Why One Expert Feels American Manufacturing Isn’t Dead – And What That Means for Mexico

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Commentary by Doug Donahue

With the 20th anniversary of NAFTA, much has been written and speculated about the future of US manufacturing. Manufacturing.net recently ran an interview they conducted with Joe Atikian, an author who explored some of the big-picture themes facing manufacturing globally in his recent book Industrial Shift: The Structure of the New World Economy.

Atikian, an economist with a background in utilities and automotive engineering, questions the widely held assumption that American manufacturing is on the decline. For example, he cites data that US manufacturing output has doubled since 1970, mirroring the national economy with nearly continuous growth. According to the publisher, his book “provides a freshly updated view that counters our tired assumptions about off-shoring, low wages and industrial decline.”

His book explores the continuing shift between three key sectors – agriculture, manufacturing, and services. His thesis is that the share of agriculture has stabilized, the manufacturing share is declining and she share of services is rising. But, at the same time, all three sectors are continuing to grow today.

What does he have to say about Mexico?
Atikian’s commentary about Mexico is interesting and succinct, and the Manufacturing.net interviewer remarks on the importance of Mexico in her introduction too. To summarize, Atikian thinks Mexico is crucial for the future of manufacturing in the western hemisphere for three key reasons:

1. The Mexican government’s commitment to, and tradition of, open trading and a pro-business attitude
2. Great capacity for future investment with capable and motivated workers
3. Close proximity to US and Canada with diminishing language barriers

When you add to that powerful mix Mexico’s unique blend of a stable currency, low-cost labor and a solid manufacturing heritage, it’s no wonder experts like Atikian are so enthusiastic about the future.

And how about China?
Geographically, Atikian also explores the Sino-US dynamic, examining whether or not it is possible for the US to become the world’s predominant services provider instead of its manufacturer, without hurting growth. As Atikian himself puts it: “Is America still a viable manufacturer? Absolutely yes. The rise of China’s manufacturing is not the downfall of America’s. Why not? The global pie is growing and US manufacturing output is too.”

Source: Manufacturing.net

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