Thinking, Making, Profiting

256 years ago this month, James Watt made the conceptual breakthrough that enabled a much more efficient steam engine…an engine that would play a major role in driving the Industrial Revolution.  He had been thinking about possibilities for improving the coal-hungry Newcomen engine, then the best available, which lost huge amounts of heat every cycle through the successive heating and cooling of the cylinder walls:

It was in the Green of Glasgow.  I had gone to take a walk on a fine Sabbath afternoon…I was thinking upon the engine at the time…when the idea came into my mind, that as steam was an elastic body it would rush into a vacuum, and if a communication was made between the cylinder and an exhausted vessel, it would rush into it, and might be there condensed without cooling the cylinder.

But in addition to the many details involved in reducing this idea to practice, there was another problem inhibiting the creation of reasonably-efficient steam engines.  The boring of the cylinders…even when the best tools and the highest skills of the day were applied…was so imprecise that considerable quantities of steam escaped around the piston, greatly lowering the overall efficiency of the engine.

Enter Matthew Boulton, who became Watt’s partner, and John Wilkinson, a Boulton associate and foundry operator who was obsessed with all things cast iron.  Boulton and Wilkinson wanted a steam engine to provide the blast for Wilkinson’s foundry, and they wanted an engine with especially-large cylinders…which made the problem of tight cylinder/piston fit even harder to solve.

Wilkinson saw that the technology he had already developed for the very precise boring of cannon could, with some modifications, be adapted to the boring of steam engine cylinders.  Amid “searing heat and grinding din,” he achieved a cylinder, four feet in diameter, which “does not err the thickness of an old shilling at any part.”  With the combination of Watt’s separate condenser and Wilkinson’s improved boring process, the steam engine was ready for the starring role that it was to hold for the next century and beyond.

Key point: It wasn’t only the design of the improved steam engine that mattered, but also the process for making it.

What if Britain had been offshoring its foundry operations, with their “searing heat and grinding din” to another country?  Spain, let’s say.  Given the importance of the interaction between the design talent and the manufacturing talent, would the improved steam engine have been developed in the 1770s timeframe at all?  And whenever it had been developed, to which individuals and countries would the financial benefits of steam power have accrued?

The present-day parallel is the relationship between microchip designers and microchip manufacturing facilities…foundries, as they are actually called.

More about John Wilkinson, here.

58 thoughts on “Thinking, Making, Profiting”

  1. I like historical fiction. It is often, in my opinion, an easy way to get started on a subject. I read Mary Renault’s novels about classical and pre-classical Greece, and then began to read Greek history. There is an English author who has written a long series of novels about the Industrial Revolution that has accurate facts and an interesting theme of two poor boys, one of them half caste, who become rich industrialists in 19th century England. I recommend them. The first in the series is “The Privateersman,” which explains how they first get the money to start their careers. The series goes on for 12 novels and multiple generations.

    The same author has multiple series and has an interesting history. He taught Economic History for ten years and spent ten years as a policeman in New Guinea. He has another series on the history of New Guinea and the area centered on Rabaul, which became the big Japanese naval base in WW2.

  2. Wareham certainly produces a lot of books!

    I wish he would hurry up ! I am waiting for the next in two series, “Innocent no More” about the RAF in WWII and “The War to End All Wars.” Both series are excellent.

  3. We have our own James Watt in Elon Musk. He’s said that creating “the machine that makes the machine” (i.e., the factory) is 1000x more difficult than making a prototype car. His Tesla “gigafactories” are loaded with manufacturing innovations such as the world’s largest casting machines that dramatically reduce the number of separate parts that need to be inserted, welded, and wired. One example is a rear-end assembly that dropped from 70 components to two. This saves on labor, time, and supply chain issues. He’s done similar things with SpaceX rocket assembly.

  4. There is an old saying — “Design Follows Manufacturing” — which recognizes the back-and-forth interplay between ideas and capabilities. To flip the steam engine example on its head, if there had been no James Watt needing accurate large diameter cylinders, Wilkinson would have found little interest in his machining technology.

    The other side of this issue is the human capital. Once the people who really understand how to make computer chips are mostly in Taiwan, the US might as well be Zambia in terms of having a relevant pool of capable labor.

    Someone on another site linked to a very interesting article about how US policy almost seems to have been designed to drive industry out of the country:

    “For several decades, there has been a gradual but significant shift in U.S. tax policy that favored strong stock performance on one hand, and the offshoring of many U.S. jobs on the other.”

    This trend has persisted regardless of the political make-up of the US government. Seems like the Chinese Communist Party is getting an excellent return on its investments in US politicians, bureaucrats, media, and academics.

