The US Is Building Factories At a Wildly Fast Rate - Slashdot
source link: https://news.slashdot.org/story/23/06/09/2054234/the-us-is-building-factories-at-a-wildly-fast-rate
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Manufacturing, though, has accelerated its move back to the US from other countries over the past year. According to Kearney's 2022 Reshoring Index, 96% of American companies have shifted production to the US or are evaluating reshoring operations -- a spike from 78% in the 2021 index. The sudden rise in factory construction corresponds with passage of the CHIPS and Science Act in July 2022, which provided $280 billion in funding to boost manufacturing of semiconductors, as well as the Inflation Reduction Act in August 2022. The IRA has sought to create new jobs in manufacturing, construction, and renewable energy, estimated to create up to 1.5 million jobs by 2030. Construction spending in most areas of the US economy has fallen in contrast, including office, health care, and educational construction. Residential construction has also declined amid a big cooldown from the pandemic housing market boom. Census Bureau data reveals manufacturing construction spending has escalated from January 2020 until April 2023 in every region except New England and the Mid Atlantic.
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This comment section is going to be a doozy.-
Because it's specifically giving credit to legislation that was pushed by Biden? Certainly there isn't a contingent of people so wrapped up in their political identity that they'd deny a good thing simply because it was pushed by the 'wrong' political party. No one would hate the US so much as to do that.
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Populists need a group to blame for all the woes real and imagined they're claiming they'll fix. This group must be relatively small, have fewer protections and can be easily identified. A negative connection must be made, which is typically that they are undermining society and leading to a degradation of morals. The best moral panics are the ones that involve children, preying on the most basic human fears. If you can include the ick factor, which is very critical, all the better.
So trans are perfect targ
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Where are these new factories going to get workers when it seems that the most vocal American workers all want to WORK FROM HOME ??
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The "But I wanna WFH!" problem is overblown due to all the loud vocalizing about it. Those who are fine with returning to work at work you never hear about because they're not sitting in a coffee shop whining about wanting to WFH. They're actually at work working.
When one of the people who wants to insist on working from home needs a job and all the jobs are not at that person's home, that person will either WAW: Work At Work, or will be UAH: Unemployed At Home.
Eventually, UAH will end up standing f
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How do you figure? They're going to be able to buy artificially cheap goods, courtesy of US taxpayers. They'll be able to take those artificially cheap inputs and make products which underprice items we could have made here but chose not to because we were building subsidized factories.
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The EU isn't exactly free of state aid. It gives a shit ton of subsidies to various industries about as much as the US. This includes tax breaks and deals for EV factories (Tesla Berlin, soon perhaps Tesla Spain), batteries, solar, etc. 21st century manufacturing. China is, of course, an outlier in how much State aid it gives to its domestic companies (a shit ton).
This ultimately isn't incompatible with globalism. States can pump what $$ they feel like into industries that it views as important to keep dome
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Yeah Airbus for example is basically a government run company in the EU.
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Reshoring is a result of Globalism dying not the cause. It's dying because of the Ukraine war, terrible relations between China and the west, mostly US.
Perhaps the biggest reason is the US is stepping back from policing the trading lanes as it has done since World War 2. Without that, trade would be difficult and subject to piracy like Iran hijacking oil tankers. The US seems no longer willing to stop that. The US started this at a time when it was the only country that could. Even now when other count
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"96% of American companies have shifted production to the US or are evaluating reshoring operations", this is an amazing statement. Strategically it is a huge win.
And "the labor market's struggle to find workers with highly technical and manual expertise", it could mean that people who make things in the USA will get a good living wage.
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Automation to the rescue!
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Dunno.
Been reading a bit on the labor movement, and I'm not convinced we are any wiser than when things like the Ludlow Massacre happened (certainly holding power to account is a great deal worse). A multi-national has no allegiance.
When the winds shift, people will be left holding the bag again (and factories will be moved to Mexico).
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You're looking at the seen. How about the unseen? For instance, how many software developers could we hire with the money we're throwing at battery factories? How do we know that's a better long term investment?
