For a growing number of thinkers, economists and consultants, manufacturing is an absolutely essential part of the economic landscape
to 20% from 35%; even in Germany, the West’s leading manu- facturing powerhouse, it slid to 18% from 32%. Worldwide, the decline dropped to about 16% from 27%. In Canada, the decline has paralleled that of the US, falling to 13% from 22%, accord- ing to Livio di Matteo, professor of economics at Lakehead University in Thunder Bay, Ont.
A change of manifesto Not the least alarmed by such declining numbers, Perry sees them as an occasion to celebrate, not to complain. His comment could be seen as representative of the postindustrial ideology. “[W]e really are experiencing an inevitable shift to a post-
industrial, Information Age economy,” he writes, “where manu- facturing’s importance to output and jobs is declining, similar to the trend in agriculture over the last century. It’s a sign that advances in manufacturing productivity and efficiency are translating into lower prices for consumers when they pur- chase things like cars, food, clothing, appliances, furniture and electronic goods.” But a 2012 report by Washington, DC-based think-tank
Information Technology & Innovation Foundation, titled “Worse Than the Great Depression: What the Experts Are Missing About American Manufacturing Decline,” suggests that the postindustrial view is wrong. It only takes into account manufacturing output as measured in US dollars. That simplis- tic measure ranks US manufacturing output as first in the world, 46% above even that of China, which comes in second. But a better measure compares the change in ratio of manufac- turing real value-added to real GDP. By that measure, from 2000 to 2010, the US has witnessed a 20.2% decline in its manufac- turing capacity. Canada fared worse: it dropped 30%. For a growing number of thinkers, economists and consul-
tants, manufacturing is an absolutely essential part of the eco- nomic landscape and the so-called postindustrial countries urgently need to revitalize it. “The simple truth is that services never succeeded in taking the place of manufacturing,” says Louis Duhamel, strategic adviser, consulting, growth enter- prises, with Deloitte in Montreal and coauthor of a 2012 study
34 | CPA MAGAZINE | MARCH 2015
on Quebec manufacturing. “A strong manufacturing sector is essential to the development of a prosperous society and a diversified economy.”
Postindustrial or preindustrial? In fact, services are not in any way an autonomous part of the economy. A large part of the growth in services comes from manufacturing, says Ian McCarthy, a professor of technology and operations management at Simon Fraser University’s Beedie School of Business. “Twenty or 30 years ago, manufac- turers had their own IT services and trucking operations for logistics. In recent years, they have been outsourcing most of that.” The evidence is that manufacturing still constitutes an over-
whelming part of the global economy: on a 2012 world trade of US$21.55 trillion in merchandise and services, manufactured products accounted for 73% of the total, or US$15.7 trillion, while services accounted for only US$4.25 trillion, or 20%, according to the World Trade Organization. (Raw materials and agricultural products made up the remaining 7%.) In the US, manufacturing accounted for more than 80% of exports, noted former US president Bill Clinton in a June 2013 Bloomberg Businessweek interview. In Canada, that proportion was almost 70% in 2012. “If in the extreme case an economy was composed only of
services, then it would be very poor, because it couldn’t trade for goods; its currency would be worth very little,” writes Jon Rynn, author of “Manufacturing Green Prosperity: The Power to Rebuild the American Middle Class,” in think-tank Roosevelt Institute’s blog. “A post-industrial economy is really a pre-indus- trial economy — that is, poor.” Rynn sees many other reasons why countries such as the US
and Canada should put efforts into a manufacturing revival. First, manufacturing has been the path to wealth and power of every country, from England, Germany and the US to Japan, Korea and China. Without the massive influx of manufacturing, China’s economy would still be led by earth-tilling peasants, not industry-savvy urbanites. Even services are dependent on manufactured goods, Rynn
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68