The real reason manufacturing jobs are disappearing | Augie Picado

155,722 views ・ 2017-09-28

TED


Please double-click on the English subtitles below to play the video.

00:12
When someone mentions Cuba,
0
12700
1696
00:14
what do you think about?
1
14420
1200
00:17
Classic, classic cars?
2
17020
2056
00:19
Perhaps good cigars?
3
19100
1320
00:21
Maybe you think of a famous baseball player.
4
21420
2096
00:23
What about when somebody mentions North Korea?
5
23540
2336
00:25
You think about those missile tests,
6
25900
2095
00:28
maybe their notorious leader
7
28020
1896
00:29
or his good friend, Dennis Rodman.
8
29940
2000
00:32
(Laughter)
9
32460
1496
00:33
One thing that likely doesn't come to mind
10
33980
2336
00:36
is a vision of a country,
11
36340
1760
00:38
an open economy,
12
38780
1256
00:40
whose citizens have access to a wide range of affordable consumer products.
13
40060
4519
00:47
I'm not here to argue how these countries got to where they are today.
14
47060
4616
00:51
I simply want to use them as an example of countries and citizens
15
51700
3696
00:55
who have been affected, negatively affected,
16
55420
3216
00:58
by a trade policy that restricts imports
17
58660
2280
01:01
and protects local industries.
18
61780
1520
01:04
Recently we've heard a number of countries
19
64300
2896
01:07
talk about restricting imports
20
67220
2176
01:09
and protecting their local, domestic industries.
21
69420
3016
01:12
Now, this may sound fine in a sound bite,
22
72460
3256
01:15
but what it really is is protectionism.
23
75740
2240
01:18
We heard a lot about this during the 2016 presidential election.
24
78980
3760
01:23
We heard about it during the Brexit debates
25
83420
2456
01:25
and most recently during the French elections.
26
85900
3320
01:30
In fact, it's been a really important topic
27
90500
2736
01:33
being talked about around the world,
28
93260
2136
01:35
and many aspiring political leaders
29
95420
2416
01:37
are running on platforms positioning protectionism as a good thing.
30
97860
3560
01:42
Now, I could see why they think protectionism is good,
31
102620
2776
01:45
because sometimes it seems like trade is unfair.
32
105420
4120
01:50
Some have blamed trade
33
110940
1936
01:52
for some of the problems we've been having here at home in the US.
34
112900
3136
01:56
For years we've been hearing
35
116060
1376
01:57
about the loss of high-paying US manufacturing jobs.
36
117460
3200
02:01
Many think that manufacturing is declining in the US
37
121380
3576
02:04
because companies are moving their operations offshore
38
124980
3136
02:08
to markets with lower-cost labor
39
128140
2416
02:10
like China, Mexico and Vietnam.
40
130580
2560
02:14
They also think trade agreements sometimes are unfair,
41
134540
3656
02:18
like NAFTA
42
138220
1696
02:19
and the Trans-Pacific Partnership,
43
139940
1816
02:21
because these trade agreements allow companies
44
141780
3456
02:25
to reimport those cheaply produced goods back into the US
45
145260
3240
02:29
and other countries from where the jobs were taken.
46
149540
3136
02:32
So it kind of feels like the exporters win
47
152700
3096
02:35
and the importers lose.
48
155820
2000
02:38
Now, the reality is
49
158780
1216
02:40
output in the manufacturing sector in the US
50
160020
2920
02:43
is actually growing,
51
163900
1736
02:45
but we are losing jobs.
52
165660
1576
02:47
We're losing lots of them.
53
167260
1240
02:49
In fact, from 2000 to 2010,
54
169220
2696
02:51
5.7 million manufacturing jobs were lost.
55
171940
3640
02:56
But they're not being lost for the reasons you might think.