That's the problem with subsidies, Absolutely those will make the subsidized industries grow bigger than they would have. What we can't know is what we gave up in order to fund that subsidy. What I'm quite confident of is those other uses were better, otherwise the greedy people running companies wou
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Funnily enough, the manufacturing sector has been on a bit of downturn for the past few quarters. The Covid backlog we accumulated has been more or less worked through, so now we have to deal with flagging consumer demand due to tighter spending.
https://www.advisorperspective... [advisorperspectives.com]
Whether there will be buyers for all the goods these factories produce is the big question. With us having cut off much of our trade with Russia, and are likely going to do the same to China soon, Europe is looking to either make or
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More goods are going to Russia than are likely to be in any report. Consider this report from Reuters. [arstechnica.com]The fact that sanctions haven't stopped the war implies that either they're fundamentally ineffective because those likely to be sanctioned can prepare for said sanctions, or that they've found ways around them.
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Battery factories make hard assets that reduce global warming and it would be done in the USA instead of offshore. That's worth an awful lot of programmers.
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Those two parts of your sentence aren't connected. Battery factories certainly reduce global warming. That is a good thing. Being done in the US has no clear benefit to climate change. In fact one could argue more batteries could've been made in another country further combating global warming.
And the programmers in the US could've made the software for those factories to be even more efficient.
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Things will be more expensive (they already are). Inflation is just what happens when demand exceeds supply. When you buy stuff or even go to a restaurant, you're competing with other companies that also need that labour. Right now this rebuilding is soaking up a lot of labour. Locally we've seen a lot of men leave manufacturing jobs to go work in construction, and we're seeing those manufacturing jobs filled by women leaving the service sector. Overall I think that's all good news. People are moving up to more valuable positions (that's why they pay more). So the flip side of there being lots of jobs and better pay is that everything costs more. The question is... does the extra pay compensate for the extra cost. The answer is obviously 'no' when you think about it. The reason for all this change is that the overall worldwide production has slowed. It was slowing before the pandemic and it took a big hit during COVID and then due to the war too. Mostly it's because worldwide the boomer generation is retiring. They're a big generation with lots of skills built up over a lifetime. More people are retiring than graduating. All those people retiring are still going to buy stuff, and there's a smaller generation taking their place in the workforce. If just as many people are buying and fewer people are working, that means there's just less to go around per person. It means labour is valuable, but it means you get less. On the bright side, the boomers have accumulated a large amount of wealth over their careers, and they're eager to spend it in retirement. We're about to see probably the biggest inter-generational wealth transfer in history.
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I was thinking of the reasons for it, personally. It's simple enough. Evaluate the cost differences between the offshoring craze starting in the '90s and today.
There are roughly three factors: Labor, transportation, and regulatory.
Labor: This was where China was winning. But over the last couple decades, I remember reading that their wages have been doubling roughly every 3 years.
Transportation: Shipping by boat from China to the USA takes roughly a month. Not only do you have to pay for the boat, but you also have already paid for the manufactured goods. Which means that you're effectively paying interest on those goods - IE it increases the costs by a few percent. Lastly, because you're making it in China then shipping it over, if you overestimate sales, it's 30 days before you can shut the pipeline down, making your overproduction that much worse. Same token, if demand is higher than expected, it'll be a month at least before you can ramp up production. With a factory in the USA, that's more like a week or even days to respond to demand changes.
Regulatory: Dealing with production in China means dealing with the Chinese government, chinese companies, etc... It's not insurmountable, but that's a ~12 hour time difference in communications, a language, different regulatory goals, etc... Plus, well, pollution. China is starting to get serious about pollution regulations. Labor and everything else.A final part is that expanding automation has made labor costs less important per unit. Machines cost about the same no matter the country.
So add all this up, it's now cheaper to produce in the USA again. Fewer regulatory hurdles(1 country vs 2), wages aren't as different anymore, lower shipping, faster responsiveness, etc...
Basically, wages and regulations have risen to the point that China is looking to outsource, India is a bit behind(in my opinion) but not by that far, and there just isn't anywhere else that is cheap and stable with the population, with the entire world looking to do it.
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Good points. Also China has become a much less reliable business partner over the past 1-2 years. Exit bans on US, Australian and Canadian citizens for no good reason. Arrests staff members of businesses that evaluate Chinese companies.
https://thehill.com/policy/int... [thehill.com] -
One thing I see interesting is that 3D printing companies (Slant 3D is the most vocal, but there are a number of others) coming up as an alternative to injection molding in China. A few years ago, anyone wanting injection molding done would be talking with an overseas counterpart, making a mold, and then having the Chinese guys stamp the parts out, put them on a ship and get them to you.
