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Manufacturing: What’s New?

Jun 12, 2013 • Businesses, Developing Economies, Innovation, International Trade and Finance, Labor, Macroeconomic Measurement, Tech • 229 Views    No Comments

Called “A Revolution in the Making,” yesterday’s Wall Street Journal  focused on manufacturing in a special section. I was particularly impressed with some stats that they presented and Jay Leno.

The Stats:

The cost gap is closing between the US and the developing nations. Using WSJ numbers, I created this graph in which total manufacturing costs by country are indexed against total costs for the US. (The US is equal to 100.) Starting with 2003, you can see China’s and Thailand’s total costs increase in comparison to the US.

Manufacturing Costs Selected Countries

Jay Leno:

Owner of more than 200 autos and motorcycles in a massive 110,000 square foot complex, Mr. Leno might have, for example, a 1906 Stanley Steamer that needs a long gone part. Describing his solution for a similar V-8 engine part problem, he said, “We took the worn piece and copied it with a scanner that can measure about 50,000 points per second. That created a digital file or image of the part, which we can modify in the computer if there are imperfections or defects in the part being scanned. Then you feed that data into the 3-D printer, and, presto, you have a mold that will allow you to cast a brand new part.”

Mr. Leno is a part of what some call the “New Industrial Revolution.” 3-D printing facilitates local production. Close to home, on demand even, you can create what you need. As 3-D printing spreads and evolves, it can make increasing sense for manufacturing to return to the US.

But what is 3-D printing?

Not really printing since metals, plastics and other materials are made, 3-D printing is a relatively new manufacturing technology. In a 7-step WSJ diagram, “Incredible Shrinking Factory/The 3D printing process from digital file to finished product,” 3-D printing became a little clearer:

A 3-D Printer Composed of a Printer Head and a Build Box From a WSJ graphic.

Manufacturing with 3-D printers from WSJ

1. Create the digital blueprint by formatting objects into a 3-D image on a computer screen.

2. Then, a very thin shape can be produced when the computer gives instructions to the printer head in a “build box” which then sprays, heats, moves back and forth.

3. Atop the first object, the printing machine makes another thin layer .

4. More and more layers, perhaps during many hours, are added. If necessary, the bottom of the box lowers to make more room.

5. At this point, for some plastic and metal items, the process is just about done.

6. Or, using heat from other metal objects that are infused into the original item, certain metal products can be strengthened.

7. The object cools before moving onward to further finishing.

So when we see the June 7 employment report with little change in manufacturing jobs and note that we have not returned to pre-recession manufacturing employment, we can respond with the bad news and the good news. Yes, the number of manufacturing jobs is growing at a slower rate. However, because of higher costs in developing nations and sophisticated technology that requires fewer people, we have become more competitive.

David Ricardo might even say that the US is increasing its comparative advantage.

Gain in manufacturing jobs:

  • Jan. 2012 to Jan. 2013: +124,000
  • Feb. 2012 to Feb. 2013: +118,000
  • March 2012 to March 2013: +74,000
  • April 2012 to April 2013: +55,000
  • May 2012 to May 2013: +41,000

Sources and Resources: Most of my information came from the WSJ Special Report on manufacturing. Here are the direct links to the stats, Leno, and 3-D printing articles and also to an excellent Economist column on 3-D printing. If you can access the pay walled articles, I recommend taking a look. The source of my jobs numbers, a Washington Post Fact Checker blog report on manufacturing was also fascinating.

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