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I remember a time when you could graduate high school or get out of the service, get a job with a big company, work your way up (on the job training, apprenticeships, extra schooling, etc.) and make a good living that would support you and your family, allow for a nice vacation, you'd have money for your kids education and save for retirement. It was a time when companies had some loyalty towards their employees and vice versa. Those days seem long gone.
This is a subject I enjoy talking about so I figured I start a thread on it. Going to start off with a question I asked Grok and progress from there. Feel free to chime in. Different opinions, perspectives and personal experiences are all welcome.
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What caused the decline and fall of manufacturing in America?
The decline of manufacturing in America is a complex story, driven by a mix of economic, technological, and policy factors that unfolded over decades. Here’s a breakdown of the key causes, based on available data and analysis:
This is a subject I enjoy talking about so I figured I start a thread on it. Going to start off with a question I asked Grok and progress from there. Feel free to chime in. Different opinions, perspectives and personal experiences are all welcome.
_____________________________________________
What caused the decline and fall of manufacturing in America?
The decline of manufacturing in America is a complex story, driven by a mix of economic, technological, and policy factors that unfolded over decades. Here’s a breakdown of the key causes, based on available data and analysis:
- Globalization and Trade Policies: Starting in the late 20th century, trade liberalization—through agreements like NAFTA (1994) and China’s entry into the WTO (2001)—opened U.S. markets to cheaper foreign goods. Imports from low-wage countries, particularly China, surged, with the U.S. trade deficit in manufactured goods ballooning from $19 billion in 1992 to $419 billion by 2006. This competition hit industries like textiles, electronics, and steel hard, as companies moved production to countries with lower labor costs. For example, China’s manufacturing output grew from 3% of global production in 1990 to over 20% by 2015, while the U.S. share dropped from 22% to 17%.
- Automation and Technological Advances: Manufacturing productivity soared due to automation, robotics, and computerization. Between 1987 and 2017, U.S. manufacturing output grew by 80%, but employment in the sector fell by 25% (from 17.6 million to 12.4 million jobs). Machines replaced repetitive tasks, particularly in assembly lines, reducing the need for low-skill workers. While this boosted efficiency, it hollowed out jobs in regions dependent on manufacturing, like the Rust Belt.
- Decline in Union Power: Unions, which once secured high wages and benefits for manufacturing workers, weakened significantly. In 1983, 20% of U.S. workers were unionized; by 2020, that figure was under 11%. This reduced workers’ bargaining power, making it easier for companies to cut costs by relocating or outsourcing. Weaker unions also meant less political clout to push for protectionist policies.
- Corporate Strategies and Offshoring: U.S. companies, chasing higher profits, offshored production to countries with cheaper labor and fewer regulations. For instance, by 2010, over 40% of goods sold by U.S. firms were produced abroad, up from 10% in the 1970s. This was driven by shareholder pressure for cost-cutting and the rise of global supply chains, which prioritized efficiency over domestic production.
- Policy and Investment Shifts: U.S. policy often failed to counter these trends. Tax incentives and deregulation in the 1980s and 1990s encouraged offshoring, while investment in workforce training and infrastructure lagged. Other nations, like Germany, invested heavily in vocational training and industrial policy, maintaining stronger manufacturing sectors. The U.S. also underfunded R&D relative to competitors—federal R&D spending as a share of GDP fell from 1.2% in 1980 to 0.7% by 2018.
- Economic Shifts to Services: The U.S. economy increasingly shifted toward services and tech, which offered higher margins and growth. By 2020, manufacturing accounted for just 11% of U.S. GDP, down from 16% in 1990, while services grew to 80%. This reflected consumer demand and higher profitability in sectors like finance and tech, pulling investment and talent away from manufacturing.
- Regional and Social Impacts: The decline wasn’t uniform. Midwest and Northeast industrial heartlands—like Michigan, Ohio, and Pennsylvania—lost millions of jobs, leading to economic stagnation and social challenges, including opioid addiction and population decline. Between 2000 and 2010, 5.7 million manufacturing jobs vanished, with 2.7 million tied directly to the China trade shock.
