US Manufacturing Uptick

Job growth is occurring as companies replace aging equipment, take advantage of government incentives, seek energy savings and discover that it makes sense to produce some products domestically, rather than operating over long distances.

A new tax break, approved by Congress in December, is expected to further stimulate investment by letting companies deduct 100% of certain types of investments from taxable income in 2011.

The turnaround comes from companies that weathered the recession, and are now building and upgrading their factories, spurred by government tax incentives. At least in the near term, prospects are good, and some expect that Manufacturing will be a good source of job growth over the next decade. Mind you, this turnaround doesn't quite make up for the 6,000,000 manufacturing jobs lost in the US over the past 10-15 years.

US manufacturers that survived the brutal 2008-09 recession are now very competitive, and can afford to expand with much lower labor costs and debt burdens. While they will keep building factories overseas to satisfy demand in foreign markets, they’ll also be investing in US plants.

After the worst recession since the 1930's, manufacturing revenue has grown for almost a year and a half, which is good news after shedding jobs offshore.

Despite the upbeat forecasts, many companies are being very cautious in their hiring, partly to avoid the risk of having to lay off later. They are finding ways to increase production without adding workers - through automation and better efficiency.

Between 2000 and 2007, manufacturing employment had already reduced by about 30%, or 3 million, as companies faced intense pressure from cheaper overseas production. Also, during the recession and subsequent recovery, automation technology accelerated, and productivity jumped 8.6 % in 2010, the biggest gain in 20 years. Automation investments increased by 15% this year to $590 billion, the biggest increase in over a decade, as automation delivered ways to do more with less.

But Manufacturing is not out of the woods. To continue this growth, US manufacturers must adopt new business growth strategies. They must prepare for "re-shoring" - bringing production back to North America by finding new and innovative ways to reduce costs and train workers in new methods and machinery.

To emphasize the turnaround, President Obama declared that his primary job is "putting our economy into overdrive". He announced a restructured presidential advisory board to stress increased employment and greater export opportunities. He put GE CEO Jeffrey Immelt in charge - good man, and a good choice. Hey, have you seen the new GE TV ad.? It features GE employees line-dancing, to show that innovation is fun. That's the positive American attitude!

WSJ - U.S. Factories Buck Decline

5 Strategies for Growing as a Domestic Manufacturer

Jeffrey Immelt To Head President's Council On Jobs

Take a look at the GE line-dance ad - "Work, work!"

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Chindia Manufacturing

According to many different surveys and indexes, India and China are becoming global leaders in manufacturing competitiveness in the short term.

The 2010 Global Manufacturing Competitiveness Index has rated the overall manufacturing competitiveness of 26 countries currently and in five years. According to this index, the world's top 10 countries in manufacturing competitiveness in 2015 will be China, followed by India, Korea, Brazil, US, Mexico, Japan, Germany and Poland. The rise of 3 countries, particularly China, India and Korea, appears to parallel rapidly growing Asian markets. Manufacturing in India puts in performance every bit as strong as China's.

Manufacturing growth will be supported by strong local consumption growth, and local demand in leading countries will remain strong over the next few years (see "demographics" item below).

Recently, 8 of the 10 global companies with the largest R&D budgets in the world are establishing R&D facilities in China and/or India, and a majority will build manufacturing facilities there. Of course, this is primarily to satisfy surging local demand, while the primary goal (I hope) of US manufacturing resurgence is to bring offshore production back to America.

China, India Challenge U.S. Manufacturing Competitiveness

Keeping a check on America's banker

The rise of China & India - Jim Pinto at TEDxDelMar

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Game-changing Demographic Shifts

In their report "The World in 2050", HSBC Bank predicts that the world's economic output will triple by 2050. They admit that their estimates are optimistic - assumptions are that major countries can avoid wars, or even trade wars, and defeat the Malthusian threats of food and water limits. They expect that humans will overcome the energy crisis and ecology problems; estimated investments of $50 trillion in energy alternatives will minimize energy-supply problems.

After averaging 2% over the past decade, world annual GDP growth will rise to 3%. China's GDP will rise to $24.6 trillion (constant 2000 $), just ahead of the US at $22.3 trillion. China and the US will be the G2, far ahead of the others. At $ 8.2 trillion, India will be the third-largest, while most of Europe will fall far behind.

The per capita income of China and India will jump 8 times, continuing their growth. Still, both countries will not match US living standards; Americans will still be 3 times richer than the Chinese in 2050.

