) leading to social challenges such as unemployment and declining living standards.

Surprisingly, Smil still expressed cautious optimism about the future of American manufacturing, arguing that the sector can be revitalized through strategic investments in innovation, education, and infrastructure. Key recommendations include reindustrialization, advanced manufacturing and sustainable manufacturing practices to address environmental concerns and improve efficiency.

I find it interesting that some critics considered the book too pessimistic. I find it overly optimistic. Is the glass half empty or half full. We'll eventually find out.

Smil makes a solid case for the importance of manufacturing. Yet here in Northern Minnesota there is very little being done to incentivize it, even though we are rich in natural resources. Our economic base has flipped, away from manufacturing to a service economy. The biggest employers are universities, hospitals and our tourism related services. I don't see evidence of this turning around. Do you?

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