What’s at the core?

There has been a significant “hollowing out” of American pencil manufacturing. But is the pencil industry representative of US manufacturing and trade generally? The data suggest it’s not.

America has lost five million manufacturing jobs since the mid-1980s. During this period, however, US manufacturing output has doubled. America is making more stuff with fewer workers largely because US factories are more efficient. Studies show that the loss of American manufacturing jobs is due primarily to improved technology, not trade. Economists at Ball State estimate that, overall, 87 percent of US manufacturing job losses between 2000 and 2010 were due to automation, while 13 percent resulted from trade. (Automation was by far the predominant cause of job loss for 15 of the 18 manufacturing sectors studied.)

There are, however, certain largely lower-tech US manufacturing sectors where trade has had a much greater impact. Foremost among these are furniture and apparel (Senator Warren’s video also highlights foreign production of Levi’s jeans) where economists estimate that trade accounted for some 40 percent of job losses. Pencil manufacturing is an example of a “mature” industry where there’s little room for manufacturing innovation but space for makers of high quality products for niche markets. Indeed, for American specialty manufacturers like New Jersey-based General Pencil, the process and equipment used to make pencils has hardly changed from over a century ago.