Electronics: So What Exactly Happened Circa 2000?

Herewith a graphic showing what has happened to the major components of our domestic electronics industry—thus semiconductors, computers, computer peripherals, and telephone apparatus. I’ve derived these data from the Economic Census conducted by the Bureau of the Census in years ending in 2 and 7—and for other years the Annual Surveys of Manufacturing also conducted by the Bureau. Thanks to the shift from the old Standard Industrial Classification (SIC) to the North American Industrial Classification System (NAICS), comparable data for some industries cannot be obtained for the pre-1997 period, but where available, I show them. Here is the graphic:

What happened, exactly, is that circa 2000 we reached what might be called Peak Electronics (on the analogy of Peak Oil). We stopped making most of the products we buy at home and began to consume the same products but made elsewhere in the world.

The only trend line still pointing up, but almost flat, is the trend associated with semiconductors, but that trend appears also destined to decline. The major product categories that depend on electronics are all headed for de facto extinction as domestic products—and the employment associated with them is therefore heading for what? Part time work in retail?

What is still climbing is software—and that with barely so much as a hiccup during the Great Recession. It’s the silver lining, you might say. And arguably technological innovation in electronics is also still firmly in our domestic grasp as well, but no sooner perfected on paper and in the lab, it gets shipped overseas for manufacturing. But here, as in other regions of our economic life, the beneficiaries are relatively small domestic elites while the ordinary people are sliding slowly toward the Third World.

I am a holdout. I am against globalism, for a National Economic Policy. We must protect jobs locally. And it won’t happen if we let whole industries just disappear without a single political murmur.

SME: Profile of a Globalizing Industry

Working on another project, I chanced across some data on the Semiconductor Manufacturing Equipment (SME) industry. In 2009, the last year for which we have hard Census data, it was 5.6 percent of the $98.3 billion domestic electronics industry, at least as measured in shipments. Herewith a profile of it from 1992 through 2011:

This industry makes the tooling for other sectors of the electronics industry. Thus in a sense it stands in relation to electronics as a whole like the machine tool industry stands in relation to all manufacturing. Electronics got its start in 1958 with the invention of the integrated circuit; a decade later Intel was launched. This fundamentally American technology has been globalizing, globalizing, globalizing—and what that means for the domestic industry is plainly visible in the graphic above.

Now, of course, we’re looking at what is undoubtedly a natural phenomenon, if our faith in the Hidden Hand is unflagging. Indeed, with the very best of efforts, technologies can never be held close and protected from spreading around the globe. But the downward trend visible here also represents employment decline from 81,900 people in 1992 to 19,362 people in 2009. This illustrates the inherent conflict that arises when we let nature take its course on the one hand and protect the domestic employment on the other. At best, of course, we can only slow things down.