Sad State of Manufacturing in America

Over at engadget, a headline caught my eye today: “Chinese workers reportedly toil in the ‘iPod City’“.

It’s certainly nothing that we haven’t heard before, overseas labor is so cheap these days, who can compete with American labor and just and humane labor laws?  In the fight to save an extra nickel here and an extra penny there, we, of all nations, do nothing to seriously counter and discourage this type of “indentured servitude” and the poor working conditions in countries all over the world. 

What irks me the most is that there was a time when manufacturing jobs in America were well paying jobs; they were jobs that you could raise a family on and they were well respected jobs.

So what’s happened in the last few decades?

I don’t proclaim to know anything about economics or manufacturing, but I really wonder how we’ve lost our ability to compete.

Perhaps what I don’t get is how we’ve lost the spirit and wisdom of Henry Ford.

On January 5, 1914, Henry Ford announced a new minimum wage of five dollars per eight-hour day, in addition to a profit-sharing plan. It was the talk of towns across the country; Ford was hailed as the friend of the worker, as an outright socialist, or as a madman bent on bankrupting his company. Many businessmen — including most of the remaining stockholders in the Ford Motor Company — regarded his solution as reckless. But he shrugged off all the criticism: “Well, you know when you pay men well you can talk to them,” he said. Recognizing the human element in mass production, Ford knew that retaining more employees would lower costs, and that a happier work force would inevitably lead to greater productivity. The numbers bore him out. Between 1914 and 1916, the company’s profits doubled from $30 million to $60 million. “The payment of five dollars a day for an eight-hour day was one of the finest cost-cutting moves we ever made,” he later said.

There were other ramifications, as well. A budding effort to unionize the Ford factory dissolved in the face of the Five-Dollar Day. Most cunning of all, Ford’s new wage scale turned autoworkers into auto customers. The purchases they made returned at least some of those five dollars to Henry Ford, and helped raise production, which invariably helped to lower per-car costs.

So what has happened to this belief that helping American’s do better as a nation, in turn, helps the bottom line?  What has happened to this humanistic element of industry and work?  Is it really just about the bottom line nowadays?  Is it really just about padding executive salaries and stock price?

If American companies like New Balance, Japanese companies like Toyota, Korean companies like Hyundai, and German companies like Mercedes Benz can successfully employ Americans to manufacture products for the American market, why can’t more American companies do the same?  Why can’t Apple, a pretentious, image conscious company, do it?  I’d think it would make a great marketing campaign and improve sales (though probably lower overall profits) if it were made in the USA.

Perhaps we’ve simply lost our ability to innovate and perhaps we’ve lost our interest in industrial engineering and innovating in that field.  Surely, through superior industrial engineering and a willingness to take a chance, we can make American manufacturing as competitive (on a broad scale, factoring in the increase an wages).

There was a time when cars were only for the rich and elite.  There was time when those that manufactured the cars did not make enough money to own one.  Likewise, the Chinese who manufacture our iPods cannot own their own iPod.  But be aware, this will surely change as manufacturing jobs continue to flow offshore and the wealth of American’s are transferred to other nations.