Last week’s Time Magazine cover story (“Made in the USA,” April 22nd issue) confirms much of what we and others have been noting for awhile now… that U.S. manufacturing is back, and in meaningful ways, though the impact this will have on future direct employment trends may leave some less than satisfied.
The article points out most notably that while direct manufacturing employment overall may only be responsible for 9% of U.S. jobs, this statistic belies the importance of the sector for the overall economy, because manufacturing represents “a whopping 67% of private sector R&D spending as well as 30% of the country’s productivity growth.” In fact, every $1 of manufacturing activity overall returns nearly $1.50 to the American economy.
A number of reversals have occurred when compared to the offshoring trend of recent years. Companies from Apple to Airbus to Ashley Furniture, among many others, are making serious returns to U.S. manufacturing. As one economist quoted in the article notes “The offshoring boom does appear to have largely run it course.”
When you add in factors like newfound, cheap U.S. based energy courtesy of shale oil and the natural gas boom, and the increasing (and tighter) alliances among government, academia and industry… and combine these with the rising wages of other nations, even as U.S. wages overall have fallen due to reworked labor contracts… the overarching conclusion is that America has once again become truly competitive in the world marketplace. In fact, while U.S. wages on a per capita basis are still about seven times greater than those in China, that disparity is down significantly from years past.
Meanwhile, speed to market has increased markedly, thanks to new technology. The new wave of 3-D printing – not of the plastic toys & widgets variety, but of actual metal and machine parts fabrication now being “printed” in a similar manner (called “additive printing”) – means that companies can get parts produced and shipped within a week by such specialty printers, without ever having to own the means of production. That kind of turnaround time, combined with today’s Just-In-Time manufacturing ethos, makes it a lot harder for foreign producers to manufacture and transport from there to here, given the competitive time and cost factors.
One Illinois provider of parts to Caterpillar says he is increasingly getting business that otherwise would have gone to China, and his comments are telling: “We can do faster delivery with higher quality. By the time you factor it all in, it makes sense to keep some of that work here. I think the insourcing trend is going to be huge.”
However, the workers required for today’s factory need to be the most educated, well-prepared ever. As Time’s article points out, employers today often look for college grads for the shop floor. The technologies involved… the expectations to “step up their game”… and the new emphasis on continuous improvement, employee adaptability and acquiring new skills, all require a new kind of worker. There may be fewer of them in tomorrow’s plant (thus extending a century long trend), but these folks are the future manufacturing jobs of America.
I heartily recommend picking up a copy of Time’s April 22nd issue and reading the full article for yourself, if you want to feel good – or even better — – about where we’re heading as a country, as employers and as an economy as a whole.