Who's the World's Largest Manufacturer?
This phrase makes you start wondering if China is the top manufacturing country in the world because manufacturing from all around the globe has been moving to China for years.
In an article in the Financial Times, Global Insight said "China is set to overtake the US next year as the world's largest producer of manufactured goods, four years earlier than expected, as a result of the rapidly weakening US economy. According to the estimates, next year China will account for 17 per cent of manufacturing value-added output of $11,783bn and the US will make 16 per cent. "
Global Insight counts manufacturing production for countries - including the activity of foreign-owned companies and local ones - as value-added output. Value-added data are arrived at by subtracting "inputs" - such as purchases of materials, parts and services - from raw "gross output" as measured by the sales of individual companies.
The National Association of Manufacturer's (NAM) had to refute this claim by "real-manufacturing" (value-added manufacturing that is price adjusted to reflect the quantity of output, that the US is still number 1 and produces about 25% of the world's output. Below were the NAM rankings.
2: European Union
China's manufacturing is growing > 10% per year and at this rate, China would overtake the US as the world's largest manufacturer by 2020.
This is just a natural trend that I have been speaking about for years that I call "The Balancing Equation". Some manufacturing, especially highly manual activities, have been shifting to regions on the globe that have a lower cost workforce (e.g. Textile Industry and others), but guess what, China won't be the last region. As China continues to grow and a larger middle class forms, regions like Africa could be the next region where low cost manual manufacturing activities move to in this global economy.
Simply put, understand where your company falls in the Balancing Equation that I describe as the global balance of raw materials, manufacturing and distribution. Some manufacturing will NEVER come back to this country, but that does not mean you can't thrive in this global economy.
Agent Technologies, Inc.
For more information on "The Balancing Equation" read our book The Consumer's Workshop: The Future of American Manufacturing.
The Consumer's Workshop: the future of American manufacturing
The Consumer's Workshop: The Future of American Manufacturing is a hand book on how to setup the systems within your company and create the workforce you need to be successful now and in the future. Written by authors that have worked at some of America's largest manufacturers, founded their own manufacturing organizations and helped numerous small manufacturers grow.
The Consumer's Workshop: The Future of American Manufacturing is a must read for today's business leaders. It is insightful and provocative in its approach to where US manufacturing has been, how manufacturing got into the troubles it faces today and what we need to do to become the standard for world class once again. If we want to know how to regain that competitive edge once again, the roadmap is certainly the pages of The Consumer Workshop.
-- Bruce Vaillancourt,Director, NIST MEP Program, TechSolve, Inc.
The Consumer's Workshop is an extremely timely review of how manufacturing strategy developed in the past
and how it will change in the future. The author team clearly demonstrates that companies have to change -- and provide plenty of advise how such a change should take place."
-- Frank Piller, PhD, International Manufacturing Consultant
As the authors make clear, eventually American manufacturing will become the workshop for direct production of consumer's own designs -- or it will be no more. Begin that path by following the steps outlined here."
-- B. Joseph Pine II, author, Mass Customization: The New Frontier in Business Competition
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1) Manufacturing Output increased 0.4 percent in July 2008 with durable goods up 0.6 percent and nondurable industries rose 0.3 percent. Source: Federal Reserve Board
2) Manufacturing Employment fell by 61,000 jobs in August 2008.
Source: Bureau of Labor Statistics
3) Manufacturing Trade Deficit in July 2008 increased $3.6 billion, or 5.1 percent, to $74.9 billion. Sources: Census Bureau, Bureau of Economic Analysis
4)Manufacturers' New Orders in July 2008 increased $5.9 billion, or 1.3 percent, to $465.4 billion. Up five consecutive months. Source:Census Bureau
5) Manufacturers' Inventories increased $2.6 billion, or 0.5 percent, to $558.2 billion. Up ten of the last eleven months. Source: Census Bureau