56
176380
3560
03:00
Mike Johnson in Toledo, Ohio
57
180940
1840
03:03
didn't lose his jobs at the factory
58
183900
1976
03:05
to Miguel Sanchez in Monterrey, Mexico.
59
185900
2456
03:08
No.
60
188380
1216
03:09
Mike lost his job to a machine.
61
189620
2280
03:13
87 percent of lost manufacturing jobs
62
193420
3296
03:16
have been eliminated because we've made improvements
63
196740
2816
03:19
in our own productivity through automation.
64
199580
2560
03:23
So that means that one out of 10 lost manufacturing jobs
65
203540
4696
03:28
was due to offshoring.
66
208260
2280
03:31
Now, this is not just a US phenomenon.
67
211500
2416
03:33
No.
68
213940
1216
03:35
In fact, automation is spreading to every production line
69
215180
3336
03:38
in every country around the world.
70
218540
1920
03:41
But look, I get it:
71
221540
1616
03:43
if you just lost your job
72
223180
1496
03:44
and then you read in the newspaper
73
224700
1656
03:46
that your old company just struck up a deal with China,
74
226380
2616
03:49
it's easy to think you were just replaced
75
229020
2456
03:51
in a one-for-one deal.
76
231500
1200
03:53
When I hear stories like this, I think that what people picture
77
233900
2976
03:56
is that trade happens between only two countries.
78
236900
3280
04:00
Manufacturers in one country
79
240940
2416
04:03
produce products and they export them
80
243380
1936
04:05
to consumers in other countries,
81
245340
2640
04:08
and it feels like the manufacturing countries win
82
248820
3016
04:11
and the importing countries lose.
83
251860
2560
04:15
Well, reality's a little bit different.
84
255340
2520
04:19
I'm a supply chain professional,
85
259220
1576
04:20
and I live and work in Mexico.
86
260820
1760
04:24
And I work in the middle
87
264340
1256
04:25
of a highly connected network of manufacturers
88
265620
3176
04:28
all collaborating from around the world
89
268820
2136
04:30
to produce many of the products we use today.
90
270980
2400
04:34
What I see
91
274420
1216
04:35
from my front-row seat in Mexico City
92
275660
2576
04:38
actually looks more like this.
93
278260
2320
04:41
And this is a more accurate depiction of what trade really looks like.
94
281500
4080
04:46
I've had the pleasure of being able to see
95
286436
2000
04:48
how many different products are manufactured,
96
288460
2496
04:50
from golf clubs to laptop computers
97
290980
2816
04:53
to internet servers, automobiles
98
293820
2576
04:56
and even airplanes.
99
296420
1200
04:58
And believe me, none of it happens in a straight line.
100
298340
2760
05:02
Let me give you an example.
101
302260
1286
05:05
A few months ago, I was touring the manufacturing plant
102
305340
4256
05:09
of a multinational aerospace company
103
309620
2976
05:12
in Querétaro, Mexico,
104
312620
1280
05:14
and the VP of logistics points out a completed tail assembly.
105
314740
3560
05:19
It turns out the tail assemblies are assembled from panels
106
319260
4376
05:23
that are manufactured in France,
107
323660
2496
05:26
and they're assembled in Mexico
108
326180
2216
05:28
using components imported from the US.
109
328420
2920
05:31
When those tail assemblies are done,
110
331860
2016
05:33
they're exported via truck to Canada
111
333900
2456
05:36
to their primary assembly plant
112
336380
2176
05:38
where they come together
113
338580
1256
05:39
with thousands of other parts,
114
339860
2416
05:42
like the wings and the seats
115
342300
2376
05:44
and the little shades over the little windows,
116
344700
2896
05:47
all coming in to become a part of a new airplane.
117
347620
2400
05:51
Think about it.
118
351300
1200
05:53
These new airplanes,
119
353140
1456
05:54
before they even take their first flight,
120
354620
2576
05:57
they have more stamps in their passports
121
357220
2456
05:59
than Angelina Jolie.
