Made in the USA

Made in the USA: The Rise and Retreat of American Manufacturing
by Vaclav Smil

Main Points:

• Dr. Smil explores the path of US manufacturing in three parts: The Ascent (1865-1940), Dominance (1941-1973), and the Retreat (1974-present) of manufacturing. The Ascent was in part due to the production of steel in the nineteenth century, the rise of a new electricity industry that both generates and distributes, as well as the pioneering developments in the invention and commercial design of new machines. Smil also explores the pioneering of Henry Ford to mass produce by using a moving assembly line with standardized components, as well as creating a vertically integrated manufacturing complex. Steel was introduced to the US in the 1860's with the Kelly-Bessemer process and was grown through three periods: 1865-1885 (railroads), 1885-1890 (cities), and 1885-1915 (weaponry). The advancements by Thomas Edison (DC powered system), Siemens (dynamos), William Stanley (transformers), and Nikola Tesla (AC powered system) led to a sharp increase in the energy intensity of the U.S. economy between 1900 and 1920 (increase of 22%). This trend increased into the roaring 20's with coal fired electricity generation and the widespread adoption of cars. Not to mention the widespread adoption of electrical appliances. The first AC unit was sold in 1902, the first vacuum cleaner in 1905, but by 1929 there were 890,000 refrigerators, 760,000 washing machines, 225,000 electric ranges. The US had become a top energy consumer transitioning from biofuels (wood) driven economy in 1884, to one dependent upon hydrocarbons (coal and oil).
• The Dominance (1941-1973) was the result of the aftermath of World War II: abundant and inexpensive supplies of natural resources, absence of foreign economic competition, and a competition with Cold War rivals. The result of World War II was severalfold- women entered the workforce in large numbers, blacks migrated from the south to the west, leading to widespread urbanization for labor in new wartime factories. During the war mean income rose by 54%. Weaponry also was taken to the next level as Enrico Fermi and Robert Oppenheimer led efforts to design the nuclear bomb. Oak Ridge became the center for designing the uranium bomb - a task that required a ton of energy and 13,000 tons of silver to make giant solenoids. Hanford became the center of the plutonium bomb that was produced by irradiation of uranium 238 in graphite moderated reactors. Oak Ridge developed the bomb the destroyed Hiroshima, while Hanford designed the bomb that destroyed Nagasaki. By 1957 the US was the world's largest creditor nation, with the largest budget and trade surpluses, the largest producer of crude oil, had low unemployment, and was building everything from airplanes to semiconductors. However the first sign of weakness came with challenges to US steelmaking. The US was slow to adopt new innovations like basic oxygen furnaces (BOF's) and electric arc furnaces (EAF's). In addition, US steelmakers did not adopt continuous casting, a way to produce semifinished items, rather than in traditional casing of ingots. This slow adoption started a reversal in economics and the growth of the Japanese steel industry. 
• The Retreat (1974-Present) was a result of several national trends. The rising demand for oil and energy made the U.S. a net oil importer resulting in the interruption of the country's trade surpluses which had started in 1895 and ended in 1971. This coincided with the oil price increases by OPEC in 1979, which caused some highly energy intensive industries to become more energy efficient, but also resulted in substantial losses in the iron and steel industry. The increase in oil prices had a second effect, U.S. automakers now struggled to compete with their more fuel efficient foreign rivals (the Hondas and Toyotas of the world). Japanese imports had 19% of all sales in 1980, but by the end of the 1990's their share increased to 30%. Meanwhile, GM's share of the US car market was about 41.4% in 1980, and fell to below 30% by the end of the 1990's. In addition, several other factors impacted the American manufacturing sector including, but not limited to, unionized labor, free trade agreements, lack of qualified labor, outsourcing due to globalization, federal monetary support for retreating industries, and short term incentives for company executives. The rise of China, resulting from Deng Xiaoping's modernization efforts in 1976, resulted in the first US-China trade deficit in 1985, which is today over $300 billion. 

Vaclav Smil gives a wonderful lecture at the Trottier Institute for Sustainability in Engineering and Design on "Energy Revolution? More Like a Crawl." 

Bill Gates is a huge fan of Dr. Vaclav Smil's books, and invites the professor to talk about the inefficiencies of American cars and transportation. 

Read this great NPR review of Energy Myths and Realities, one of Smil's books in which he outlines why energy transitions take decades, rather than a few years.

Read about Vaclav Smil's personal history and how the fourth energy transition will be from high power density sources to lower power density ones.