The Manufacturers Alliance for Productivity and Innovation (MAPI) follows statistics and trends in the industry closely. We at ENGINEERING.com watch their stats as an indicator of where we’re headed.
Recently, MAPI released statistics noting a troubling, negative trend in the US trade deficit in manufactured goods in the first quarter of 2015 compared with 2014, as you can see in the chart below.
The trade deficit has soared by $33 billion dollars, or 30 percent, MAPI reports. This translates to a net loss of about 230,000 American manufacturing jobs for this quarter alone.
Take a look at China’s side of the graph. Exports are up five percent resulting in $490 billion dollars in their first quarter, compared to 1Q 2014. China is also enjoying an impressive 24 percent increase in their trade surplus.
Weak as the US Manufacturing export numbers are, the nature of Chinese manufacturing exports is at least as significant.
Traditionally low technology, high labor, low value added products are being replaced with high tech, high value added exports such as consumer electronics. With advancing automation and the emergence of other global competitors, many Chinese manufacturers are moving production facilities to other low-wage nations such as Bangladesh, Vietnam and Myanmar.
For the 10 largest technology export industries, the Chinese trade surplus is $82 billion dollars in Q1 2015. At the same time, the US trade deficit in the same 10 technology export sectors is $70 billion dollars. This suggests that re-shoring is still limited to specific, narrowly focused industrial sectors.
Mass-market goods, such as consumer electronics are still primarily offshore products. With advancing automation, the situation may change if major facilities open in the US. Tesla’s large battery facility in Nevada is a recent development and Apple has announced that the firm will be moving some production to the US.
The timing of the MAPI statistical release coincides with political wrangling in Washington over the Obama administration’s negotiations for a trans-Pacific partnership (TPP). Details of the TPP are secret and politicians who will vote on granting Obama fast track negotiating authority are required to keep details to themselves.
With no public scrutiny of these details, it is impossible to tell if the current administration will address the trade deficit issue with a new tariff arrangement.
If you’re the President, these stats have to be considered. We are going in the wrong direction. Reshoring is good, in fact it’s great and we need a lot more of it if we’re going to correct this seriously imbalanced situation.
For more information, visit MAPI.net.