Global American Leadership: Then and Now

Posted: 17th January 2013 by brednane1981 in Super Tool

 

 

 

 

 

 

A new semester of MBA classes started last week and one of my classes is titled Global Business Environment. We began discussing the nature of globalization and how it has evolved over the decades.

In the years following World War II, business in America exploded. With much of Europe still cleaning up the mess from the front lines of war, firms in the U.S. began a boom in manufacturing and technological innovation that changed the world. According to Global Business Today, during the 1960s, 40.3 percent of the world’s manufacturing output came form the U.S. Today, the U.S. is still the leader in world manufacturing, however, the number is down to about 20 percent of the worlds output.

So what happened? Before you start thinking that our economy is disappearing or our deficit spending problems have marked our country for disaster, think about the global market and how it has changed.

In the ‘60s, international trade was relatively small as many countries that have global markets today, were closed to cross-border trade. Plus, with many of the countries in Europe and East Asia torn apart from war, governments were reshaped in to communist run countries. Enter the Cold War. When communism lost and democratic free-markets began to rise up, the global market was recreated and international trade began to increase. Now, developing nations around the world have increased their share of the global market and, yes, the U.S. lost a large portion of its hold on the international market.

But let’s look at the whole picture. Even though the United State’s portion of the market share went down, the size of the market dramatically increased. The United State’s share of the pie dropped from 40 percent to 20 percent, but the pie quadrupled in size. We are now able to trade with countries that 20 years ago were closed economies.

For the average consumer, this is a good thing. Free markets allow for more competition which in turn drives prices down. Free markets also allow for a greater flow of information and technology which can also drive prices down and living standards up. Not to mention this could generate more jobs.

David Brooks, an Op-Ed columnist for the New York Times hit the nail on the head when he said, “One problem is that we have many mortgage brokers and not enough mechanics.”  Perhaps the most unique feature of the current recession is that unemployment is still high and yet, manufacturers are looking for workers!

As Americans we have shifted our focus away from pounding out industrial, durable, and tangible goods, to engaging in a lot more service oriented jobs such as finance or communications. Which are good jobs. But American manufacturing is lacking the skilled labor force needed to run its factories. Factories that have long been the backbone of our country’s economy. This could help explain why the U.S. has seen such a large drop in the percentage of that global pie.

But America is not doomed. The fact that our country does not have as high of an output percentage as before is not something that signals the end of a strong American economy. However, with new emerging markets from developing countries, our position in the United States must become more proactive.  Investment in education and skilled workers is something we need to encourage and we need to bring the factories back to life.

Chadd Brown
Super Tool, Inc.

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  1. Tina K. says:

    I think a key point you have made here is “As Americans we have shifted our focus away from pounding out industrial, durable, and tangible goods, to engaging in a lot more service oriented jobs such as finance or communications”. As Americans we push for college educations, but how can degrees in English, History, Philosophy, etc benefit the manufacturing realm? Unemployed people with degrees are considered skilled and educated, but these are not degrees that transfer into the working world easily. I have strongly encouraged the youth in my family to pursue skilled trades schools which not only have lower costs, but also tend to get placed much quicker. Great article!

    • brednane1981 says:

      Thank you for your insight and your opinion. We should encourage the young adults of today to see that high skills in math and science are of great value. Whereas other, more social science oriented degrees are important to society as a whole, they do not produce a working class of skilled individuals. Thanks again.

      -Chadd

  2. Jim Scarlett says:

    Education is the key. No matter whether it’s a skilled tradesman or financial wizard, we need our youth well educated and that’s not happening. Education reform has become so poliicized now that like so much legislation in need of modernizing, is stalled out and going no where. A well educated work force can do the jobs that our improving technologies will create. We no longer need a host bodies to line the factory assembling anything. Those kind of jobs are in the emerging markets where wages are very low and the work routine and mundane. Our workforce needs to fix the MRI scanner at the hospital or devices like them. Vote for people willing to change the broken and outdated education system and we can recover nicely. Keep the status quo and we’re doomed.

    • brednane1981 says:

      This is something that I can’t agree more with. Education is the key and the economies of other countries proves this claim. We need to refocus our attention to train and educate young adults to think critically and develop their talents and skills. We need to teach students to “want to know more” and use thoses abilities to have succesful and productive lives. Thanks for your comment.

      -Chadd

  3. Isn’t it nice that Free markets also allow for a greater flow of information and technology which can also drive prices down and living standards up.We should encourage the young adults of today to see that high skills in math and science are of great value.

  4. The United States as a whole needs to take a good look at what can be manufactured in-country and what needs to be imported. If import is preferred to reduce costs and therefore offer a more competitively priced product that is a reasonable business decision. But we must also think of what happens when everyone wants to do the same – the P/Os shift to foreign workshops, technology is transferred (exported), corporate sales may increase (and short-term profit as well), but domestic jobs are lost. Skilled workers then need to find new work, sometimes it’s not easy and they shift professions. This has happened in Russia and the situation here is not good. Young people are less interested in engineering, manufacturing and production. The “cool” professions are selling and reselling imported goods, like celphones and PCs almost all of which are imported. The other cool jobs are in government, because government never goes out of business as long as taxes can be collected.