If you don't have the factories, you lose the expertise

24 September 2026 · 3 min

Mainstream economists have been advocating for the marvellous effects of global trade for decades. Who needs these factory jobs anyway? We’ll be designing the robots and the nuclear rockets.

Except that, no. It does not work like that.

If you have the factories, sooner or later, you get the designers. If you don’t have the factories, you lose the expertise. Or you never get it.

There aren’t that many people left in the Silicon Valley capable of working on silicon. You can design a chip from California. Making one is done where the fab is.

You can get a PhD in robotics in Quebec City, but you won’t be designing robots unless you fly over to where they are made. Zoom calls won’t cut it at scale.

Jensen Huang’s account, as Joseph Steinberg reported it, is that American manufacturing jobs declined because the work was outsourced. Steinberg says this is flatly wrong, and that technology accounts for the vast majority of the decline in manufacturing’s share of employment.

In 2000 there were 17.3 million manufacturing jobs in the United States. The peak was 19.6 million, in June 1979. From the early 1980s to 2000 the count stayed high, apart from the recessions. China joined the WTO in December 2001. By 2010 manufacturing employment was 11.5 million. In August 2026 it was 12.6 million.

That is 5.8 million jobs gone in a decade. About a million have come back since the bottom. The rest have not.

If technology were the main driver, output should have kept rising while the jobs fell. The fifteen years before 2000 are what that looks like. Manufacturing output nearly doubled, from an index of 51 to an index of 93 (2017 = 100). Employment went from 17.8 million to 17.3 million. The robots were already here in 1985. Employment did not collapse.

After 2000, production stalled. Manufacturing output peaked just under 107 in December 2007. In August 2026 the index was 99.1. Total industrial production was 103.1. American factories are not turning out a flood of extra goods. They are turning out roughly what they turned out twenty years ago.

Output per hour did rise while the jobs were disappearing. The BLS index of manufacturing labor productivity went from about 70 in 2000 to about 100 in 2010. Then it stopped. In early 2026 it was still about 100. Flat output, fewer workers, a higher ratio. The ratio has been flat for fifteen years.

The problem after 2000 was not that American factories became too productive. What changed after 2000 was where the goods were made.

And now, often, we don’t know anymore how to make things. Human expertise matters, and you maintain it by building stuff locally. You are not going to design microprocessors in Maine. It just won’t happen.

Daniel Lemire, "If you don’t have the factories, you lose the expertise," in Daniel Lemire's blog, September 24, 2026, https://lemire.me/blog/2026/09/24/if-you-dont-have-the-factories-you-lose-the-expertise/.

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