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How U.S. Manufacturing Stacks Up Against the Rest of the World

Posted by: 17. December 2015

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Even though many companies now have global supply chains, there are important differences from one country to another in the manufacturing industry. Here are a few examples of ways that United States manufacturing stacks up compared with other countries.

Total Employment

According to information published by the World Bank, the three countries with the highest percentage of workers engaged in manufacturing as of 2012 were Qatar at 51.9 percent, the Czech Republic at 38.1 percent and Slovakia at 37.5 percent. By contrast, the United States had less than 15 percent of its workforce in manufacturing at last report (2011), and the percentage had fallen dramatically from more than 26 percent in 1990.

The three countries with the lowest percentage of the population involved in manufacturing were Bhutan at 8.6 percent, Hong Kong at 11.6 percent, and Luxembourg at 12.6 percent.

While some research shows China as the largest manufacturing economy, a 2015 report issued by the U.K. House of Commons ranks the U.S. slightly ahead of China in manufacturing output, although both countries’ numbers round to approximately $1.8 trillion.

Productivity

Recent reports from the U.S. Bureau of Labor Statistics (BLS) show that the country is highly productive, with the fifth highest output per hour of all measured countries. U.S. workers rank behind those in Taiwan, Singapore, Finland and Sweden but ahead of Japan, United Kingdom, and the Netherlands.

However, increases in per-unit labor costs for U.S. manufacturers are well below most other industrialized countries, ranking 16th out of the 17 countries included in the report. This shows that manufacturing costs outside the U.S. are losing their historical cost advantage, a conclusion further proved by looking at average annual manufacturing salaries in consistent currency.

Hours Worked

Germany is the country working the fewest hours at 1,371 per worker annually, followed by The Netherlands at 1,425 and Norway at 1,427, according to 2014 data from The Organization for Economic Cooperation and Development, a nonprofit organization. Countries working the most hours were Mexico at 2,228, Korea at 2,124 and Greece at 2,042. The United States was again in the middle of the pack, with an average of 1,789 hours worked per worker annually.

Benefits

According to another Bureau of Labor Statistics report, Belgium has the highest percentage cost of benefits of any other country. Belgium’s benefits approach 50 percent of the average hourly wage, and of that, around 33 percent goes to legally mandated costs such as insurance or other social programs. The balance goes to vacation, sick time and other direct benefits. Sweden’s mandated benefits are actually slightly higher than Belgium’s, but they allot less to direct benefits. Taiwan has the lowest percentage cost of benefits at just under 15 percent, with the entire amount going to mandatory programs.

The United States ranks 12th in legally required benefits and social programs at about 24 percent, with about 10 percent additional in direct benefits. Although these data are the most recent available, they represent conditions in 2012, before the advent of the Affordable Care Act. It’s possible that the numbers may have changed since it became law in 2014.

Pay

Norway had the highest average hourly wage in 2012 at $63.36, and the Philippines had the lowest at $2.10, according to the above BLS report. The average hourly compensation for U.S. workers in 2012 was $35.67, putting it in 14th place among the countries measured. Hourly compensation for all other countries except Taiwan increased as a percent of the U.S. wage, which is helping to make U.S. manufacturing more cost competitive by reducing or eliminating the rationale for offshoring of manufacturing jobs.

Between 2011 and 2012, Argentina had the highest positive percent change in hourly compensation at approximately 19 percent, while Greece had the highest negative percent change, with a reduction of around 15 percent.

Despite ranking in the middle for pay and hours worked, the United States continues to be a global manufacturing powerhouse. Productivity improvements and innovative methods keep U.S. manufacturing strong and globally competitive, even in the face of rising competition from other parts of the world.

Tom Bonine is the president of National Metal Fabricators. The firm was established in 1944 in Chicago and offers services including custom fabrication, angle rings, welding and bar milling services.

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For further reading on the state of machine tool manufacturing in the United States and the world, check out two recent articles by Modern Machine Shop’s Director of Market Intelligence Steve Kline, Jr.:

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