The U.S. trade deficit in manufactures and the Chinese surplus continued to surge in 2012 | "Shared responsibility" -- The chief justice called it a tax | U.S. economic outlook for 2013 and 2014
February 21, 2013
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MAPI Research and Insight
The U.S. trade deficit in manufactures and the Chinese surplus continued to surge in 2012
Ernest H. Preeg, Ph.D., senior adviser for international trade and finance
U.S. and Chinese exports of manufactures grew at a slower pace in 2012, although the 8% growth in Chinese exports was almost double the 5% U.S. growth. Far more important was the continued surge in the trade imbalances -- the U.S. deficit and the Chinese surplus -- for a third year. The U.S. deficit rose by 8% in 2012, to $498 billion, while the Chinese surplus soared by 15%, to $755 billion. The $35 billion increase in the U.S. deficit resulted in the loss of 140,000 to 280,000 American manufacturing jobs. Policy Analysis
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"Shared responsibility" -- The chief justice called it a tax
Donald W. Westfall, research and council director
The IRS released draft regulations last month clarifying many but not all of the issues around the penalties employers will pay if they choose to drop insurance coverage or if they provide coverage that fails to meet certain minimums. The new rules shed light on the "pay or play" decisions that many manufacturers will have to make over the next few years. Issues in Brief
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U.S. economic outlook for 2013 and 2014
Daniel J. Meckstroth, Ph.D., vice president and chief economist
MAPI believes that the fourth-quarter decline in economic activity is not the beginning of another recession or a harbinger of one. On the contrary, the end-of-year weakness was a correction in production to temporary surges in the third quarter. We predict that manufacturing production will increase 2.2% in 2013 and 3.6% in 2014, versus 1.8% and 2.8% growth, respectively, for the economy as a whole. The bottom line is that stronger growth in business fixed investment and residential construction is offset by government spending austerity. Economic Update
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Manufacturing facts: The sector's falling unit labor costs increase global competitiveness
This week's excerpt from The Facts About Modern Manufacturing: Between 2000 and 2011, U.S. manufacturing's unit labor costs declined by an average annual rate of 1.6%. Based on data for major manufacturing countries (excluding China), just four -- Taiwan, Japan, the Czech Republic and Singapore -- experienced larger declines. The decline in unit labor costs in the United States has occurred even though hourly labor compensation (adjusted for inflation) increased by an average annual rate of 0.9% over the decade, largely as a result of productivity growth. Manufacturing Facts
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MAPI in the News
Manufacturing embraces the smart factory
Manufacturing is increasingly combining high-tech tools and high-tech workers and welcoming the industrial Internet into smart factories, such as the Siemens Electronic Works facility in Germany. The Siemens plant integrates product lifecycle management, manufacturing execution systems and industrial automation. "By leveraging [these] systems, successful companies can focus on aspects like shortening their innovation cycles, getting transparency into their operations, raising individual productivity through knowledge sharing across their organizations and minimizing risk by building in more predictability into dynamic environments," said Helmuth Ludwig, CEO of Siemens Industry Sector North America and MAPI board member. IndustryWeek (2/14)
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MAPI: U.S.-Chinese trade imbalance in manufactures is set to continue
The U.S. trade deficit in manufactures increased by 8% in 2012 while the Chinese surplus was up by 15%, making the total increase in the U.S. deficit $172 billion between 2009 and 2012 and the increase in the Chinese surplus $333 billion over the same period, according to a new report from MAPI. "Looking ahead, the momentum is toward still larger trade imbalances in 2013," said Ernest Preeg, senior advisor for international trade and finance at MAPI. "Less clear but far more important is the longer-term outlook over 5 to 10 years. Opinions vary as to whether the U.S. deficit in manufactures will continue to rise or begin to fall, but it is highly unlikely, on current policy course, that there will be a major decline in the deficit." Modern Distribution Management (2/14)
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China faces tough transition to maintain manufacturing lead
China took the top spot as the largest manufacturing nation in the world in 2010, replacing the U.S., and continued to gain momentum in 2011, but China must make a long-term transition that will be possible only through economic and political reforms, according to a new MAPI report. "Eventually, growth will depend more heavily on an expanding service sector, where difficult structural changes are necessary to promote productivity growth. The Chinese will eventually exhaust the easy productivity gains from imported technology and technology transfer, and they will have to rely more on their own R&D," according to MAPI chief economist Daniel J. Meckstroth. "The growth rate in China is bound to slow ?- what remains to be seen are the magnitude of change and the timing." Modern Distribution Management (2/15)
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In the Industry
Weed-seeking robots could be answer to farmers' problems
Herbicide-resistant "superweeds" are stymieing farmers with their ability to thrive despite use of chemicals. Researchers at the University of Nebraska have suggested a solution: weed-seeking robots. "The computer would know what species it's dealing with, the appropriate weed-control tool, and you'd be done with it," weed ecologist Steve Young said. National Public Radio/The Salt blog (2/14)
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Leadership and Strategy
Manage your talent like a sports team, former Tyco CEO says
Successful sports teams usually have a balanced roster of committed and talented players, former Tyco International CEO Edward Breen says. That's the same approach leaders should take in running their company, Breen explains. "There's no one individual going to make a company," he says. "So I always want to put people around me who I think are better than me, who will challenge me." Knowledge@Wharton (2/13)
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The right to be let alone is indeed the beginning of all freedoms."
-- William O. Douglas,
U.S. Supreme Court justice
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The Manufacturers Alliance for Productivity and Innovation, founded in 1933 and located in Arlington, VA, contributes to the competitiveness of U.S. manufacturing by providing economic research, professional development and an independent, expert source of manufacturing information.
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