tag:blogger.com,1999:blog-5235419263414453422.post2539794559011377714..comments2024-02-23T01:30:06.101-08:00Comments on Early Warning: US Manufacturing EmploymentStuart Stanifordhttp://www.blogger.com/profile/07182839827506265860noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-5235419263414453422.post-34160704607813794382011-06-24T04:29:26.159-07:002011-06-24T04:29:26.159-07:00I am just wondering guys, given the advances in co...I am just wondering guys, given the advances in computer technology and robotics(chips and software), is it possible to make a car without any human interference at all? Given the level of technological advances in computer vision (which we see everyday on TV as cruise missiles find their target unerringly), I am surprised that we still have human workers in many manufacturing facilities. What has prevented our workforce from being completely replaced by robots? Given todays technology, robots should be able to build more robots, in fact given a problem to tbe solved, a robot should be able to design another robot (number of manipulative units (arms), level of processing power(brains), etc.)<br /><br />At least given a blueprint, one robot should be able to manufacture another.<br /><br />I am pretty amazed to see so many human workers in factories and mines.<br /><br />Has there been a deliberate policy to keep humans working?Harish Kumarhttps://www.blogger.com/profile/07465708756942782430noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-84609851004386030272011-05-22T17:14:39.712-07:002011-05-22T17:14:39.712-07:00I'm baffled that Krugman is being so sloppy - ...I'm baffled that Krugman is being so sloppy - it really misleads his readers to not cover the key factor: manufacturing labor productivity.<br /><br />The US manufactures 50% more now than it did in 1978. People are misled by the fact that US manufacturing employment has dropped substantially in that period. But, that was caused by sharply rising manufacturing labor productivity, rather than by a decline in absolute levels of manufacturing output. See nice charts at http://www.dailymarkets.com/economy/2010/10/03/increases-in-u-s-worker-productivity-more-than-chinas-currency-responsible-for-loss-of-u-s-jobs/ and data at http://www.census.gov/manufacturing/m3/index.html, including http://www.census.gov/manufacturing/m3/historical_data/index.html , Historic Timeseries - SIC (1958-2001), "Shipments" http://www.census.gov/manufacturing/m3/historical_data/index.html.<br /><br />What happened in the 90's was that US domestic manufacturing stopped growing, not that it declined. Flat production meant that rapidly growing labor productivity reduced manufacturing employment equally quickly.<br /><br />It would be very hard for US manufacturing to grow faster than labor productivity, which tends to grow 3-5% per year. So, the best we can hope for is flat employment levels. That, of course, would be a relief for US workers in manufacturing.Nick Ghttps://www.blogger.com/profile/12721405349726668110noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-6441911812686353022011-05-22T13:24:06.107-07:002011-05-22T13:24:06.107-07:00Don't forget the impacts of automation on manu...Don't forget the impacts of automation on manufacturing employment. Over the course of the 20th century, employment in agriculture declined from 40% of the workforce to 2%. In the early years the decline looked linear, but eventually tailed off.<br /><br />From Henry Ford's original assembly line to the 1960s or so, the hours of human labor required to assemble a car went from 100 to about 20. More recently, computer control has made it possible to automate an wide range of tasks, eg, precision machining of complex forms. If transportation costs bring manufacturing back to the US, it is not clear how many jobs will be generated.Michael Cainhttps://www.blogger.com/profile/01472223216496790376noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-2066413245697085972011-05-22T08:28:15.537-07:002011-05-22T08:28:15.537-07:00Mythodrome, Draft, etc: I'll try to write furt...Mythodrome, Draft, etc: I'll try to write further, with data, on this, but very roughly my working hypothesis is that given peak oil taking the form of a longish bumpy plateau, the solution the global system may find to continued operation is to displace US and, to a lesser extent other OECD, workers driving big cars with Asian workers on scooters, electric hybrid bikes, etc. This will save the necessary fuel (as the western workers will be home unemployed playing video games instead of working and driving around) while allowing the system to avoid making fundamental change (I think large systems always resist making big sudden changes if there's any possible way to avoid it).Stuart Stanifordhttps://www.blogger.com/profile/07182839827506265860noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-75332390534647930832011-05-20T15:48:22.153-07:002011-05-20T15:48:22.153-07:00I like how shippers negated the cost of fuel as a ...I like how shippers negated the cost of fuel as a % of the whole by simply jacking rates up. Yeah, that works, sort of! Here's another paper:<br /><br /><i>Ocean shipping, which constitutes 99 percent of world trade by weight and a<br />majority of world trade by value, also experienced a technological revolution in the<br />form of container shipping, but dramatic price declines are not in evidence.<br />Instead, prices for ocean shipping exhibit little change from 1952–1970, substantial<br />increases from 1970 through the mid-1980s, followed by a steady 20-year decline.<br />That is not to say that the container revolution is unimportant; after all, estimates<br />in this paper show that increasing the share of trade that is containerized lowers<br />shipping costs from 3 to 13 percent. However, these savings were trumped in the<br />1970s by sharp increases in fuel and port costs. Indeed, ocean freight costs in recent<br />years have again begun to increase with the cost of crude, and port congestion has<br />become an especially severe problem in those countries with rapidly growing trade<br />volumes (Bajpai, Carruthers, and Hummels, 2003).</i><br /><br /><a href="http://www.jstor.org/stable/30033738" rel="nofollow">Transportation costs and international trade in the second era of globalization</a>. Published 2007. <br /><br />In the news, from 2 days ago: <a href="http://biz.thestar.com.my/news/story.asp?file=/2011/5/18/business/8701282&sec=business" rel="nofollow">Dry bulk, container shipping rates firm up</a><br /><br /><i>Bunker fuel constitutes up to 65% of the total operational cost. Shipping freight rates, which plunged during the global economic crisis in 2008, have been improving since while grappling issues of demand and overcapacity.