Britain slips to No. 6, with GDP at $3.6 trillion, far ahead of Italy and France, and almost level with Germany, which will remain Europe's biggest economy. The GDP of small countries like Sweden, Belgium, Netherlands, Switzerland and Austria, will fall below the top 30.

China's strong GDP is predicted to start slowing in 2015, as their rapidly aging population starts reducing their workforce. By contrast, India's young population is surging, and growth will soon surpass China. Within a decade, perhaps two, India is expected to become the world's manufacturing leader.

Demographics are important. America’s high fertility rate (2.1) will allow it too keep adding manpower long after China's workforce has begun to shrink in the 2020s, and even as India starts to age in the 2040s.

The low fertility rates of many countries will cause their steady population decline unless they become more open to immigration. Japan is already approaching a serious decline; its population has been falling since 2005, and will shrink 37% by 2050.

More than 700 million people will become "middle class", reducing the differential between the first and second worlds. The already rich world will continue to suffer from anemic growth; the law of diminishing returns applies: how much more can they grow? But emerging countries will advance much more quickly, accounting for more than 50% of global growth. Upward mobility will fuel their dynamism and creativity.

BRIC countries (Brazil, Russia, India and China) are already spoiled - they've already become somewhat arrogant, picking fights with outsiders more than watching their own internal corruption. Russia is the BRIC anomaly - its population is shrinking fast, and wealth comes more from natural resources than from innovation. Some say that South Africa will become the S in BRICS.

But, America, Europe and BRICS, get ready for some steep competition from emerging companies and countries.

China and America to lead global mega-boom

Economist - The emerging emerging markets

Pretty Wild Predictions on Global Growth by World Bank

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Stuxnet Cyberwarfare

Cyber analysts say that Stuxnet includes two major components. One sends nuclear centrifuges spinning wildly out of control, while the other secretly records what normal operations look like and then plays those readings back to plant operators so it appears that everything is operating normally while the centrifuges are actually tearing themselves apart. The attacks are not over; some believe the code contains seeds for yet more disruption.

The fast-spreading malicious computer program is a prime example of clandestine digital warfare and is the first to attack industrial systems. But unlike other cyber attacks, this malware did not stay invisible; it somehow turned up in other industrial processes around the world - India, Indonesia and other countries. If Iran was the primary target, perhaps these other locations were just prototype tests, or decoys?

It's interesting to note that automation companies sell their equipment around the world, to anyone who will buy. These products can be used by anyone to develop and test Stuxnet or equivalent malware programs.

It's an open secret that Israel originated Stuxnet; when asked whether Israel was behind the attack, Israelis break into wide smiles - without, of course, admitting anything. America will not admit to any involvement. Just recently (Jan. 2011) the Israeli intelligence agency, as well as Hillary Clinton, separately announced that they believed Iran's efforts had been set back by several years. They stopped short of admitting to using Stuxnet.

Stuxnet was clearly preemptive cyber warfare, used for national security, utilizing a combination of "humint" (human intelligence) and "elint" (electronic intelligence) to prevent the impending threat of nuclear weapons. The point is that Israel, operating under clearly declared threats of nuclear attack, finds that a preemptive cyber attack is justified.

From the American standpoint, Wikileaks and other sources have shown that Saudi Arabia and others in the Mid-East region have become uncomfortable with Iran's belligerence and were putting pressure on the US to "do" something. And Stuxnet was launched - though no one will admit who was responsible.

Israeli Test on Worm Called Crucial in Iran Nuclear Delay

Stuxnet: Joint Operation Nets Victim

Stuxnet may be the Hiroshima of our time

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Buying Big-screen HD 3D & Google TV

I thought you'd enjoy reading my summary of the complicated selection and shopping process.

With a plethora of models available at huge discounts (prices plummeted recently) it was fun making the selection - if you like that kind of fun. Even though I'm an "old geek", I don't particularly enjoy looking at the huge variety of products that are available. Lots of information is available online; it seems everyone rates everything on some website or other. I checked out my 2 favorites, CNET and Amazon, to whittle down the possibilities.

And then I had to shop for price. Online prices were lowest, but I'd have to pay the freight and wait; so I decided to shop locally.

It quickly boiled down to my 2 favorite retailers - Best-Buy and Costco. The Best-Buy website compares any number of models, showing prices and feature-differences for each. Costco has a limited selection, which can be comforting because they do a pre-selection of the best. It quickly came down to price - almost the same, though not quite. Costco offers a free 2-year warranty (extra cost from Best-Buy) plus extra goodies in the discounted "bundle".

