Manufacturing Sector

And now a few more words on the manufacturing revival. Friday’s Wall Street Journal had a piece (“In U.S., a Cheaper Labor Pool”) on how Caterpillar, which has been doing quite well lately, is threatening to close a plant in Canada and move operations to a low-wage site unless it gets big concessions from its union, the Canadian Auto Workers. That low-wage country its threatening to move to? The United States. The Journal also reports on other manufacturing firms moving south from Canada (but without crossing the Rio Grande): Siemens, Navistar, and Electrolux. The reason? American workers are very productive but they earn a lot less. Caterpillar claims that its workers in Illinois cost the firm less than half as much as their comrades in Ontario. Over the last decade, unit labor costs—wages and benefits paid per dollar of output—have fallen by 13% in the U.S. They rose by 2% in Germany, 15% in Korea, and 18% in Canada. When you factor in transportation and other costs, U.S. workers in some sectors are starting to become competitive with China, where wages have been rising sharply for years and workers have developed a habit of striking and ransacking the boss’s office. The trend towards bringing factory work back to the U.S. even has a name: onshoring. A revival of manufacturing would be good in many ways, but one based largely on low wages and high levels of exploitation is not something to cheer. – Doug Henwood

Actually, Doug Henwood’s entire analysis of the recent job’s report is really illuminating.  The interesting point is that it appears that Globalization has reduced the labor pool of the US to an outsourcing sector for other countries, even China, where in some sectors wages are beginning to be comparable.  This is Globalization, the great equalizer to the lowest common denominator what neo-liberals used to say about socialism.  Welcome to the new normal.  All that late 90s and mid-2000s want of manufacturing return as a way to save the economy? Well, look at it for what it is.