122
359700
1240
06:02
Now, this approach to processing goes on all around the world
123
362580
3496
06:06
to manufacture many of the products
124
366100
2496
06:08
we use every day,
125
368620
2536
06:11
from skin cream to airplanes.
126
371180
2320
06:14
When you go home tonight, take a look in your house.
127
374340
2440
06:17
You might be surprised to find a label that looks like this one:
128
377500
3200
06:21
"Manufactured in the USA from US and foreign parts."
129
381900
4200
06:26
Economist Michael Porter
130
386980
2176
06:29
described what's going on here best.
131
389180
1960
06:31
Many decades ago, he said that it's most beneficial for a country
132
391660
4736
06:36
to focus on producing the products it can produce most efficiently
133
396420
4376
06:40
and trading for the rest.
134
400820
1760
06:43
So what he's talking about here is shared production,
135
403820
2760
06:47
and efficiency is the name of the game.
136
407340
1880
06:50
You've probably seen an example of this
137
410540
2536
06:53
at home or at work.
138
413100
1360
06:55
Let's take a look at an example.
139
415620
1736
06:57
Think about how your house was built
140
417380
2120
07:00
or your kitchen renovated.
141
420340
1400
07:02
Typically, there's a general contractor
142
422420
2456
07:04
who is responsible for coordinating the efforts
143
424900
2216
07:07
of all the different contractors:
144
427140
1616
07:08
an architect to draw the plans,
145
428780
1640
07:11
an earth-moving company to dig the foundation,
146
431300
2936
07:14
a plumber, a carpenter and so on.
147
434260
1880
07:16
So why doesn't the general contractor
148
436820
1856
07:18
pick just one company
149
438700
2616
07:21
to do all the work,
150
441340
1216
07:22
like, say, the architect?
151
442580
1200
07:24
Because this is silly.
152
444420
1200
07:26
The general contractor selects experts
153
446580
2296
07:28
because it takes years
154
448900
1736
07:30
to learn and master
155
450660
1736
07:32
how to do each of the tasks it takes to build a house or renovate a kitchen,
156
452420
3776
07:36
some of them requiring special training.
157
456220
2280
07:39
Think about it:
158
459860
1216
07:41
Would you want your architect to install your toilet?
159
461100
3440
07:45
Of course not.
160
465140
1416
07:46
So let's apply this process to the corporate world.
161
466580
2840
07:50
Companies today focus on manufacturing
162
470020
2576
07:52
what they produce best and most efficiently,
163
472620
3336
07:55
and they trade for everything else.
164
475980
1840
07:58
So this means they rely
165
478500
2696
08:01
on a global, interconnected, interdependent network of manufacturers
166
481220
4976
08:06
to produce these products.
167
486220
1256
08:07
In fact, that network is so interconnected
168
487500
2056
08:09
it's almost impossible
169
489580
1240
08:11
to dismantle and produce products in just one country.
170
491900
3360
08:15
Let's take a look at the interconnected web
171
495940
2296
08:18
we saw a few moments ago,
172
498260
1656
08:19
and let's focus on just one strand
173
499940
2296
08:22
between the US and Mexico.
174
502260
2080
08:26
The Wilson Institute says that shared production represents
175
506460
2816
08:29
40 percent of the half a trillion dollars in trade between the US and Mexico.
176
509300
5080
08:34
That's about 200 billion dollars,
177
514900
2656
08:37
or the same as the GDP for Portugal.
178
517580
2960
08:41
So let's just imagine
179
521540
2536
08:44
that the US decides to impose
180
524100
3096
08:47
a 20 percent border tax on all imports from Mexico.
181
527220
3720
08:51
OK, fine.
182
531660
1216
08:52
But do you think Mexico is just going to stand by and let that happen?
183
532900
4360
08:57
No. No way.
