The Real Reason We’re Losing Manufacturing Jobs (in North America)?

Because the Chinese are taking them? No.

Because we’re not subsidizing them? No.

Because, as pointed out by Mitch Free of MFG.com in a great article in Forbes this summer, we’re not exporting.

Instead of using North American know-how to build great products and sell them to other countries and optimizing the value generation chain, we’re optimizing the cost saving supply chain to instead import great products from other countries. Now, in some cases it makes sense when these products can be produced cheaper and in greater quantities than they can be produced in the US, especially when those products are going to be sold around the world, but I’m still not sure it makes sense in all cases. Especially for custom made products or high-end manufacturing or medical devices which are high value and require very high-end expertise that we possess a lot of in this country.

And while some North American companies have figured this out, and are doing a great job of selling product abroad (like Apple and Caterpillar), they are few and far between and all large companies. As Mitch says, the key to (North) American Manufacturing success is for small and mid-size manufacturers to get into the exporting game and sell their products outside of North America. There are less than 460 Million people in North America. That’s less than 6.6% of global population. And with large middle classes emerging in China and India, where 2.585 Million people live, North America is quickly becoming a (very) small portion of the global market for whatever product you are making.

So why aren’t we exporting? Because, as Mitch says, we have been spoiled by our home business market of more than 300 million people who speak the same language, largely embrace the same culture, abide by the same laws, use the same currency and have freedom of movement and disposable income. In the past, our market has been so robust that you did not need to sell abroad in order to have a great business and live a comfortable lifestyle. But this isn’t the case anymore. Now, we have a lot of work and learning to do in order to catch up with our global competitors whose small- and medium-sized businesses are already skilled exporters. They understand and appreciate different cultures, speak multiple languages and are good at adapting to the markets they are selling in. Because, for the most part, they had no choice. For example, Germany only has 81 Million people. It couldn’t build great, now globally recognized, brands if it just tried to build for it’s home market. And the UK and France only have 62 Million and 65 Million respectively.

We’re losing jobs because we aren’t exporting. But there’s no reason we shouldn’t be. We are among the most productive and technologically advanced countries in the world. We can compete with anyone; we just need to learn to export. And it shouldn’t be hard. We’re already masters at importing with some of the most advanced supply chains in the world. We just have to point them the in the other direction now and then.

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