  5. Gavin…interesting, as is most of Lyn Alden’s work. One thing I don’t think she mentioned is expensing vs depreciation tax policy for capital equipment and structures. The rules have bounced around from year to year and administration to administration, but in many situations, a manufacturers acquiring (and paying for) an expensive new piece of equipment has not immediately been able to deduct that expense; hence, he is in effect paying taxes on profit (cash profit) that he has not yet made and may never make. Whereas for a software or a services business, asserts such as equipment and structures are generally less important as a % of the whole picture, and they are more able to deduct expenses immediately than can a manufacturer.

    Also, for many kinds of manufacturing, the cost of *energy* (including electricity) is an important factor.

  6. Dan O…”We have our own James Watt in Elon Musk”…to the extent that Musk is driving major innovations in manufacturing technology, I’d call him more of a John Wilkinson…to the extent he’s driving major innovations in product design *and* manufacturing technology, he’d be a combination of the two men, with maybe some Matthew Boulton thrown in.

    But is the Tesla really an innovative product on the level with a Watt steam engine?…to a large extent, it’s a brilliant marketing/styling/branding play, based on the idea of making an electric car beautiful and high-performance, rather than merely a utilitarian or even ugly vehicle (ha!) for virtue signaling.

  7. Maybe Musk could use his talents and intelligence better to redesign electrical grids and generation equipment. We desperately need a new grid that is stronger and less subject to disruption. Electric drive is not new technology. Maybe the batteries but that seems to me to be a dead end.

  8. …the coal-hungry Newcomen engine, then the best available, which lost huge amounts of heat every cycle through the successive heating and cooling of the cylinder walls…

    Ditto the rotary engine. It’s thermally inefficient. They generate a lot of power for their displacement but they’re also a gas hogs. Too much combustion surface spreads the heat out as opposed to a piston engine which retains heat in a smaller area, promoting more complete combustion.

  9. The Wankel Engine never seemed to make sense. The piston engine, with additions like fuel injection, is far more efficient. This may all be of historical interest as the Biden people seem determined to abolish gasoline. And RIGHT DAMN NOW !

    Tucker Carlson, as usual, explains it.

    There are a lot of unprecedented things happening, but not all of them are shocking. For example, it probably shouldn’t surprise you that, once they got their hands on real power, the same lunatics who don’t believe in human biology immediately made a serious mess of our economy. It took them less than six months to do it.

    Pretty much covers it. Fortunately, gas prices in Tucson have not budged, at least so far.

  10. “We desperately need a new grid that is stronger and less subject to disruption”

    We had perfectly good grids before “Renewable” energy started messing them up. Massive rotating turbine/alternator sets have the stored energy to “ride over” the sudden loss of one or two large power stations going off line. And so long as those stations are not running flat out the remainder will quickly be able to ramp up and cover the short fall. This is how every large AC grid around the world has worked for decades. But all of a sudden we have zero inertia DC to AC wind turbine & solar plants being connected all over the network, not because the grid operators want them, but because “Zero Carbon” obsessed governments give them priority access. The very nature of wind, sun and clouds means that considerable changes in generation can happen in minutes, and this has already led to several close calls where “Load Shedding” (i.e. controlled power cuts) has been the only way to avoid cascade failures.

    “Maybe Musk could use his talents and intelligence better to redesign electrical grids and generation equipment”

    Unless the likes of Musk want to change an entire grid from synchronous AC to non-synchronous DC with colossal battery storage and inverters in every home & business, there is no way to keep adding more and more “Unreliables” to the existing systems, and maintain any degree of stability.

  11. What Dave said. We are building multi-thousand addition points of high failure, intermittent generation into the grid. We use AC but must store DC. That sounds expensive to me.

    So let me ask, since we just had a severe hail storm, do current solar panels withstand high velocity golf ball size hits? My roof will still work until repaired, but what about the solar farm panels?


  12. I hear that people in Germany are being told that they need to get used to the idea that electricity will be available at the convenience of the grid (ie, the wind and the sun) rather than at their own convenience. Wouldn’t be surprised to hear the same idea being promoted in the US.

    Of course, there would be special priority for certain people and businesses, namely, the government-favored ones.

  13. I ran my first steam engine ( ) when I was in 2nd grade and nobody thought it odd for children that age to be playing with dangerous toys. I later grew up to run and maintain steam engines for the Navy as a Machinist Mate. They still have a big attraction for me.

    Always happy to see Watt mentioned. There have been a lot of great inventors throughout history but I think Watt has to be ranked #1. He was the first to invent portable power or, as I call it “Power at Demand”

    I am also happy to see Matthew Boulton mentioned. I suspect that of the relatively few people who know who Watt was and what he did, not 10% know who Matthew Boulton was. He is a very interesting character in his own right but he, even more than Wilkenson, was a manufacturer who knew how to commercialize a product.

    Without Boulton to commercialize Watt’s steam engine, it might still be just an interesting laboratory apparatus or perhaps a children’s toy.

