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Reasons: 1) Productivity (fewer jobs needed for same output levels) 2) Outsourcing (to
lower wage countries, keeping corporates competitive)
However, job loss in mfg leads to a job loss in service space too. General estimate: 4 service
jobs are lost for every 1 mfg job lost
Impacts:
1) Mfg workers who lose jobs are finding it tougher to find a new job in mfg, end up
remaining unemployed or take a service job at lower pay
2) Not only work, but crucial intellectual knowledge is also transferred to other countries in
outsourcing. Over LT, the domestic base of mfg skills and know-how is lost
3) Tax impact: loss of jobs means lower taxes collected from corporates and individuals, and
govt has to pay out costly unemployment benefits
4) Mfg is an imp source of R&D and innovation, responsible for 70% of private sector R&D
and 90% of US patents. Innovation also generates jobs (Intel invested several billion dollars
in factories so that it could produce the most advanced semi-conductors
5-S:
1. Sort
2. Systemize
3. Shine
4. Standardize
5. Sustain
Measuring productivity in services is more difficult than manufacturing.