Now, with 3D printers going from a curiosity to being able to be managed in large farms (such as Ultimaker, Prusa's AFS,
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That depends on why they are doing this. If it is because improved technology has made it just as cheap to make things in the US as it is in historically much cheaper countries then great! If not, and it is due to nationalistic zeal overriding economic factors then you are going to have a serious economic problem on your hands in the future.
Just remember that those of us who are non-American are not going to buy goods made in the US if they are more expensive than those we can buy elsewhere. -
Strategically it is a huge win if it reflects the underlying economic reality properly. If it is funded by a government that is already running a huge debt, and if it ignores the said reality, it will be hit the same way Soviet Union was hit in the end. It remains to be seen if "AI" will have the impact that the Internet had.
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Outstanding debt is mostly irrelevant, see Japan, unless politics make it relevant through the debt ceiling. Debt+inflation funding vs taxation is a political choice, there is a danger politics loses all discipline but as of yet government budget relative to GDP in the US isn't that bad, relatively speaking.
With debt funding there is a chance of being driven into trade balance by foreign powers, but the US trade deficit vs GDP ain't that bad either relatively speaking.
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There's no struggle to find those people. There's a struggle to find those people who are also willing to work for minimum wage in dangerous and abusive conditions.
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Honestly - this is likely a preparation for the general feeling from the US that there will be a war with China in the near future.
Too much manufacturing has been moved to a country that we may engage in conflict with, and in any war between major powers a major factor is who can outproduce the other. Whatever your military is in peacetime will not be enough to sustain your through a war. You need replacement planes, tanks, guns, bullets, and supplies (food, clothing, etc) for soldiers.
During World War 2 the US was a manufacturing powerhouse. To the point that even before our official entry into the war we were still supporting countries with material supplies.
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Why does it have to do with war and not simply that China is a crappy trade partner?
The cheap labor is no longer worth the hassle of doing business in China. Add that to the increased transportation costs and the tariffs assessed on some items coming from China.. it just doesn't work out.-
Maybe it has something to so with China floating warships around Japan and Taiwan. Also, Chinese PLAAF fighters bumping into USAF and USN recon jets flying in international airspace. Then there's China warning ships flagged as American being warned of crossing Chinese waters while in a "law of the sea" open shipping lane.
China has been building artificial islands out in open waters that are supposedly equipped for civilian use. Things like way stations for rest and repair of fishing and shipping vessels,
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by hdyoung ( 5182939 ) on Friday June 09, 2023 @11:20PM (#63590408)
We’re still a manufacturing powerhouse. We were number 1 for a long time after ww2, then China pulled ahead, barely, just on the strength of the shear size of their population combined with massive government support. Now we’re probably going to retake the top spot as China gets old and other countries stop playing nice with them.
China’s previous generations of leaders followed a strategy of “hide your strength, and grow powerful quietly”. A very successful strategy that Xi has abandoned 50 years too early. Most Chinese people will never get enough education to understand just how badly his hubris will hurt China in the coming years. They’re not getting any more help from other countries - they’re gonna have to stand on their own two feet and they don’t have what it takes to get out of the middle income trap. It’s a shame, really. A richer, more enlightened China could have been an enormous benefit to the world-
Had China just shut up, denounced Russia, stopped the saber rattling of Taiwan, and focused on wooing Europe as opposed to demanding concessions from the EU, China would have their belt and road extend from the Atlantic to the Pacific. It only was a few years ago that Europe was giving the middle finger to the US and throwing Cisco stuff in the garbage for Huawei network gear and Huawei servers. Had China just kept on as a quiet trade partner, they would have had to do very little except watch the US impl
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+1. Damn thatâ(TM)s insightful. âoeWhat could have beenâ
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Yes we are starting a Cold War in China but that's just because we no longer have any enemies to justify our $800 billion military budget. This is just because we're not cleaning up the wet markets or stopping deforestation in China so pretty soon we're going to have a sequel to covid-19 and the automobile company don't want their supply chains blow out of the water again
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Peacetime military spending will continue no matter how many bogeymen there are or aren't.
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It isn't the US MIC flying jets over Chinese territory. This is definitely a theater of Chinese aggression. Read Taiwan's defense force's twitter account on how often China does incursions into Taiwanese airspace with military jets, and China doing war games near Taiwanese waters.
Sorry, but that propaganda won't fly, so please stop that. You know better.