    And I take nothing away from Wilkenson. He was one of a number of great British inventors. But by the time Watt needed it, the boring technology was already pretty much in hand. It needed some perfection and adaptation, but the basic precision boring technology existed.

    I think Watt fully deserves having his name enshrined as the primary measure of power. I’ve always thought it shameful that there is no unit of measurement named the Boulton. He deserves it every bit as much as Watt.

    Re Musk: I don’t think of him as a Watt in this regard or even a Wilkenson. He is more of a Boulton. He has taken technology invented mostly by others, he has adapted it, hired a team, developed suppliers and designers to come up with a useful product. He has perfected how to manufactures, sell and service it.

    Kudos to him for all of that. But that makes him a Boulton not a Watt. I don’t think, other than a vision of electric cars, and space ships and boring machines, he has really invented anything particularly unique. We had electric cars 120 years ago. He’s just improved them.

  14. One of the least educated, most successful, authors of all time wrote an excellent biography of Watt for anyone who wishes to learn more about him.

    The bio is “James Watt” by fellow Scotsman Andrew Carnegie. Available free on Amazon or as a free audiobook on

    For a man who had a total of 3 months schooling in his life, Carnegie is a hell of a good writer. My understanding is that he wrote it himself.

    I also recommend his “Autobiography of Andrew Carnegie” also available free at Kindle or Gutenberg and Librivox

    Somewhere in my Kindle library I have a book on British invention as told through a series of biographies of Newcomen, Watt, Brunel, Nasmyth, Arkwright, Wilkenson(?) and many others. I’d recommend it if I could remember the title.

  15. Enter Matthew Boulton, who became Watt’s partner, and John Wilkinson, a Boulton associate and foundry operator who was obsessed with all things cast iron.

    Last week I posted a comment about religious Dissenters having a disproportionate influence on Great Britain’s scientific and engineering revolution through the 1850s.

    Guess what? Matthew Boulton and John Wilkinson were also cast in the Dissenter mold. As the Spartacus link indicates, Matthew Boulton was educated at a dissenters’ academy. Also confirmed in this link:

    John Wilkinson came from a dissenting family.

    I don’t bring up James Watt, because I already mentioned him.

    Anglicans were good for the ministry, the military, and government, but not so good for science and engineering advancement.

  16. Gavin,

    There is a popular myth that we have driven manufacturing out of the US.

    It is just not true. the US manufactures more today than it ever has.

    What we have lost is manufacturing jobs. But the value of good manufactured in the US, in inflation adjusted dollars has increased every year since 1950 with a couple of year over year exceptions.

    8-10 years ago, having gotten tired of hearing this. I gathered the data and adjusted it for inflation and for population of the US. After all, if you have a bigger population manufacturing could decrease percentage wise while increasing absolutely.

    I still have it on a card in my wallet for when I would get into this discussion which seems to happen to me a lot.

    My wallet is upstairs at the moment but my recollection is that between 1970 and 2010, US manufacturing per capita, in real dollars, doubled from about $3,000 to $6,000.

    Now if you want to talk about manufacturing JOBS, yes, we have lost a lot of them. And I would say good riddance. When people talk about manufacturing jobs, they usually have in mind the kind of unskilled labor that anyone with a HS diploma can learn in a week or less. These are usually pretty nasty jobs and they also can’t pay well unless in a protected monopoloy industry like autos, steel.

    How much can you afford to pay someone to stack 30# boxes on a pallet all day? And who in their right mind wants to do that kind of work or ask someone else to do it? Those are the kinds of jobs we are losing and we are losing them as much to automation (including robots) as to offshoring. And have been for 100 years.

    Kind of like the loss of farm jobs to automation over the past 200 years.

    I go into many companies every year and talk to people in many more. NONE of them can hire the people they need. Especially not skilled people but not unskilled people either.

    I just did a 3 week swing through 5 midwest states in 4 companies. All were desperate for employees. Everywhere I went from small mom & pop C-stores to big box stores had helpwanted signs. Most don’t say how much they pay but some do. Here are a few data points.

    Arbys Kalamazoo MI, $12
    Fedex warehouse Kalamazoo $15
    St Louis Best Buy $15
    Logistics warehouse on an interstate billboard $18.

    A consumer goods manufacturing plant in the Dallas area had about 10% of their positions unfilled. Paying around $15/hr. That’s why they had me in to see what could be done to get around the unavailability of labor.

    The point about government making it hard to manufacture in the US is absolutely correct. But there are still enough crazy people trying to do it that manufacturing output is going up, not down.

    If anyone got this far, apologies for the screed.

