“The most believable forecast for 2020 suggests that manufacturing output in the developed countries will at least double, while manufacturing employment will shrink to 10% to 12% of the total workforce. . . . The decline in manufacturing as a creator of wealth and jobs will inevitably bring about a new protectionism, once again echoing what happened earlier in agriculture. The fewer farm voters there are, the more important the ‘farm vote’ has become. As numbers have shrunk, farmers have become a unified special-interest group that carries disproportionate clout in all rich countries.”
—Peter F. Drucker
Drucker was most certainly right about the rise of protectionist sentiment in developed countries as a result of low-wage competition from developing countries. We as a society benefit overall from free trade and globalization, but particular geographical areas in the United States have been hit hard.
A recent MIT study, “The High Price of Losing Manufacturing Jobs,” reports that American imports from China grew tenfold between 1991 and 2007, causing the loss of 1 million jobs, or a hefty 25% of all lost jobs in manufacturing in the U.S. during the period.
To the extent lost jobs are due to currency manipulation, we must be in a protectionist mode with China. But the only sure way out of our dilemma is to upgrade manual manufacturing methods with knowledge workers. A while back, I wrote the book Lasting Value, which featured the stories of such high-productivity U.S. manufacturing companies as Lincoln Electric and the steelmaker NUCOR. Drucker endorsed the book, saying that the lessons in Lasting Value “have particular force for the new job facing management: building organizations of knowledge workers who perform and who create Lasting Value.” The book shows that America’s great manufacturing companies have relatively low unit manufacturing costs—2% in the case of Lincoln’s Ohio operations and under the cost of foreign freight at NUCOR.
The solution is all about bringing knowledge to bear on the manufacturing workforce in America. We have powerful examples of success.
— Joe Maciariello