China to Surpass USA as World Leader in Manufacturing?

The headline in a June 2010 Financial Times article was bothersome. It chronicled “US Manufacturing Crown Slips”.

In summary, the article reported:

“The US remained the world’s biggest manufacturing nation by output last year, but is poised to relinquish this slot in 2011 to China – thus ending a 110-year run as the number one country in factory production.”

“Last year, the US created 19.9 per cent of world manufacturing output, compared with 18.6 per cent for China, with the US staying ahead despite a steep fall in factory production due to the global recession.”

“If the figures are calculated in inflation-adjusted, constant price terms, then….the US will keep its top role in manufacturing…. On an inflation-adjusted basis….China is forecast to take over the number one position in manufacturing….”

In this article, population is a primary factor impacting the prediction. China is four times as large as the USA in terms of population. This size, coupled with a lower wage rate, estimated at one tenth of the average cost in the United States, makes it reasonable to expect China will surpass the USA in manufacturing production.

However, in my opinion, there are sincere problems with this premise. The USA is superior in several manufacturing categories, particularly in the innovative capability to create new products, technologies, and industries. A properly focused, capitalized USA manufacturing industry, can remain the world leader in output.

After having a number of business experiences within China, I now believe the Chinese will not retain the leadership in manufacturing in the world. I predict a pendulum will swing eventually. China will most likely stumble, similar to the historic decline of Japan's edge in business.

An Op-Ed on Federal Spending and Legislation

The following is an op-ed article written by Dave Farr, Chairman and Chief Executive Officer of Emerson Electric Co. His concern is the affect federal spending and legislation are having on the ability of USA manufacturers to compete globally, and to successfully invest in USA operations. It is a non-partisan, truly objective article, and thus worthwhile reading:

To: Emerson U.S. based employees

Attached is a copy of an op-ed that I recently wrote and submitted to local St. Louis newspapers relative to my concerns as the CEO of Emerson -- a global manufacturing company.

As the leader of this company of 120,000 employees, hundreds of thousands retirees, and 350,000 shareholders, I must be concerned about strategic global issues that will impact Emerson and our ability to survive, compete and win.

We are a diverse company and I realize that opinions vary. My responsibility is to do my best to represent the overall interests of our shareholders, our employees and our customers. In this instance, I want first to share this piece with you as employees of this great company.

I wish all of you a very special and joyous holiday season and a prosperous new year.

My personal regards,
David N. Farr

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America's Survival as a Prosperous Nation is at Risk

Major manufacturers today must compete in global markets if they want to survive, prosper, and grow. Emerson is no exception. We compete head-to-head with Asian and European companies here at home and in virtually every market of the world. The ability to manage quality, innovation, logistics, customer support, manufacturing cost and many other factors determines which companies survive or don't.