  17. Steve Jobs had something to say on this 10-12 years ago:

    Jobs went on to urge that a way be found to train more American engineers. Apple had 700,000 factory workers employed in China, he said, and that was because it needed 30,000 engineers on-site to support those workers. “You can’t find that many in America to hire,” he said. These factory engineers did not have to be PhDs or geniuses; they simply needed to have basic engineering skills for manufacturing. Tech schools, community colleges, or trade schools could train them. “If you could educate these engineers,” he said, “we could move more manufacturing plants here.”

    From Walter Isaacson’s bio of Steve Jobs

    We have very few schools teaching manufacturing engineering in the US. Generally it is a subset of industrial engineering.

  18. John H…The way Steve Jobs said it…”30,000 *engineeers*”…sounded like he meant 30K graduates of 4-year engineering colleges… industrial or mechanical engineers, etc. Which offered a nice excuse to Obama to conclude we could never bring much manufacturing back to the US (remember his snarky comments about Trump and ‘magic’?)

    Maybe you would need 30K shift supervisors, setup men, expeditors, machine repairmen, etc to make iPhones in the US, but couldn’t most of these people be trained at community colleges OR in company training programs (the latter assuming that they graduated from highschool with basic literacy and numeracy)

    In WWII, the US managed to build a large number of products which were surely as complicated as an iPhone (Battleship? B-29 bomber?), and while there were surely more graduate manufacturing engineers then than now, I doubt this diversity and quantity of products could have been made if there had been a need for 30K engineers per iPhone equivalent complexity.

  19. John H…bottling video is very cool.

    I first read ‘bottling’ as ‘bootleg’, and was thinking that even the bootleggers were getting automated, which would be even cooler!

  20. John Henry,

    With due respect, a ratio of 23.3 workers (mostly finger work at that) per engineer indicates that few were doing any sort of engineering. We’ve seen the pictures of those assembly lines.

    I wonder if there was ever a time when good engineers weren’t in short supply. Manufacturing engineering seems especially hard to nail into some sort of a curricula. Cell phones and locomotives are both manufactured.

    I worked for a manufacturing engineer many years ago. He was trying to make material handling pumps. His previous jobs included building the F1 engines for the Saturn V. To his grief, he was a much better engineer than businessman. I still use what I learned from him.

  21. David,

    The actual discussion of manufacturing engineers goes on for 2-3 pages in the book with a bit more detail.

    But you are right, they do not need to be graduates of 5 year (the normal length now) engineering schools. They dont need to even be “engineers” in the legal sense of the word. Isaacson mentioned this though I am not clear whether it is a direct quote or a paraphrase.

    From the book These factory engineers did not have to be PhDs or geniuses; they simply needed to have basic engineering skills for manufacturing. Tech schools, community colleges, or trade schools could train them

    I knew a number of “Manufacturing Engineers” at various GE plants here in PR back in the 70s and 80s. Most did not have engineering degrees. None were licensed engineers which got GE in trouble but that is another story. A couple that I was close with were navy vets with just HS and navy technical training.

    Manufacturing engineers don’t, generally, do engineering in the strict sense of the word. They makes sure work flows are propely designed and balanced, machines properly serviced and so on.

    A 2 year tech school could teach most of what they would ever need to know.

    MCS: Just because it is a manual operation, usually with aids and tools, doesn’t mean that engineering is not required. Manual operations are especially difficult to keep running smoothly. Machines are predictable. People are not.

  22. David

    Glad you liked the video. I do 2 a month for Frain, usually 1 on some kind of packaging machine, operation or something like the bottling. The other is related to changeover.

  23. Always happy to see Watt mentioned. There have been a lot of great inventors throughout history but I think Watt has to be ranked #1. He was the first to invent portable power or, as I call it “Power at Demand”

    I just was reading a biography of George Stephenson, who not only invented the miners’ safety lamp (he was first) but the locomotive. He was illiterate until age 18. His son Robert did much of his writing for him. Every steam locomotive uses his steam draft method to increase draft.

  24. John Henry,

    I didn’t say that the Chinese “engineers” didn’t do useful and necessary work, just that it wasn’t engineering. I’m pretty sure Apple could have found 30,000 Americans that could do the same, what they couldn’t find were 700,000 Americans willing to work for about $10 a day.

    I read, back during the Soviet days, an account of a plane conversation with a Russian that said he was an electrical engineer. It eventually was clarified that he was what we would have called a maintenance electrician at the airport. Of course half the people you meet doing everything from installing cable to fixing your washing machine are called field engineers here. You apparently shouldn’t even apply for a job picking up doggy doo without “some” college.

  25. JH, I wonder about the vintage of the automation equipment at the bottling plant…recent in the last couple of years, going back a couple of decades, or somewhere in between?

    The only part that looked computationally-intensive was the inspection camera.

