Being that we are providers of business software and consulting solutions predominantly to manufacturers and distributors throughout the Midwest, we have a presumed (and accurately so) bias towards manufacturing.
For that reason we are pleased to reprise a few comments made recently by Forbes Magazine “Editor at Large / Global Futurist” Rich Karlgaard, in his column “Innovation Rules.” In an article criticizing the high cost of regulation to business, he cites current administration proposed reforms that he believes will greatly – disproportionately, even, and “quite intentionally” – help the manufacturing sector, which as noted in our article title he says has “the best wealth- and job- multiplier effect.
In the article, Karlgaard quotes economists Mark and Nicole Crain that “The costs of federal regulations fall disproportionately on manufacturers…[who] pay $19,564 per employee on average to comply with federal regulations, or nearly double the $9,991 per employee costs borne by all firms as a whole.”
Since the era of globalization, notes Karlgaard, “manufacturing as a percentage of the labor force has steadily fallen from a peak of 22% in 1977 to about 8% today.”
And lest one think that’s due solely to automation, he points out that Germany and Japan, both world leaders in robotics and among the most technologically advanced economies in the world still retain healthy percentages of their respective populations in the manufacturing sector – 20% of Germany’s workforce and about 17% of Japan’s work in manufacturing.
And that’s not just T-shirts and plastic toys – we’re talking about high tech manufacturing from autos and chemicals to robots and aerospace, 3-D printing, shipbuilding and the like.
The bottom line: manufacturing still matters. A lot. And it could matter even more, as resources are focused, training programs expand and regulations are judiciously refined.
And a final postscript to our manufacturing comments…
Just today, as we write, the Institute for Supply Management published results showing that “U.S. factory activity grew at the fastest pace in 2-1/2 years in February as new orders and production advanced.” Their supplier indicator showed that manufacturing was in a state of “expansion.” Their report goes on to state that “17 out of 18 manufacturing sectors reported growth” in the month just ended. It notes that the economy overall grew for the 93rd consecutive month.