— By Scott Holbrook and Adam-Paul Smolak
Since China joined the WTO in 2001, the US has imported $6,747,513,000,000 ($6.7 Trillion) in goods from China.
Let that sink in.
In 2019 alone, the US imported $450 Billion from China. That’s four times the economic output of the entire state of Mississippi for the same year.
That’s $450 Billion of American’s money that should have gone to Americans to develop American communities. $450 Billion that could have been spent with American businesses so they can expand their businesses and hire more Americans.
Though it might not have been classified as an “economic miracle,” the $6.7 Trillion-plus the US has sent to China as payment for manufactured goods, could have helped a huge number of American communities get out of poverty as well. That $6.7 Trillion could have written many paychecks for many hard working Americans.
If companies like Apple and Nike had decided to build their factories, or contract their labor, in low-cost manufacturing regions in the US (e.g, the entire Southeastern US), that $6.7 Trillion would have made its way back to the Americans that spent it in the first place.
Would it have been more costly for Apple and Nike to do that? Probably. But look at the situation we’re in now:
- Thousands of American companies are making products in a country they can’t event visit right now (due to travel restrictions on both sides).
- Thousands of American companies are unable to control or QC their supply chain.
- Thousands of American companies have had their IP stolen (from forced transfers to espionage).
- Thousands of American companies want to leave China but don’t know how, or where to go.
- Thousands of American companies are stuck with suppliers that openly trample upon the ethical values they hold dear, not only in business, but in basic human dignity.
So, as the US focuses on post-COVID economic development, there are 6.7 Trillion reasons every discussion should address re-creating middle-class revenue-earning opportunities in America. 6.7 Trillion reasons to strategically create a “Silicon Valley” ecosystem for Innovation in Manufacturing. We specifically call out manufacturing for the following reasons:
- A strong, domestic, manufacturing base is necessary for self-reliance (and self-reliance is a core American Value).
- Manufacturing processes and technology have changed drastically since these jobs were exported to China (additive manufacturing, etc.).
- Purchasing habits and business processes have changed drastically since these jobs were exported to China (Americans don’t hold inventory).
- Manufacturing cannot be done in a vacuum (it requires an entire ecosystem).
Over the next few articles, we will unpack each of these points and why for the U.S. to succeed in re-creating revenue-earning opportunities in the US, we must strategically create an infrastructure for product innovation, of which manufacturing is a critical component.
That being said, let’s make something abundantly clear from the outset: The future of US manufacturing is not huge factories with scores of manual labor each performing a monotonous task.
That’s what we sent to China, and it suits them well. Let China keep that, or, better yet, let’s encourage and maybe even subsidize those companies leaving China for emerging market countries (such as Mexico and India) with which we are more aligned. The problem isn’t so much that America sent these manufacturing jobs to China. The problem is that America failed to replace them with better manufacturing jobs.
The future of manufacturing in America is manufacturing custom products, using automation and 3D printing solutions. It’s cutting edge additive manufacturing, robotics and automation. It’s a team that consists of a machine maintenance engineer, software engineer, materials manager, etc. In the future of manufacturing, every one job creates three more.
This is where the US should start when strategically re-creating lost opportunities. This is where companies like Apple and Nike need to step up and do their part to help replace the jobs they exported with new opportunities for the future.
In our next article, we’ll take a closer look at the causes of the currently deficient state of American Manufacturing and dive deeper into why it’s so important to establish the right kind of manufacturing jobs and what those jobs look like.
Scott Holbrook and Adam-Paul Smolak together operate a number of product and manufacturing companies and they both have a long history assisting educational institutions in developing and enhancing manufacturing and logistics programs and events.