  26. David,

    It’s still happening all over. I remember seeing a community college, in I believe Georgia, that ran a school for transmission and distribution linemen. It included things like pole top volley ball and pole climbing races. You have to learn to trust the gaffs.

    The junior college in, Trinidad Colorado has a well regarded gun smith course as well as more mundane things like diesel mechanics taught in conjunction with different engine manufacturers.

    A lot of schools have courses geared toward and directed by local industries. The IBEW apprenticeship requires a large number of classroom hours.

    It’s only in certain circles that bragging that junior or jouniorette is studying to be a gun smith has the same cachet as premed. Some of that may go away when they start comparing student loan payments.

  27. Mike,

    I learned how to use a Davies lamp in the Navy for checking confined spaces. I had never heard of Stephenson’s involvement with it. So I went to look and it seems like an interesting story. Both independently invented the lamp at the same time and fought over priority. Or so it seems from about 2 minutes of research.

    Davies won and they are called Davies lamps to this day.

    Now I am going to have to go look deeper into this.

  28. In Gerhard Neuman’s biography, he mentions a year of apprenticeship as part of a Mechanical Engineering curriculum. I wonder if such exists anymore? I went to work as a junior engineer after two years of college and several fraternity brothers were working at Douglas Aircraft with me while finishing school. I wonder how often that happens now what with student loans?

    I took premed classes at night while working. I was able to go back full time with the first year of student loans. A year later, I was starting medical school. Never did get a bachelors’ degree.

  29. David,

    The black and white footage is taken from a film I found made at Seagrams in Canada in the late 60s or early 70s. My guess is that most of the machinery is from the 40s or 50s but that is just a guess based on similar machinery I have seen or worked with.

    What I did was take a “then” segment from the film and match it with a similar, automated, operation now. Mostly from machine builder YouTube videos. Vintage of the “now” equipment is probably within the past 10 years or so.

    The older equipment is basically pure mechanical with an electrical drive motor and an on-off switch. Speed is controlled by variable pitch pulleys in most cases.

    The more modern machines may be very computationally intense. The rinser/filler/capper probably has a couple dozen servo motors, all controlled and synchronized programmatically via PLCs. Also lots of sensors like photoeyes. And then an overall control to speed up and slow the machine to keep in it balance with up and downstream production requirements. All at 10-15 bottles per second.

    The main control cabinet might be have 15 or more PLCs in it.

    That is not all that high speed, some canning lines run 50 cans/second (3,000 per minute)

    Speaking of the cameras, Heiniken used to have a plain glass 12 oz bottle. They ran it at about 1,000 bottles per minute. When it got to the labeler, they would spin the bottle for labeling, as in the video. But they would also look for the mold marks on the bottle where the 2 halves of the mold come together during bottle making. Once the camera saw the very faint marks, the labeler would place the label between them.

    Now they have an embossed logo at 90 degrees to the mold marks which is very easy to detect and they can run even faster.

  30. Davies won and they are called Davies lamps to this day.

    Davies was a member of the Royal Society. Stephenson made the discovery first but was far in rural Scotland. Davies was in London. No patent office like the one that ruled on the integrated circuit.

  31. Lots of thos disputes went on and who is to say who is right? Other than that if you call McMarster-Carr orr Grainger and ask for a Stephenson lamp, they will have no idea what you are talking about. They’ll be happy to sell you as many Davies lamps as you like, though.

    Kind of like Otto von Titzling got screwed out of credit by Luc du Brassiere.

    Oh well, it happens. I’m gonna take a break now and go have me a shrewsbury. (Dick Somer fans will know that story)

  32. Mike K
    In Gerhard Neuman’s biography, he mentions a year of apprenticeship as part of a Mechanical Engineering curriculum. I wonder if such exists anymore?

    Some colleges or universities have work-study programs, where students alternate work and study. Antioch College was one example. Guess that Antioch isn’t a great example of work study preparing students for the real world, as at the end of Antioch’s days, Antioch tried to prepare students for the woke world. In any event, Antioch didn’t have an engineering school.

    Northeastern University in Boston is a better example of a work-study program, especially because it has an engineering school. My sister got her engineering degree from Northeastern. Among the places she worked were the Natick Army (Navy) Labs and Arthur D. Little, the consulting firm.

    Northeastern’s work study experience was of great benefit for my sister.

  33. John Henry: “… the US manufactures more today than it ever has. What we have lost is manufacturing jobs.”

    No question that automation has reduced the number of workers required to make many products. There is also little question that the way in which numbers are categorized can obfuscate things. The classic is the ladies working in the canteen down at the mill. They used to be emplyed by the manufacturer and counted as manufacturing workers. Then the mill outsourced the canteen and its workers to a catering company. Now those ladies are counted in Services instead of manufacturing.

