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MANUFACTURING MYTH

 

 

PROLOGUE

The story of Man is quite distinct from the stories of men.  The former is based in fact; the latter are acknowledged at best as embellishments based in a seed of truth and at worst as outright lies.  Myths, of course, are a subset of the stories of men.  There are famous myths from the past - such as that of Odysseus as told by Homer. 

As much as the intent was to entertain, the purpose of the myth was to reinforce or instill values - much as one of the purposes of the stories from the Bible.  In these stories recounting cause and effect (another Greek, Aristotle), the "cause" is based in a seed of truth - and is the virtue being reinforced in the myth.

Propaganda could be construed to be myth, because it shares one of the purposes of myths: to reinforce or instill values.  There is a difference, however.  A myth has a seed based in a truth.  Propaganda is simply based in a lie.  There is a difference between Goebbels and Homer, Stalin and Virgil.  So propaganda is not a myth.  It is the use of a lie to shape the values and actions of men.  In the stories told of cause and effect, the cause is a lie.

It is arguable that if one casts out a net far enough, some seed of truth can be ensnared by propaganda - and that facts or truths can be found much as loose glitter on a greeting card.  For example, a group of citizens could have a higher average net wealth than the rest of the citizenry.  That could be a truth.  Propaganda then is constructed around that incidental truth - such as the cause of the accumulation of wealth is that the group has been using unlawful means or predatory practices.  In other words: the wealth was the result of cheating and stealing from others.  Yet the reality is that the value system of that wealthy group of citizens consists of a strong work ethic combined with a sense of responsibility for the generations to come - resulting in the accumulation of wealth rather than the squandering of income on petty personal pleasures.  The cause is something completely different from that presented by the propaganda.

But the propaganda is then used to justify stealing from the group that has done nothing wrong.  This is a pattern that has been repeated and repeated again and again throughout History.

There are those who could argue that the Manufacturing Myth is actually not a myth at all - it is propaganda.  After all, it is not based in truth and History has demonstrated that there is no factual basis to the Manufacturing Myth.  The Past has completely contradicted its premise.  Additionally, those perpetrating the Manufacturing Myth are working their own agenda, contrary to the interests of others and at the expense of others - a classic attribute of propaganda.

Therefore, we won't argue with those who prefer to call it the Manufacturing Lie rather than the Manufacturing Myth.  However, we prefer the alliteration.

What is this Manufacturing Myth?  It is that manufacturing jobs are evaporating before our eyes due to robots.

Before the advent of robots, the mantra was that manufacturing jobs were evaporating before our eyes due to automation.  Before that, manufacturing jobs were evaporating due to the assembly line (specialization of work - think Henry Ford).  Before that, manufacturing jobs were evaporating due to uniformity of materials (think Colt).

You get the picture.  As manufacturing has evolved to remove non-value added costs, at each turn so-called "futurists" have predicted the end of jobs like the End of Days.  At each turn those futurists have been dismally wrong (think Malthus).

They were wrong because increased productivity (lower cost per unit produced) resulted in lower prices to the customer that resulted in increased demand that resulted in a net increase in manufacturing jobs.  The Luddites were also wrong because machinery (including robots) doesn't spontaneously appear - thereby replacing employees.  Machinery including robots must be manufactured - a process requiring employees occupying jobs that didn't exist prior to the automation/mechanization.

Yet, this Manufacturing Myth of the evaporation of manufacturing jobs (due to robotics) is being perpetuated by those working their own agenda.

 

BUSTING THE MANUFACTURING MYTH

It is the End of Days.  At least it is the end of manufacturing jobs.  Robots are not only here, they are on the manufacturing plant floor, replacing people.  Soon, there will be no one employed in manufacturing.

And so begins the Manufacturing Myth.  It is the Luddites revisited.  And it is a fraud.

 

One can rationalize anything.  The less one knows, the greater the need to rationalize.  It is popular to rationalize that manufacturing jobs are going away, anyway.  The production floor employee is being replaced by robots and those with great vision have seen the future and it is filled with robots and devoid of workers.

