US Deficit in Manufactures Surges 19% -- Could Lead to Job Loss

Aug. 20, 2014

MAPI estimates a potential increase to $60 billion in the U.S. deficit this year in manufactures, which would mean a net loss of approximately 400,000 jobs.

Adrienne Selko

The second quarter of 2014 did not bring good news to the manufacturing sectors, according to a new report from the MAPI Foundation, the research affiliate of the Manufacturers Alliance for Productivity and Innovation.

The surge in the U.S. trade deficit in manufactures in the second quarter of 2014 and the increase in the Chinese trade surplus shows the countries have resumed their opposite growth paths, says the industry group.

U.S. manufactured exports grew by only 3%, to $304.6 billion, in the second quarter as compared with 2013. The U.S. deficit in manufactures rose by $21.6 billion, or 19% compared with the second quarter of 2013. This followed an 8% increase in the deficit in the first quarter.

Conversely, Chinese exports were up 6%, to $549.3 billion in the second quarter. Its trade surplus increased by $20 billion in the second quarter over 2013, or by 9%, and reversed an 8% decline in the first quarter.

“China is clearly pursuing an export-led growth strategy to stimulate lagging GDP growth, including very large official foreign currency purchases to lower the exchange rate, and is achieving robust industrial growth, much if not most of which is for export,” said Ernest Preeg, MAPI Foundation senior advisor for international trade and finance.

“These sharply divergent trends for the dominant trading sector, which account for 75% of U.S. merchandise exports and 95% of Chinese exports, raise important questions about the trade policy course ahead,” added Preeg.

Although the U.S. added 28,000 manufacturing jobs in July, Preeg estimates a potential increase to $60 billion in the U.S. deficit this year in manufactures, which would mean a net loss of approximately 400,000 jobs in the American manufacturing sector.

“U.S. manufactured imports from China in the second quarter of 2014 of $110.5 billion were five times larger than the $20.7 billion of U.S. exports to China, with a resulting deficit of $89.8 billion,” Preeg noted. “This amounts to 66% of the global deficit.”

About the Author

Adrienne Selko | Senior Editor

Focus: Workforce, Talent

Follow Me on Twitter: @ASelkoIW

Bio: Adrienne Selko has written about many topics over the 17 years she has been with the publication and currently focuses on workforce development strategies. Previously Adrienne was in corporate communications at a medical manufacturing company as well as a large regional bank. She is the author of Do I Have to Wear Garlic Around My Neck? which made the Cleveland Plain Dealer's best sellers list. She is also a senior editor at Material Handling & Logistics and EHS Today.

Editorial mission statement: Manufacturing is the enviable position of creating products, processes and policies that solve the world’s problems. When the industry stepped up to manufacture what was necessary to combat the pandemic, it revealed its true nature. My goal is to showcase the sector’s ability to address a broad range of workforce issues including technology, training, diversity & inclusion, with a goal of enticing future generations to join this amazing sector.

Why I find manufacturing interesting: On my first day working for a company that made medical equipment such as MRIs, I toured the plant floor. On every wall was a photo of a person, mostly children. I asked my supervisor why this was the case and he said that the work we do at this company has saved these people’s lives. “We never forget how important our work is and everyone’s contribution to that.” From that moment on I was hooked on manufacturing.

I have talked with many people in this field who have transformed their own career development to assist others. For example, companies are hiring those with disabilities, those previously incarcerated and other talent pools that have been underutilized. I have talked with leaders who have brought out the best in their workforce, as well as employees doing their best work while doing good for the world.