So, now I'm the proud owner of a Samsung Model UN55C7100, 55-inch, HD & 3D (with 2 sets of 3D glasses) and a Blue-Ray player.

I drove home with my friend Merle Borg in his truck, and he helped me unpack the gorgeous giant. And then Jimmy the Geek was left in hog-heaven to play with the cables & connectors & gadgets & gismos.

But wait, I also bought Logitech's Revue with Google TV - after comparing it against Apple TV (see weblink). Ahhh, the bliss bonanza!

It took me awhile (you can't rush these things, and I refuse to read the manuals). Now I don't need to use multiple clickers - everything is accessible with one stylish little keyboard. The Home button displays the choice on my big-screen: TV (my regular Cable-box with hundreds of channels and lots of HD); Google Chrome web-browser with bookmarks for Youtube, Yahoo, Facebook, Twitter, CNN, and anything else; Netflix, with choice of unlimited streaming videos; plus my Blue-Ray DVD player with regular and 3D movies. Hey, and all this with a single keyboard which clicks from my couch - goodbye clickers!

And here's another bonus: Now I can show all my gazillion bucket-list pictures on my 55" HD TV from just one 8-gigabyte memory stick. Hey, wanna visit to watch??

Best-Buy TV finder

Apple TV vs. Google TV: How do they differ?

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eFeedback

"I am a Chinese engineer living in Canada, originally from Hong Kong long before its return to China.

"I'm glad you observed that Chinese competitiveness is at least partially due to their workers' willingness to put in 12-hour days and work weekends, with entrepreneurial zeal to do whatever it takes to advance.

"Here's an old Chinese proverb that Chinese parents drill into their children, 'There is gold in education'. Western society needs to wake up its younger generation to the fact that life is not all about indulging ones self with consumption while ignoring how to pay for that consumption!

"The Chinese workers' day will be coming too, just as it did in North America and Japan when their workers tasted the 'good life' and wanted more and more, which drives them to lower productivity. Perhaps that is core to Capitalism?"

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Nilesh Pradhan [npradhan@sensata.com] writes on the subject of engineers re-engineering themselves:

"I agree with you that engineers should have a more holistic view of the business. I also believe that in addition to personal initiative, the process should be institutionalized.

"Many technology companies are structured as hybrid functional/ matrixed. But product managers typically are lightweight, and engineering members receive their feedback and benefits from their functional manager, with very little involvement from the product managers. Functional managers, by their very title and responsibilities, tend to be subject-matter experts. It's not a far stretch from here to realize why engineers tend to focus very narrowly.

"In my view, the organizational structure has fundamentally to be designed with the customer in the middle. Product managers then, should have the power to make decisions about how best to serve the customer, and focus the product team towards the customer value-proposition. The product manager should be a heavy-weight in the company, and in control over the team's performance appraisal. Physical layout changes that bring the product team together in one location will contribute to broadening the perspective, and remove false stereotyping.

"It’s very disheartening for me when I find out that some of my fellow engineers don't have any idea of customer-value. It is no surprise then, that Marketing is right at the top."

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Leon Michaud [lmmichaud@earthlink.net] on my recent writings regarding sleeping Automation Creativity (eNews 21 Oct. 2010):

"Our culture has long been teaching that we need to drive towards making our life 'easier' (happier, more beautiful, thinner - take your pick.) We don't seem to remember that 'Good' and 'Great' do not come from 'Easy'. It's almost as if the cheerleader has become the 'raison-d’être' (justification) for the sport, not productive work.

"Senior Managers continue to preach 'work smarter, not harder' without bothering to define what working smarter might be like. I am thinking; therefore I must be wasting my time and, by extension, the company’s time. Just do it; quality be damned (and be ready to absorb the blame should you be found culpable.)

"Then, there are our automation suppliers (less tech, more talk.) In an effort to maintain their investor’s double-digit growth, they provide legacy products, with an ocean's worth of promises. And we, the customers, are left to debug their technical issues, correct their technical documentation and pay inflated prices.

"Getting back to your article on Automation Creativity, the implication has been that automation will free us. Unfortunately, as I see it, the successful application of automation has freed us from many manufacturing jobs. I guess they never bothered to explain just how the unemployment line would be 'freeing'.

"Yes, we have more free time to engage in whatever short-term motivators we have been told to crave, just so long as we can afford them. Perhaps we have momentarily innovated ourselves out of demand?

"Sometimes it all makes me wonder: just where in the heck are we driving so quickly towards?"

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