Why the US manufacturing sector will not return to its glory days no matter what any administration does.

Here is the thing.  Manufacturing in the United States – grand at one point and powerful – is now a shadow of its former self. Right? Well, let's see.

GDP from Manufacturing in the United States averaged 2076.61 USD Billion from 2005 until 2024, reaching an all-time high of 2383.80 USD Billion in the second quarter of 2024 and a record low of 1800.80 USD Billion in the first quarter of 2009. [1] That sounds like a lot – but – consider this. 

In the 1960s the US was responsible for about 50% of the world’s manufacturing output.  That equated to about 25% of the nation's GDP – so a quarter of our GDP came from manufacturing in the 1960s. 

Today, we are contributing about 16% to the world's manufacturing output and about 11% of our GDP comes from manufacturing.  It is not that we don’t make things anymore – we just don’t make the same things we did 50-75 years ago.  You can read a lot more about this in the article from 60DayUSA – here is a link for you.  60 Days Across The USA - A 2-Month Journey Through The 48 Contiguous States

What I’d like to talk about briefly is not specifically the manufacturing sector, but rather the environment in which we discuss manufacturing these days.  The new presidential administration is touting in a very loud and booming voice that they will bring manufacturing back to the US, they will bring prosperity back to the US.  I’m assuming that the mysterious “Again” in the slogan Mr. Trump uses, refers to a time when the US had a robust manufacturing sector, when it was 25% of our GDP and we were responsible for 50% of the world manufacturing output.  Those jobs that people – men specifically – had back then, were good enough to support a family, to buy a house, to buy a car and to save for retirement and for the kids’ college education. 

Here is the thing: those times are not only gone – but they will NEVER return to the US.  Ever.  The reasoning for this is quite simple but numerous.  Reason 1.  All those kids whose parents were able to save for their college, grew up, and many of them did go to college.  Lots of them did in fact.  They were the college kids of the 70s and early 80s and they graduated with advanced degrees.  Those kids are automatically removed from the pool of workers who would settle for the manufacturing jobs their parents had and the parents would tell you that they would like their kids to have better jobs and higher paying jobs than they did – that’s the reason they sent them to college.  Many of those kids got jobs in the 80s and 90s and they are now parents and in some cases grandparents and they, by and large have enjoyed a level of prosperity that surpasses their parents’ generation.  Why would they go back to manufacturing?

Reason 2.  The base for workers, who would undertake those manufacturing jobs, has come to expect a level of lifestyle that is no longer in line with their parents’ expectations.  In the simplest terms, people who would be working manufacturing jobs want more money than employers are willing to pay.  They want benefits, they want security, they want pension plans, they want a safe, productive environment with guaranteed jobs – like their parents had – but with more money.  And those conditions cost a lot more today than they did in the 1960s so an employer would have to pay out more per capita than their counterparts did 60 years ago.  Why would they do that?  They wouldn’t.  They would seek out job markets where they don’t have to provide any of that stuff and still get obedient workers who are willing to settle for less money, less safety, no benefits and no retirement packages. 

Reason 3.  The United States has shifted its corporate focus from one of building a future, to building a quarterly report.  What I mean by that is what employers were focusing on in the 1960s is nowhere near what employers are focused on today.  Whereas it was perfectly acceptable for a CEO in the 1960s to earn about 20 times that of a worker, today that has jumped by about 1000% and CEOs now earn about 250 times what average workers earn.  Companies used to focus on building the brand and building longevity with workers being an intricate part of the planning process.  Today, companies focus solely on the next quarterly report and how it is growing quarter over quarter because that is what makes the stock price go up, that item to which most C-suite compensation is tied to. 

Here is the bottom line.  In order for US manufacturing to return to a time when – again – presumably America was a great manufacturing powerhouse – we as a country, would have to be wiling to essentially reduce our needs and wants and standards to those nations where labor is so cheap and disposable that companies move there en mass to continue their march towards greater corporate profits.  The world has changed, and the US has changed and we will never have that level of manufacturing capability that we had in the 1960s when most men were able to make a great living working for a company for 40 years and retire. 

That will never happen again.  At least, not in the way that Mr. Trump might understand it or his supporters.  Those times are gone.  Our manufacturing sector is more profitable even at a reduced percentage of GDP than it was back then but the jobs that make up the bulk of manufacturing as they understand it, utilitarian sectors, those jobs cannot be brought back to the US – they simply won’t work here anymore.  Those items produced by manufacturing jobs from the 1960s are simply not expensive enough to support an industry anymore. Even vacuum cleaners have advanced chips in them now, and your iPhone has more computing power than the Saturn 5 rockets that took our astronauts to the moon. Fair wages cannot be combined with corporate output requirements so this notion that any politician can bring those jobs back is purely nonsensical.

So, what CAN we count on or rather hope for?  What we can hope for is politicians and leaders who can see the value of future development and new technologies.  US manufacturing capabilities are leading to more high tech and more high-end jobs not washing machines and radios.  The way to profitability in manufacturing is not by looking back, because that will never happen – those times are gone and if anyone thinks they can be brought back they are delusional. The way to profitability is to look forward – science and engineering and futuristic things.  Leading the world in future technology is what will save US manufacturing – not outdated ideas.  Because if we allow places like China, Taiwan, Pakistan, Vietnam, etc, to continue their manufacturing paths, paths which we initiated, they will not be content with continuing to produce cheap toys, clothes and iPhones.  They will innovate, they will improve, they will become more efficient, more future oriented more technologically sufficient and the only loser in that race will be us, the United States, if we cling to this idiotic notion that we can be great again by looking to the past instead of the future. 

Manufacturing in America is no longer the powerhouse it once was – or rather, it is no longer the powerhouse it was for such a large percentage of Americans.  It is a bigger powerhouse than it ever was – but it is more efficient than ever, so it requires a lot less labor to accomplish a lot more than before. We need to give up the idea that we can be great again – unless we start producing great things.  Again.  Right now, we are yesterday’s news – about to be tossed onto the trash heap of history if we keep trying to relieve our glory days instead of trying to build something better for the world to follow. 

[1] source: U.S. Bureau of Economic Analysis (BEA)