</i><br /><br />There's a surprising dearth of relevant articles on 'bunker fuel shipping cost' in Google Scholar; the 1st paper quoted here seems to be about it. Maybe Hamilton or Rubin have delved into this in further depth. You're right of course that as long as shipping costs can be born by consumers via price markup it will still be profitable to build in developing nations and ship to OECD etc. The news item mentions world's #1 shipper AP Moller-Maersk Group stating that they expect growth in containers regardless of high fuel costs, after all.KLRhttps://www.blogger.com/profile/00691172491186270514noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-84009875977100762292011-05-20T13:22:14.464-07:002011-05-20T13:22:14.464-07:00KLR - that's certainly a very interesting piec...KLR - that's certainly a very interesting piece of data, but it's not exactly what we need to know. What we really need to know is what is the share of shipping fuel in the overall cost of manufactured goods, versus the share of labor. I suspect the share of fuel is still much smaller, but would like better data.Stuart Stanifordhttps://www.blogger.com/profile/07182839827506265860noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-81714742628425266292011-05-20T11:22:05.899-07:002011-05-20T11:22:05.899-07:00The other day I found this article which has a gra...The other day I found this article which has a graph depicting fuel costs as % of freight revenue: <a href="http://www.clarksons.net/markets/feature_display.asp?section=&news_id=27854&title=Ballooning+bunkers+blister+bank+balances" rel="nofollow">Shipping Intelligence Network 2005 - Features : Ballooning bunkers blister bank balances</a>. This was something I'd been curious about for years but never found any data for. Jeff Rubin alluded to this phenomenon in his book, that with crude >$100/bbl fuel costs would be so onerous that manufacturers would give up on globalization and relocate closer to home, never mind that cheaper labor was to be had elsewhere.KLRhttps://www.blogger.com/profile/00691172491186270514noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-7590423363396369532011-05-20T10:09:09.257-07:002011-05-20T10:09:09.257-07:00There are some solutions to rising transportation ...There are some solutions to rising transportation costs driven by rising fuel prices - electrified rail and fission powered container ships for example. Interestingly, China seems to be working like mad to develop their strengths in both those areas. (Electrified rail and fission power plants at least.)Jameshttps://www.blogger.com/profile/16069860882299265079noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-40980627506878210552011-05-20T08:06:50.729-07:002011-05-20T08:06:50.729-07:00@Mythodrome... Doesn't that work both ways? A...@Mythodrome... Doesn't that work both ways? Any exports that we ship to China will incur those same increased transportation costs.<br /><br />Now, this hurts the Chinese more at a gross level because they export more to us than we do to them. But if both sides have increasing costs, does that significantly benefit either side? Increasing transportation costs are basically tariffs on distance not on imports. If you are an American company located in LA, with supply lines coming from all over the country, and deliveries of goods all over the country, then increased transportation costs are going to hurt you as well.<br /><br />What is interesting though is looking at the percentage of final cost of goods made up by transportation vs. labor. If the difference is large in one way or the other, then even moderate moves in one will not materially affect where manufacturing goes. However, if they are similar in scale, then significant jumps in transportation costs could offset the advantage of cheap labor enough to change manufacturing siting decisions. I suspect that this ratio is very product/technology dependent, so rising transportation costs would tend to move some (but how many?) manufacturers back to the states.<br /><br />I just don't know whether the effect would be very big absent really high oil prices. And, at really high oil prices, is there an economy that requires all of the existing manufacturing let alone additional capacity returning from abroad?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-37723413558684272392011-05-20T07:40:49.920-07:002011-05-20T07:40:49.920-07:00Another possibility is that people will become eas...Another possibility is that people will become easier to employ through relaxed regulations governing wages, hours, and safety. USA: the whiter Third World nation.<br /><br />http://www.cjr.org/the_audit/lat_on_the_us_as_low-wage_offs.phpAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-6791910030347065532011-05-20T07:01:17.680-07:002011-05-20T07:01:17.680-07:00Stuart - why not the obvious cause of a trend reve...Stuart - why not the obvious cause of a trend reversal: peak oil? Seems like shipping costs have no direction to go but up, and that's not something that can be substituted for. (i.e. I don't expect to see solar powered cargo ships anytime soon.)<br /><br />Eventually we'll have to source our goods locally.<br /><br />(Though in writing this I was reminded that I'm still puzzled on where you stand - sometimes I think you expect peak oil to be a major issue and sometimes it seems you think it won't be that major.)Drafthttps://www.blogger.com/profile/06476204907199270127noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-31880269351727040652011-05-20T06:22:00.541-07:002011-05-20T06:22:00.541-07:00Don't rising fuel costs act as a tariff on imp...Don't rising fuel costs act as a tariff on imported goods? At what oil price would shipping costs equalize the wage gap?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-8258450248260639862011-05-20T06:21:16.382-07:002011-05-20T06:21:16.382-07:00I believe that (i) the good news is that economic ...I believe that (i) the good news is that economic imbalances are self correcting in the long run, (ii) the bad news is that this imbalance is going to be corrected via a currency crisis.<br /><br />I hailed a cab in downtown Buenos Aires about a year ago and my cab driver was about 72 years old. I am sure he did not intend to be driving a cab at 72.<br /><br />The symbiosis between the desire of the average American to live beyond his means and the desire of the Chinese government to pursue a mercantilist trade strategy cannot go on forever.<br /><br />[Of course it is not just Americans who like to live beyond their means - the Greeks have an even greater propensity to do so and lots of western countries are in the same league as the US in this regard.]Jameshttps://www.blogger.com/profile/16069860882299265079noreply@blogger.com