Made in America

I saw a book sitting in a bookstore over the weekend: Making It in America: The Almost Impossible Quest to Manufacture in the U.S.A. (And How It Got That Way).

I’m heavy on unread books right now, so I didn’t buy it. But I got to wondering about it later, so I went looking for a book summary.

I didn’t find one, but I did find a review from National Review – a traditionally conservative publication – titled A Flawed Tale of the U.S. Manufacturing Sector. They claim that the book has a Left bias, so they were dismissive of it.

Those looking to confirm their anti-capitalist biases will no doubt find Making It in America a gripping read. More neutral readers searching for a serious examination of the state of U.S. manufacturing are advised to look elsewhere.

However, somewhere in the middle of the review they said something which I can’t get out of my head:

The point of manufacturing is not employment but production, and by that metric U.S. manufacturers are doing just fine. U.S. manufacturing output is only slightly off its 2007 all-time high, while the sector’s value-added – arguably the most important measure of manufacturing’s well-being – is at record levels.

That first sentence: “The point of manufacturing is not employment but production…” – that’s interesting. They claim that producing things in America is not about employing people, but simply producing stuff. How many people are employed to do that is immaterial.

National Review is absolutely right that U.S. manufacturing output is very high. It’s very common to claim that, “America doesn’t make anything anymore!”, but that’s just factually incorrect. We make a lot of stuff.

But here’s key: we do it with drastically fewer people.

In 1970, the U.S. produced just over $1 trillion in annual manufacturing output ($1.9 trillion, inflation adjusted).

In 2024, it was just under $3 trillion.

That’s more than a 50% increase. During that time, the U.S. population increased 67%, which certainly accounts for some of it, but the numbers still indicate that our manufacturing output is very healthy.

However, will production is up, employment in the manufacturing sector has plummeted.

In 1970, manufacturing employed 21.3 million Americans. In 2024, it was 12.8 million. This is a 40% decline in raw numbers. If we take population increase into account it’s worse: we have declined 64% in manufacturing employment, considering where we should be if the rate was stable with a growing population. Then, if we add in the increase in output, the relative numbers go down even further.

The conclusion is obvious: we make more stuff with fewer people, because we’ve automated a lot of manufacturing. Given the advancements in technology, we just don’t need that many manufacturing workers anymore, relative to output.

In 2011, the Federal Reserve Bank of Minneapolis released a study about large manufacturing plants. They did a case study of the U.S. Steel plant in Gary, Indiana, and how 50 years of progress had changed its production.

In 1960, the plant produced 6 million tons of steel.

In 2010, it produced 7.5 million tons – that’s an increase of 25% in 50 years.

In 1960, it used 30,000 workers for that 6 million tons of output.

In 2010, it only needed 5,000 workers for the 7.5 million tons.

That’s an 84% reduction in employment, and a 25% increase in output. It turns out that technology is really good at displacing workers.

Which brings me back to the book and the comments in National Review. What is the point of “bringing back” American manufacturing? (In truth, it never left…) Do we want to bring back American manufacturing, or American manufacturing employment?

I don’t think manufacturing employment is ever coming back. Technology has ensured that those glory days are probably behind us.

So, again, why do we want to bring American manufacturing back?

Here are some possible reasons –

Having manufacturing inside our borders gives us some supply chain security, or at least the illusion of such. We love the idea of self-sufficiency and we’re naturally suspicious of globalization. We like that we have factories here that we believe are under our control since they’re within our borders.

I suppose the idea is that no other country can disrupt that manufacturing. For example, we’re on a mission to move semiconductor manufacturing inside the borders of America (the Biden administration passed the CHIPS act specifically to encourage this). Most semiconductors are made in Taiwan, and with China’s never-ending threats, that’s a very fragile supply chain.

There’s clearly some valid security in that particular case. If China invaded Taiwan, I assume we could continue manufacturing here. TSMC is working towards independent U.S. operations which could ramp up in the event of some military action – I imagine they have contingency plans for exactly this, in fact. This is a national security issue, so there would be some emergency process in play.

But that’s a unique situation. Other situations are less cut-and-dried.

For example, lots of European and Japanese car manufacturers have factories here. If we got in some dispute with Germany, would the Mercedes Benz factory in South Carolina continue to build Sprinter vans?

