Big Manufacturing Isn’t What It Once Was
There’s a whole new economy evolving and manufacturing, as we traditionally think of it, is a shrinking part of it. Yet, we are producing more now than we ever have before. What gives?
Apple’s App Store and iTunes, Google and Facebook are examples. They only sell bits, there’s nothing material involved. Facebook’s market cap is is currently $332 billion, Alphabet’s is $487 billion and Apple’s is $531 billion. That’s over a trillion dollars of wealth “created.” Google, Apple’s App Store and iTunes represent actual value even though they are completely non-material.
Most wealth now is created by people like Steve Jobs and Johnny Ives, designers. Natural resources being converted into useful items is the 1st stage of the industrial revolution, which unfortunately many people who look at the “loss of manufacturing” are still stuck in.
Now, natural resources make up a very small part of the wealth being created. In looking where the value of an iPhone is derived from, raw materials and labor are less than 25% of it.
We manufacture now more than ever, it just doesn’t take a lot of people to do it. We are indeed the manufacturing center of the world. If you want to purchase semiconductor fab gear, we’re it. If you want high tech gear, this is where you come.
A lot of manufacturing for companies nowadays is done by other companies. This is because manufacturing is a very low value add to the products they’re exporting. The vast majority of the value in those products are in software and design. Furthermore, we’ve replaced labor-intensive jobs with robots; we make the most sophisticated robots here as well. Otherwise, we are the world’s bread basket, exporting more food than anybody else.
This is the 21st century in the global economy. Manufacturing as we used to think of it is over.