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The EV and battery factories are mostly due to the Inflation Reduction Act creating huge incentives for domestic production. That's a huge win, especially considering that we're at the start of a huge shift in technology from ICE to EV, and without the IRA, most of that battery production would have been in Asia.
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Eh? We've had battery plant starts since before covid. Lots of them.
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Many companies got burned with supply chain disruptions as COVID caused wild swings in demand that they generally failed to predict, combined with unpredictable factory closures and overloaded ports. You can be certain that every large company has at least looked into alternatives for their supply chains. And with automation, factories aren't as labor intensive, so the cost of production isn't necessarily that much higher here anymore.
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Much of it isn't what you think.
The big 3 are building large facilities to build EV's and batteries. Unfortunately, that isn't 'new' volume. It's replacement volume that takes the place of units that are in manufacturing facilities right now.
For instance, at the end of last year, Ford idled the Romeo Engine Plant in Romeo Engine, who used to produce the 6.2L engine, the 3.5L engine, the 5.4L supercharged GT500 engine, and others. Transmission plants and other powertrain plants will be going through -
Hand out hundreds of billions of dollars and companies will take it. Once it runs out the factories will go right back overseas. I'm not even being cynical, companies have said this is why they're building here now.
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Indeed, the very moment there are no more subsidies to harvest, corporations will move production to wherever wages, workers rights and environmental protection is lowest. And it is not only that they said this - they already did this, numerous times, in numerous countries, and with multiple destinations.
Just recently I bought the same brand/model of shoes that I learned to like over decades. The "manufacturer" is a UK company. The first pair I bought decades ago was made in Portugal (a relatively low-inco
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I remember from my history classes how nations thought the more economically entangled they were the less likely they were to go to war. By being interdependent these nations threatened their own well being if they were to separate themselves by declaring war upon each other.
There's a couple big flaws with this thinking. One is that this economic interdependence was never going to be equal. Perhaps the southern states in the USA produced oranges, tobacco, peaches, and cotton, which the states in the nort
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The US is one of the worst country for logistics in the world. During my short 48 years, I have watched more and more degradation of railways in America. And no, trucking cannot ever compensate for commercial railways. It used to be that factories could easily be built with each rail car access and my uncle even had tracks running directly into his factory where a car loaded with steel 2m x 20 meter steel bars could be lathed and put back onto a car for transport. Those lines shut down ages ago because some idiots built houses near the tracks and then complained they didn't like the noise. Then they complained that there were no jobs.
I live in Europe now. I order most everything from China or other areas of Asia because the US lacks logistics for transporting small or big items cost effectively outside of the US.
So far as I know, there is no known method, slow or fast of moving small packages from the US to anywhere else in the world for reasonable prices. For comparison, when checking prices on USPS, UPS, FedEx, and DHL, the cheapest method of shipping 0.5KG to my location from the US is $35. On the other hand, from China, I can find $3-5. It's slower, but I don't care about fast, I care about getting it there. In fact, it's cheaper to ship from South Africa, India, Australia... the only place that seems more expensive to ship from is Japan.
Manufacturing in the US is a fool's errand. So long as the government makes it impossible to move product, you might as well just give up.-
Well, do you supposed that with the diminishment of the number of factories, there's no reason for all that trackage? And do you suppose that, with the resurgence of American industry, the tracks will be rebuilt?
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There's all sorts of fake bullshit articles saying American manufacturing is collapsing. Suk a Dik, Tik Tok.
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Externalities were more hidden in the past. And now we're more of a global economy, so I assume the differences in costs are shrinking.
And they can't ignore pollution from transport (a previous externality) as easily. Makes building local better.
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Like it or not Trump started this trend. Iâ(TM)m not a Trump supporter but give credit to him.America first , terrifies he put on china is where it all began.
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Trump and Putin combined. If Putin hadn't gone full retard, Biden would probably have gone back to globalist status quo.
Democrats would have never sunk the TPP and crippled the WTO... but now it's done, they are happy with the new paths opened up.
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Well, the industries involved just might have to train-up a few blokes like they used to do with union apprenticeship programs. That's right, the evil unions used to provide skilled tradesmen for industries, but now that union penetration is so shallow, it is going to be difficult for training to happen that way. So, the companies are going to have to do it. People just don't borrow a pile of money to become skilled millwrights to maybe, eventually get a job at a factory that is rumored to be coming to
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