184
537940
1696
08:59
So in retaliation, they impose a similar tax
185
539660
3056
09:02
on all goods being imported from the US,
186
542740
2840
09:06
and a little game of tit-for-tat ensues,
187
546460
2240
09:10
and 20 percent -- just imagine that 20 percent duties
188
550020
3456
09:13
are added to every good, product, product component
189
553500
3496
09:17
crossing back and forth across the border,
190
557020
2696
09:19
and you could be looking at more than a 40 percent increase in duties,
191
559740
3336
09:23
or 80 billion dollars.
192
563100
1760
09:25
Now, don't kid yourself,
193
565620
1776
09:27
these costs are going to be passed along
194
567420
2296
09:29
to you and to me.
195
569740
2240
09:33
Now, let's think about what impact that might have on some of the products,
196
573780
5256
09:39
or the prices of the products, that we buy every day.
197
579060
2720
09:42
So if a 30 percent increase in duties were actually passed along,
198
582420
4416
09:46
we would be looking at some pretty important increases in prices.
199
586860
3640
09:51
A Lincoln MKZ would go from 37,000 dollars to 48,000.
200
591460
3800
09:56
And the price of a Sharp 60-inch HDTV
201
596580
3360
10:00
would go from 898 dollars to 1,167 dollars.
202
600620
5216
10:05
And the price of a 16-ounce jar of CVS skin moisturizer
203
605860
4136
10:10
would go from 13 dollars to 17 dollars.
204
610020
3440
10:14
Now, remember, this is only looking at one strand of the production chain
205
614060
5376
10:19
between the US and Mexico,
206
619460
1376
10:20
so multiply this out across all of the strands.
207
620860
2800
10:24
The impact could be considerable.
208
624420
1656
10:26
Now, just think about this:
209
626100
2656
10:28
even if we were able to dismantle this network
210
628780
3240
10:33
and produce products in just one country,
211
633300
3216
10:36
which by the way is easier said than done,
212
636540
2496
10:39
we would still only be saving or protecting
213
639060
3416
10:42
one out of 10 lost manufacturing jobs.
214
642500
2896
10:45
That's right, because remember,
215
645420
2040
10:49
most of those jobs, 87 percent,
216
649220
2656
10:51
were lost due to improvements in our own productivity.
217
651900
2680
10:55
And unfortunately, those jobs, they're gone for good.
218
655340
3160
10:59
So the real question is,
219
659980
1560
11:02
does it make sense for us to drive up prices
220
662340
2336
11:04
to the point where many of us can't afford the basic goods we use every day
221
664700
5520
11:11
for the purpose of saving a job
222
671100
2216
11:13
that might be eliminated in a couple of years anyway?
223
673340
2480
11:17
The reality is that shared production
224
677860
2016
11:19
allows us to manufacture higher quality products
225
679900
3656
11:23
at lower costs.
226
683580
1216
11:24
It's that simple.
227
684820
1200
11:26
It allows us to get more
228
686780
1856
11:28
out of the limited resources and expertise we have
229
688660
2416
11:31
and at the same time benefit from lower prices.
230
691100
3200
11:35
It's really important to remember
231
695380
2056
11:37
that for shared production to be effective,
232
697460
2816
11:40
it relies on efficient cross-border movement of raw materials,
233
700300
5416
11:45
components and finished products.
234
705740
1960
11:48
So remember this:
235
708780
1200
11:50
the next time you're hearing somebody try to sell you on the idea
236
710940
4056
11:55
that protectionism is a good deal,
237
715020
2320
11:58
it's just not.
238
718260
1576
11:59
Thank you.
239
719860
1216
12:01
(Applause)
240
721100
2760
About this website

This site will introduce you to YouTube videos that are useful for learning English. You will see English lessons taught by top-notch teachers from around the world. Double-click on the English subtitles displayed on each video page to play the video from there. The subtitles scroll in sync with the video playback. If you have any comments or requests, please contact us using this contact form.

https://forms.gle/WvT1wiN1qDtmnspy7