It helps to keep in mind a few simple points. First, manufacturing is extremely cyclical. The manufacturing component of the U.S. industrial production index fell by 5.5 percent a year in 1974-75, then rose by 6.6 percent a year for the next four years. In 1980-82, manufacturing fell by 3.1 percent annually for three years, then rose by 4.8 percent a year for six years. Manufacturing then dropped 2 percent in 1991. What happened next?
While Mr. Uchitelle first began whining about manufacturing being "downsized," it actually grew by 5.3 percent a year from 1992 through 2000. Manufacturing then fell 4.1 percent in 2001 (the bottom of his "trend") but rose at a 6.1 percent pace during the first three quarters of last year. What has been unusual about U.S. manufacturing was not the inevitable recession in 2001 but the unusually long and strong expansion for the preceding eight years. About half of the unusually strong gains came from the manufacture of high tech equipment, which is a lot more valuable than T-shirts.
The cyclical ups and downs of manufacturing are international, by the way, not national. Manufacturing started falling in August 2000 in Japan and Korea, followed by the U.S. a month later. When manufacturing falls, so do imports.
Increases in productivity from improved machinery and skills are the reason manufacturing employment falls most of the time, as it does in farming, even when output is growing briskly. From 1990 to 2000, manufacturing employment fell by 0.4 percent a year in the U.S., by 1.8 percent a year in Japan, and by 2.5 percent a year in Germany.
Efforts to stir up "public agitation" about China are based on lies. China accounts for only 18 percent of our imports of merchandise. Chinese imports seem bigger because they are concentrated in clothing and consumer goods, which are far more visible than more costly industrial supplies and equipment. Apparel accounts for only about 6 percent of U.S. imports, industrial supplies and equipment for 55 percent. Major industrial countries supply almost 48 percent of U.S. imports of manufactured goods, while all newly industrialized Asian countries account for 9.3 percent.
The level of value-added per Chinese worker in 1999 was only 8 percent of U.S. productivity, according to the International Labor Organization (ILO). It takes a dozen Chinese manufacturing workers to match one American. The ILO says real wages in Chinese manufacturing industries rose 80 percent from 1990 to 1999, or 8.9 percent a year. Roughly comparable figures for productivity show slower gains of 6.8 percent. That means Chinese unit labor costs are rising much faster than in the U.S. -- a trend that ultimately caused a loss of 15 percent of South Korean manufacturing jobs in the '90s (when U.S. manufacturers shed only 3 percent).
Unfortunately, it looks as though indefensible assertions about the alleged long-term disappearance of U.S. manufacturing are going to become a familiar political complaint over the coming year (as well as a promising source of special interest campaign funds). This rerun of the old "downsizing" story will again bore us with many more efforts by bumbling business writers and their slumbering editors to trump up some sort of "public agitation." If the rhetoric gets too annoying, ask the authors for a few facts. They just hate that.