EuroWire May 2016

Transatlantic Cable

that time. In January, the country’s Ministry of Commerce reported that factory activity had contracted for six months, falling to a three-year low. In addition, foreign direct investment in Chinese manufacturing was at for all of 2015, while China’s balance of trade with the USA barely budged – despite the strong dollar. Moreover, China’s exports tumbled in February by 25 per cent, after falling 11 per cent in January. To Mr Rothfeder, the picture that emerges from these statistics is much more nuanced than the one the presidential candidates are presenting. “It reveals China to be something less than a rapacious economic winner,” he wrote, “and the US to be enjoying an industrial resurgence that seemed unimaginable a decade ago.” What is perhaps the biggest impetus to American manufacturing? Mr Rothfeder identi ed this as the move toward “reshoring,” and again collected some persuasive numbers: † In recent years, companies have increasingly been bringing manufacturing jobs back to the USA from China and elsewhere. The practice received a big boost in 2012 with General Electric’s announcement that it was investing $1 billion in an appliance plant in Louisville, Kentucky. The plant would reshore 4,000 jobs that had been moved to China and Mexico and add, over time, nearly 20,000 factory positions at the plant’s regional suppliers. † Reversals like this are apparently part of a broader trend. According to data provided to Mr Rothfeder by the Reshoring Initiative, over the past ve years some 100,000 manufacturing jobs have returned to the USA from overseas, 60 per cent of them from China. If new US plants opened by companies headquartered elsewhere (ie foreign direct investment in manufacturing) are included, the total jumps to 250,000. An additional 50,000 jobs were saved when companies that had planned to go o shore changed their minds. Harry Moser, the president of the Chicago-based non-pro t trade organisation, told the New Yorker that, since 2007, the annual increase in the number of American companies o shoring has dropped from six per cent to 2.5 per cent; and that, over the past couple of years, for every new job o ered by US companies overseas one had been reshored. A strong attraction for these rms is the quality of the USA workforce – its productivity and easy familiarity with lean-factory principles – as well as its ability to adapt quickly to changes in domestic consumer demand.

Manufacturing

China the avaricious job-eater, a theme on the US presidential campaign trail, is a gment of the candidates’ imaginations “They’re stealing our jobs; they’re beating us in everything; they’re winning, we’re losing.” The “they” here is China; and, according to Je rey Rothfeder of the New Yorker , the sentiments are a fair summary of views held by presidential hopeful Donald J Trump. Not only have these struck a chord with many Americans; they have also, wrote Mr Rothfeder, resonated so well that other aspirants to the White House have “have felt compelled to demonstrate a properly high level of indignation toward China’s economic prowess.” In particular, the notion of a ourishing Chinese manufacturing industry, grown fat at the expense of struggling US workers, has weight with unemployed and underemployed Americans – including many who were pink-slipped during the 2007-2009 recession. But is it warranted? Mr Rothfeder, who thinks not, marshalled some facts in aid of a more accurate analysis. (“Why Donald Trump Is Wrong About Manufacturing Jobs and China,” 14 th March) Among the strong indications that global manufacturing is trending positive for the USA, the New Yorker contributor noted the following: † Factory jobs are on the rise in North America; and many of these new jobs are coming back from China, which in fact is straining to maintain its manufacturing capacity. Since March 2010, when manufacturing employment in the USA hit a bottom of 11.45 million jobs, nearly a million new factory positions have been created, most of them in the Southern states – particularly North Carolina, South Carolina and Tennessee. Better still, wrote Mr Rothfeder: “The jobs are typically good ones. Across that same ve-year period, average hourly manufacturing wages have increased over ten per cent, to more than $20. On the whole, US manufacturing, as measured by the Purchasing Managers’ Index, has steadily expanded.” † Meanwhile, according to New York-based Quanton Data, which tracks global job postings by industry, open manufacturing positions in China have been dropping steadily since 2012, and are down nearly six per cent in

Image: www.bigstockphoto.com Photographer Zsolt Ercsel

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May 2016