…I don’t think so. There would certainly be legal obstacles, and that plant likely needs things from Germany, so it would in all likelihood simply shut down and lay everyone off.

But since it’s within our borders, couldn’t we just force it to continue operating? Again, I doubt it. There would be supply chain issues from Europe. And management executives would likely walk out rather than turn against the organization that signs their paychecks. Additionally, we’re basically talking about nationalizing private property, which is fraught with political peril.

The idea that U.S. manufacturing gives us self-sufficiency simply might not be valid anymore. The world is far more interconnected than it ever was, and none of these U.S. plants would be totally independent. In the case of war, we could probably capture some of that capacity, but outside of that, I don’t know how independent they really are.

But what about profits? If we increase U.S. manufacturing, that would increase profit flow to the United States. This is the implied crux of the National Review argument.

However, note that much of the vaunted U.S. manufacturing is for foreign concerns. Every van output by the Mercedes plant in South Carolina is not directly producting money for the United States.

Additionally, since we’ve stated that manufacturing employment is largely static, where are these profits going? Even if a manufacturing concern is 100% U.S. owned, that money is going to the investor class, not the working class. How much value that provides to the middle class very much depends on how much you believe in trickle down economics.

To put it simply: I don’t think the manufacturing profits of the future will do nearly as much for the middle class as they did in the past. Profits used to manifest almost directly as paychecks for blue-collar workers. More stuff meant more jobs. But that’s just not true anymore.

We could consider supply chain efficiency as a benefit.

We bring in so much stuff from overseas that the waterways are clogged with container ships belching pollution, and problems like a global pandemic or a ship clogging a key canal can completely screw up economies.

From logistical and environment standpoints, there’s some value in moving goods shorter distances. But from a financial standpoint, we can lump this in with the prior point about profit flow. This efficiency does nothing to employ more people (indeed, by definition, “efficiency” means less employees), it just increases profits. And the value of more profit depends on who you are and where you believe those profits will flow.

There’s also the issue of national pride. In America, we have a very romantic view of manufacturing. We have visions of the Golden Age of American Industry, when millions of workers clocked into factories and Rosie the Riveter held down the homefront during the war.

But, as we’ve noted, manufacturing employment has plummeted. Additionally, the decrease in the power of labor unions and the lower cost of manufacturing overseas has meant factory employment doesn’t have nearly the value it used to. Back in the 1950s, a young man could get a union job in a factory without any formal education, make a living decent enough to buy a home and raise kids on one income, all while earning a good pension.

In 2025, that idea is laughable purely on an financial level. And it’s more unrealistic when we throw in the cultural and social aspects. Given the advent and glorification of the digital economy and our obsession with higher education for the last couple of generations, going to work in a factory after high school is no longer considered a “success.”

Additionally, I’m not sure the national pride we’re looking for is related to just putting stuff together. It’s more about coming up with ideas. In today’s world, we don’t celebrate assembly. We really celebrate innovation.

This might also just be a societal shift. Manufacturing has largely moved offshore in the last 50 years, and we don’t look at final assembly as a point of pride anymore. We love ideas and innovation, and those are often manifested by workers in other countries.

When it comes to manufacturing, it’s a common refain that we need to “make America great again.” But what’s the “greatness” that we’re trying to make happen “again”?

I feel like we believe this is employment. When people lionize our manufacturing history, they’re having fond memories of when people did meaningful work building stuff. But I don’t think that goodness is ever coming around again.

Consider –

1. Manufacturing employment levels will never be as significant as they once were
2. Manufacturing pay and benefits will never be as generous as they once were
3. Manufacturing jobs will never be as socially desirable as they once were

I don’t know if National Review is right about what it should be, but they’re unquestionably right about what it’s not.

So what is it about? What is the preoccupation with “made in the USA”? Do we want to make stuff for a pure profit motive, even if automation and labor changes will likely shift most of that profit away from the middle class?

Politicians constantly try to evoke some memory of the 1950s gritty work ethic of a blue-collar factory town where everyone clocked out at 5:00 and spent their generous paychecks on Main Street until they retired with a full pension and a smile on their face. For many people – Baby Boomers and early Gen Xers especially – there’s still some comfort in this retro-vision.

But those glory days of American manufacturing are probably never coming back. The dynamics of automation, economic changes due to globalization, shifts in societal perspective, and the erosion of organized labor are a bridge that simply collapsed behind us.