    That is why it is useful to test statistics against our own lying eyes. When I go to the hardware store, it is tough to find things made in the US. It is why many guys treasure the socket wrench sets they bought a quarter of a century ago, when things like that were made in the USA. And of course places like Detroit & Cleveland are sad evidence in support of the assertion that around 60,000 former US factories have been closed down, with their equipment often shipped to China.

    a big part of Boeing’s business these days is final assembly of foreign-made substructures. US automobiles come off the line full of imported parts. HP printers are made in Vietnam. There are effectively no US-made TVs, computers, cell phones. Let’s not even talk about steel.

    I would love to believe that manufacturing is alive & well in the US. But my lying eyes keep seeing those massive trade imbalance figures, largely because the US has to import so many manufactured goods that are no longer made in the USA. Where are these US manufacturing powerhouses?

  34. David,

    I think in the Seagrams line you might have 30-40 people actually touching the bottle.

    In the equivalent modern line, nobody would normally touch the bottle. Only to clear jams or such. you might have 5-10 people actually running the line at 500 bottles per minute as opposed to the 60-80 bottles per minute in the seagrams line.

    And the quality, such as straightness of the labels, cleanliness of the bottles, tightness of the caps, would be much higher (more uniform) when done by machine instead of by hand.

    So maybe a 50 or 100 fold increase in productivity. (Guessing, I’ve not actually tried to calculate)

  35. Think of the repetitive strain injuries from tightening those caps all day, not to mention the incredible boredom of such a job. Want to bet you couldn’t tell when in a shift a bottle was filled just by how tight the cap was?

    Many years ago, I was involved in the production and packaging of potatoes. They were put up in packages of 5, 8, 10, 20, 50 and 100 pounds, essentially by hand. The smaller packages were filled on a simple scale with the flow stopped short of the full weight. The operator then would try to judge just which potato would finish filling it with the minimum overage. Underweight wasn’t allowed. If you were good, the average overweight would be less than 3-4 ounces. The last machine I saw, which is several years ago so things have probably progressed, had something like 20 individual scales where one potato was placed on each and the computer choose which ones to put into each bag to minimize overage. They told me the average overage was down to a few grams. Oh, and it was easily 20 times faster, probably more with no operator.

    Then, we used to look at the potatoes as they passed by on a conveyor to pull out the rotten, damaged and green tubers. Now, I’m told, they are x-rayed and defects are rejected that would have never been noticed before. Nothing lower tech than a potato.

    Think about all the links in the process that takes a bushel of grain from the middle of the U.S. and delivers it to China for less than they can apparently grow it locally. The number of countries that can do that is less than the number that can make computer chips. Right now, low river levels in Brazil are impacting markets.

  36. Gavin,

    the first problem is that you do believe your “own lying eyes” rather than statistics. Not your fault, we all do, including myself. You are looking at anecdotes rather than data.

    Quick example: When you see a BMW driving down the road (or a Toyota, Mercedes, Nissan, VW, Honda etc) do you think “Import”? I suspect that most people do. But it is not an import. It is American made in South Carolina, as is the steel (Nucor) and most of the components. It is as American a car as a Ford or a Chevy. Or perhaps more on point a Dodge.

    I also see a very different picture with my own lying eyes as I go around the US working with manufacturing plants and talking to many others involved in manufacturing.

    The real problem is the way the trade deficit is calculated. It is not just a bogus number, it is a totally bogus concept. Trade balances. Always. Not always in the way we might wish but it always balances.

    As an example, suppose you buy a Toyota made in Japan (or something similar from China or any other country). You pay $30,000 for it. Of that let’s say that $10,000 stays in the US as dealer profit, transportation cost, taxes etc and $20,000 goes back to Toyota in Japan. In actuality it is pixels but lets imagine that is is actually 200 $100 bills

    Now ask yourself what it can do with it.

    1) Put it under a mattress in which case we have the car, they have an IOU that they will need to use to buy someting in the future from the US

    2) Buy something from another country paying in dollars. That only moves the problem to the other country.

    3) Buy USG bonds or other bank debt

    4) Invest in a new plant in the US

    5) Buy something from us, perhaps steel made in Crawford IN and ship it back to Japan to build a new plant.

    In other words, the money always has to come back to the US and trade will always balance.

    It is the concept that is bogus. If they buy steel to build a plant in the US, we say it is a trade imbalance. If they ship the same steel to Japan, we say trade balances.

    Trade always balances. Always. There is not and can not ever be a trade imbalance.

    The only exception would be if Toyota gives us the car and never spends/or invests the dollars we pay. If they were stupid enough to make us a gift of the Toyota, there would be a trade deficit in Japan’s favor. But who is better off, Japan which got nothing? Or the US which got a free car?

  37. MCS,

    I don’t think I would use something like this on potatoes as it seems like overkill. There are simpler ways to do it and a bit of overfill on something as cheap as potatoes probably doesn’t justify the additional sophistication.

