In a recent article, Bloomberg BusinessWeek teamed up with former President and uber-wonk Bill Clinton to ask what the former President would do in order to resolve five critical economic concerns facing the U.S. today.
Today we present one of them, since it relates to our chosen business sweet spot of manufacturing. Clinton was asked by Paul Jacobs, CEO of Qualcomm, the following question: “Advanced manufacturing doesn’t really generate a lot of operating jobs, and the jobs it does create are highly skilled. Manufacturing that requires a lot of lower skilled labor will likely continue to be located outside of North America. So how important, finally, is manufacturing to U.S. job growth?”
We excerpt part of the former President’s reply below.
Manufacturing remains critical… to build a balanced economy with good jobs. It accounts for 80% of exports and 90% of patents and R&D spending. It’s a jobs multiplier: Every new manufacturing job creates an additional 4.6 jobs to support it. For high-tech manufacturing, the multiplier rises to 16.
Because of increased productivity, the cost of labor is becoming a less significant factor in siting decision, while the costs of energy, materials and transportation increasingly matter more. That bodes well for the U.S., where our workforce is huge, energy is plentiful and cheap, and labor costs are not that high, comparatively.
We do have continuing challenges, including… training our workforce to meet the needs of a 21st century manufacturing sector, and developing new products for domestic and global markets. Yet today just 7% of all bachelor’s degrees in the U.S. go to engineering, compared with 18% internationally. [Other] countries invest in engineering education at many levels… they build workforce pipelines. A robust manufacturing workforce gives economies a competitive advantage. When we fail to keep pace, we lose our advantage.
The U.S. also needs to finance and support entrepreneurs to bring new products in key sectors. Our nation’s 300,000 small and medium-size manufacturers account for over 50% of U.S. manufacturing employment. [Clinton’s Global Initiatives, as he explains in the article, has launched a pilot program to identify, support and scale 10 companies in advanced manufacturing industries. He also credits Qualcomm’s CEO’s efforts through a new institute launched recently at U.C. Berkeley.]
The original article can be found in the June 17th issue of Bloomberg BusinessWeek, where Clinton also informs readers about the progress and obstacles to solar panel adoption; the skills gap in America, which has reached a crisis point; what to do about our crumbling infrastructure; and which countries provide the best models for government working with business.