Tom Groenfeldt, Contributor
Is manufacturing the wave of the future in the US or the heritage of the past? The issue was raised at Manufacturing First, a Wisconsin conference organized by First Business Bank, Insight Magazine and the New Manufacturing Alliance. Manufacturing is finally getting some attention from Harvard and MIT which used to focus almost exclusively in financial innovation, said Scott Paul, from the Alliance for American Manufacturing. (See the Boston Consulting Group on the topic at a Harvard Business Review blog, for example and its extensive comments) Then I saw Ed Schultz, the self-important commentator on MSNBC, doing a promo saying we need to recover manufacturing jobs. Hey, maybe something really is happening here. Paul said that manufacturing is central to the future of the economy, with pay that averages $32.67 an hour compared to $27.11 in services. This is an interesting contrast to some commentators who talk about the U.S. becoming a knowledge economy, symbolic analysts in the terminology of Robert Reich. But not everyone is capable of, or interested in, working with symbols. The chattering classes speak of the evolution of economies from agriculture to manufacturing to services, said Paul. “Most of those people live in Washington and New York. Not everyone is going to be writing screenplays or giving massages or flipping burgers.” Paul touched on what he termed the financialization of America which has had a huge impact on manufacturing. (I mostly write about finance and technology for Forbes and other publications.) “They have gobbled up a ton of the tax benefits that manufacturing should get; they have gobbled them up and they haven’t spit out jobs. Wall Street got extraordinary help from the feds during the recession and yet manufacturing firms have trouble getting loans from Wall Street institutions.” Paul said that 90 percent of all U.S. patents come from manufacturing, and 70 percent of research and development is done there. But manufacturing has declined from 25 percent of jobs in the U.S. to less than 10 percent today. Since 2010 the country has gained 250,000 manufacturing jobs, the first gain in 18 years, but it has lost a total of 5.5 million since 2000, a third of all manufacturing jobs. “State budgets wouldn’t be in trouble if states had held their manufacturing jobs.” Yet the U.S. resists any sort of industrial policy for manufacturing, even while it spends billions supporting agriculture, which employs far fewer people than manufacturing.
What to do?
Invest in infrastructure to create immediate jobs and a platform for future growth. Provide better skills training — up to 600,000 manufacturing jobs may be unfilled because companies can’t find the trained workers they need, said Paul. Support legislation to levy tariffs on Chinese imports if they continue to keep their currency artificially low. This has passed the Senate but sees little hope in the House. Paul pointed out that China is a growing part of America’s trade deficit, accounting for about 70 percent of the non-oil trade deficit. Meanwhile, there are signs of hope, some of it in the combination of great design and American manufacturing, as Fast Company recently reported with photos highlighting top design manufactured here. Some of the products, including Estwing hammers and Pendleton blankets, are produced by heritage brands that have been with us for decades and remain paragons of craftsmanship. Others, such as Billykirk’s leather bags and Raleigh Denim jeans, come from young designers who have rediscovered and revived the meticulous manufacturing techniques employed by generations past. Still others, like this SHY Light chandelier, live at the aesthetic vanguard, pushing the boundaries of contemporary design. “
And Businessweek’s Alan Ohnsman reports that the auto industry in the US is expanding, mostly in the nonunion South, and creating jobs that pay reasonably well for the region, although much less than Detroit, and offer benefits. He writes that domestic and foreign automakers plan to hire 25,000 workers between now and 2015. Better yet, every job in an assembly plant may create seven other jobs. “We need to get Wall Street off our backs,” said Paul.
This from a post by Georges Van Hoegaerden managing director of The Venture Company.
“The United States (and many other countries that copied our financial model) is in trouble because over many decennia – so do not get partisan on me now – it has amassed a financial system eleven times the size of production. “Think about that stunning fact reported by our government for a while. Let it sink in for a minute. Then continue… “We gained self-induced economic instability as a result of valuing the ballooning gamble on production (with its many derivatives) higher than the creation of production that produces social economic value. A giant financial bubble, bigger than we have ever seen before, is starting to deflate. And no new air blown into it by the sub-optimizations from the Fed or other government institutions will prevent it from deflating further. “Fundamental financial reform is the cure needed to resurrect our economy. Mark my words; nothing will improve in the economic outlook of our country until we improve the economic imbalance between finance and production.”
Interesting point in new economics column in the New York Times magazine Sunday. Adam Davidson: “… an economy is truly healthy only when its people know how to make and do things that others will pay them a decent amount for. Jobs, in other words, are not the cause of a healthy economy; they’re the byproduct…the economy that emerges from this recession is going to be different. Without the distortion of a credit bubble, it is clear that far too many Americans don’t know how to do anything that the world is willing to pay them a living wage for.
“…An economic downturn is a great time to learn things — carpentry, say, or aerospace engineering — that others will eventually pay for: high-school dropouts should get their degrees and a year of specialized training; high-school grads who can’t afford a four-year school should get a community-college degree. Life will be tougher for liberal-arts majors if they don’t get training in how to apply a humanities education. Those who can’t find a job where they live should consider moving to places where there are more jobs than applicants — the Dakotas, Nebraska, Wyoming.” This is far more pointed than the usual encouragement to get more education…this is warning to get education, or training, that matters and be willing to move to opportunities, even when they are far from the coasts. And one more point from a piece in The Atlantic by Kate Bolick on singlehood in America. The departure of manufacturing jobs from inner cities left black men in the lurch. “According to the sociologist William Julius Wilson, inner-city black men struggled badly in the 1970s, as manufacturing plants shut down or moved to distant suburbs. These men naturally resented their downward mobility, and had trouble making the switch to service jobs requiring a very different style of self-presentation…”
This manufacturing story just keeps spreading out into more and more impacts across the country. We should all pay greater attention.