    This is a video of a combining scale filling jelly beans at 180 28 gram packs per minute. This could be discharging into a bag, a pouch or a box of some kind. Probably +/- a tenth of a gram per pack.

    As you mention, no underfills. In the US you have to have at least the weight claimed on the label. So if the label claims 28grams, you would set your target at 28.1. Some would fill 28.2, some 28.0 but none would be less than 28.

    I had an interesting project with tic-tacs which used to be made in Puerto Rico back in the 80s and 90s. Tic-Tacs and Dynamints are very similar products.

    Tic-Tacs were sold in a plastic container and the label claim was that each one had 30 tic-tacs. Dynamint’s label said that it contained 30 grams (or whatever the amount was) and “approximately 30” mints.

    Tic tac had to use an expensive pharmaceutical tablet filler to fill by count. Not 29, not 31, but 30 mints. Also inspection to make sure that it was always exactly 30.

    Dynamint just had to have at least 30 grams. A much simpler filler to fill to 30.1 grams +/- 0.1 grams. Also faster.

    I serviced the filler and sold parts for it which is how I know about this. The local plant was very unhappy with the Italins and their selling by count instead of weight.

    Legally there is no problem with either label claim. All the law requires is that you comply with whatever you say on the label.

  38. The problem is the grade of potato that goes into the small bags is not uniformly sized. the next potato in line might weigh a half pound or a couple of ounces. The real money is in making sure the more valuable potatoes never get there and that happens up the line.

    The real issue was that the manual fillers were slow, bulky and labor intensive. The new fillers are much faster, physically smaller and no labor, the accuracy is free.

  39. @Mike K – absolutely agree on your last point. I wasn’t clear that I meant it would eventually be going both ways.

    While cleavage is possible I think at least a few of the saner inhabitants of the Left Coast realize they have a significant dependence on the states they would be leaving behind. For example California is self-sufficient in some areas but it imports a pretty hefty chunk of its electrical power needs (as I understand the situation), and it would take some time to rearrange the grid to source it from WA and OR exclusively. Probably more significantly those states plus IL and others likely know they need continuing infusions of cash from Uncle Sugar, and uncertainty regarding the status of Social Security and other federal programs in a post-breakup world is likely to give them pause.

    They might crazy but they aren’t dumb. I’m thinking they’d prefer to cow enough purple states into sullen submission than take the risk of striking out on their own, no matter how much they crow about being the forward-looking dynamic part of the country.

  40. John Henry: “There is not and can not ever be a trade imbalance.”

    Mr. H., you clearly are smart, well-informed, and give great book recommendations. But somehow or other, you are kidding yourself about this.

    Agreed, a full picture has to include capital movements as well as trade (goods & services) movements. All of those inter-country transfers are mediated by exchange rates. if we look back, the value of the US dollar versus other currencies has mostly tended to decline over the long term, although arguably some of that is the long-term impact of the world outside the US recovering from WWII. That trend suggests the US is taking more than it is giving with respect to the rest of the world.

    If we look forward, an economy which imports massive amounts of physical goods from China and sends back empty containers can expect a continuing declining in the dollar. In theory, eventually it will become cheaper to make it in the US than to import it from China. However, by that time, living standards in the US will be disappointing.

    But since you mentioned automobiles (where the US imports many more than it exports), how about a joke? What do you get when a Turkish worker assembles Polish parts? A German car!

  41. Once you take a dollar in trade, the only place in the world bound to accept it as currency is right here. England got into the Opium Wars mess because China wouldn’t accept anything but silver for the tea England couldn’t live without and had no interest in importing English goods.

    For now, we can get away with demanding that trading partners take dollars on pain of simply ending trade with us. There is nothing preventing them from requiring payment in gold or anything else except for that. But as long as they take dollars, they all have to end up here eventually.

    Now, the combination of cutting us off from imports and flooding our economy with foreign held dollars might produce some unfortunate effects.

  42. Gavin,

    1)I’m guessing you were speaking at least partly metaphorically about full/empty containers.

    $10,000 worth of t shirts might not fit in a single van. $$100,000 worth of certain chips might fit in my pants pocket.

    It’s value, not physical volume that matters.

    2) If the Chinese send us $10,000 worth of t shirts and we send them $10000, what happens to the dollars? What can they do with them?

    3) If we send money to China for the shirts and they never spend, doesn’t that make the shirts a gift? Seems like the Loss is china’s not ours. We got shirts, they got nothing.

  43. Other things that China (or other country) can spend the dollars on:

    –stock or bonds of US-based corporations
    –land and buildings in the US
    –subsidization of US politicians, academics, and lobbyists to skew policies

  44. Land and buildings did not work out well for the Japanese in the 80s but Reagan was not printing trillions of dollars each year. I think the Chinese are buying politicians and when they have enough, they will stop taking dollars. This is tricky but maybe oil will be the new currency. The Democrats seem determined to end our oil surplus. I wonder where they are getting this idea ? Climate Change is just too silly.