These are the same seers who saw COBOL programming as the future a few decades ago.

Certainly, that vision of the future – the vision filled with robots – then allows those who have failed to protect manufacturing jobs in their communities to justify their failings.  They haven’t failed.  The jobs were going to go away, anyway.

But what are the facts?  According to the World Bank, manufacturing jobs worldwide have INCREASED 11% since 2000.  That experience, however, is not universal, as the graph of World Bank and USDOL data shows (EXHIBIT A).

 

Quite simply, in the United States manufacturing jobs have declined more than in any other remotely comparable country or group of countries.  Even Canada and the EU outperform the U.S.  This makes perfect sense when taken in the context of US companies investing overseas as depicted in the graph (EXHIBITS B-D).

 

Today, for every dollar of US GDP, US companies are making direct investments overseas equal to 30% of the GDP!  This contrasts with 10% when George W. Bush took office (EXHIBIT B).


And that investment growth abroad definitely includes manufacturing investment, as there has been a three-fold increase in such direct investment also since George W. Bush became President (EXHIBITS C & D).


So, US companies are growing manufacturing jobs – overseas.  It isn’t that there is an absence of opportunity to attract manufacturing investment and grow manufacturing jobs – it is simply that certain communities have failed to compete.  And the failure to compete is not consistent nor true across all states as the graphs in Exhibits E & F clearly show.


It is important to note that the loss of manufacturing jobs has consequences far greater than the absolute loss of tax revenues and jobs from the business affected.  The consequences have been studied and measured by the U.S. Department of Commerce, and the results are in the tables in Exhibits G & H.


That multiplier effect of course applies in each community, and the table below shows the impact in each state.

EPILOGUE: WHAT THEN?

Manufacturing jobs are not in decline worldwide.  They are increasing.  Manufacturing investment worldwide is increasing.

The questions become: Can a manufacturing investment in the U.S. be competitive with one made overseas?  Can a U.S. investment have a competitive ROI?  Can the manufacturing cost in the U.S. be competitive?  Can a manufacturing investment in a high-cost state be made competitive with one in a low-cost state?

The answer to all of those questions is “Yes” – and the answer is not theoretical.  We’ve successfully worked with companies and communities to keep manufacturing jobs in-place.  We’ve successfully worked with companies and communities to bring off-shore manufacturing stateside.

We are the Sherpa – who knows the mountain, the passes, the dangers, and the pathways to lush valleys.  We’ve been on the mountain many times.  We’ve lived on the mountain for many decades.   

As we've mentioned, our core competency is research and analysis.  That includes legal, social and financial.  All are requisite to solve the problems that cannot otherwise be solved.  To give you a better sense of what we mean by research and analysis, we’ve made available upon request access to several online documents (see Sample Work Product).  One is a post-mortem of the failed Texas bid for the Tesla Gigafactory created at the request of some Texas officials.  Another is an example of the econometric modeling we do in evaluating the financial implications of a pending business decision on government.  Yet another is an example of the econometric modeling and extensive financial analysis we do in evaluating the financial implication of a pending business decision on that business.  The fourth document is what we call a company summary that is used to evaluate that company for government.  To receive a password to open a document, simply make the request to us by chat, email, form or phone – or book a call through our online system.

Manufacturing is not disappearing.  It is simply disappearing from places that either don’t care (that is another story), or don’t know the tools available to enable manufacturing to prosper.

EXHIBIT A
Global Manufacturing Employment.png
EXHIBIT B
Direct Investment by US Companies Overse
EXHIBIT C
Growth in US Cos MFG Investment Overseas
EXHIBIT D
US Cos MFG Investment Overseas.png
EXHIBIT E
Manufacturing Jobs Lost US 2001-2018.png
EXHIBIT F
15 Worst State MFG Job Performances sinc
EXHIBIT G
EXHIBIT H
GOV FAQ1.jpg

G    VERNANCE, INC.

JACKSON HOLE, WYOMING

info@governance-inc.com

(214) 628-7700