  45. David,

    Yes, of course. We call them “investments” generally but they are still spending and trade balances.

    The reason we say we have a trade imbalance is because we don’t count them in the trade numbers.

    I gave the example of Toyota buying $20,000 worth of steel. If they ship it to Japan, it balances the car import. If they use it to build a plant in the US, it doesn’t. But they have still bought the steel in either case.

    I don’t like what China is spending the money on in many cases. Buying politicians and universities. Financing deficit spending.

    But they are still spending the money here and trade balances.

    Caveat: When I say trade balances, there will be some imbalances due to timing. Toyota may spend the money a few days after they receive it in which case there is a momentary imbalance. But that works both ways and largely zeros out.

  46. Great point about the Japanese, Mike. Two specific examples that I remember were Rockefeller center and Pebble Beach. I think they wound up selling those a few years later for about half what they paid.

    Ditto a lot of farmland.

    That worked out pretty well for us. If not them.

    They also built a lot of factories in the US. Car companies most visibly but many, many, others.

    That’s worked out pretty well for them and us.

  47. John H.: “If we send money to China for the shirts and they never spend, doesn’t that make the shirts a gift?”

    Exactly! Although “subsidy” would be a better word than “gift”.

    The question we need to ask ourselves is –Why is the Chinese Communist Party willing to subsidize the US? Per your thinking, it is actually a double subsidy — First, China is exchanging real goods for dollars they can’t use, and then China is subsidizing over-expenditure by the bloated US government by buying Treasury bonds they don’t need. Arguably, 20 years ago those subsidies were the price China had to pay to get production, jobs, & technology transferred from the US to China. But that was then, and this is now.

    One of the old fashioned ways of trapping a wild animal was simply to feed it regularly. Once the animal was hooked on free food, it was fairly straightforward to get it into a pen.

    Serious question — Aren’t you just a little concerned by the CovidScam revelation that something like 90% of US medications come directly or indirectly from China?

  48. Gavin, I agree with you. I don’t like the way China is spending the money either and have commented in this thread and many others over the past 10-15 years.

    But that is beside the point. We were talking about whether trade balances and it does. You and I don’t like how it balances, but it does.

    I am not sure it is 90% of medications, if you are talking about the finished product. Much of that is still made in the US. But a lot of the active and inactive ingredients do come from China, India and other countries. Yes, I am concerned. I am concerned more from a quality standpoint than economics but I am concerned about both.

  49. John H: “I am concerned more from a quality standpoint than economics but I am concerned about both.”

    I am most concerned about the strategic risk. Country X can supply the world with 100% of the plastic toys — and that is ok. But when Country X has an overwhelming dominance in the supply of “must haves”, it is time for the rest of the world to take sensible action, even if empty-headed “free traders” complain that domestic production is more expensive. It does not matter if Country X is our best friend or an expanding dictatorship — the same risk of critical over-dependence is there.

    Only mushy-minded “Let’s buy the world a Coke” kind of people refuse to see the risk of over-dependence on the continuing kindness of strangers. President Xi will not be there forever — and who is willing to bet their lives on the proposition that the next guy will not be an admirer of Ghengis Khan?

  50. During the Iraq war, the Swiss company Swatch refused to supply components for the US JDAM missile–crystals or subassemblies including crystals, I believe.

  51. They also built a lot of factories in the US. Car companies most visibly but many, many, others.

    That’s worked out pretty well for them and us.

    I have read that the Japanese car companies expected their plants to be unionized but they also tended to avoid Detroit and Pittsburgh, old manufacturing sites, and built instead in the South where they were surprised to learn that the employees were not interested in unions.

    Recently, Volkswagon, a very union friendly company in Germany, held a union certifying election and, in spite of considerable pro-union activity by the employer, the workers rejected the union.

    On the other hand, GM tried to build a Japanese style factory to build the Saturn and found that the UAW union sabotaged the project, which was also not supported by GM junior executives.

  52. Building automobile assembly plants closer to the point of sale goes back a long way. Following John Henry’s suggestion, I recently read Henry Ford’s “My Life & Work” (1922). Ford describes how he soon progressed to making the high value automobile parts in Detroit and shipping them to dozens of assembly points across the US and later internationally. It would be interesting to know how much of the price of a US-assembled Toyota finds its way back to Japan through the miracle of intra-company transfer pricing on imported components.

    The reprint I bought of Henry Ford’s book was printed in India, by the way. Our supply lines implicitly assume there will be no significant global disruptions in the years to come. Talk about a Black Swan flapping overhead!

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