American Manufacturing Struggles

Has Past Erosion Finally Been Overcome?
We love the comeback story of an underdog, but that doesn’t mean everyone believes our hero can make it though when the tale is non-fiction.
Manufacturing in the U.S. is starting to gain ground that has been lost since the 1980s and the rebound has been inspiring thus far, but is it a true turnaround?
Before we get the detractor’s view, let’s take some time to assess the U.S. manufacturing sector as a whole. Not only have we once again surged past the 12 million-job mark, but U.S. production prices are becoming more competitive and we’re seeing a small boom in oil and natural gas production here in the States.
The recent surge in “made in America” goods is not just a feel-good effort dreamed up by marketers. Consumers are willing to pay a little more for these goods and moving manufacturing closer to consumers also allows companies to run leaner, more dynamic operations.
Being close to your customer allow for greater product shifts or changes to address changes in taste or problems and recalls. This has limited utility, however, because near-shoring needs to economically feasible before this rapid response is considered. Google learned this with the Motorola Mobility plant in Texas that will be shut down by the end of the year because of poor product demand.
The Google piece is important because it also represents a gain of 3,800 jobs, followed by a loss of roughly 3,100, from the manufacturing sector. Google isn’t the only company to see these shifts, as it appears we may have leaped too far without looking.
Let’s take the time to look now and review some important figures about U.S. manufacturing from the Bureau of Labor Statistics, Accenture, Boston Consulting Group and others:
Positives
21% of manufacturers are already moving jobs back to the U.S. or have current plans to do so.
Manufacturing reached roughly 8.75% of (nonfarm) employment in the U.S. by the end of last year.
The average annual pay for manufacturing employees was $77,500 at the end of 2012, roughly $15,450 higher than the average for all U.S. workers.
60% of manufacturers say there is a “severe shortage” of highly skilled workers.
80% of manufacturing jobs require at least one-year of training or an associate’s degree before employment begins.
The U.S. currently has a trade deficit of manufactured goods. At the end of 2013 this was $470 billion.
Negatives
Those negatives provide the clearest concern for the long-term viability of our recovery. We need to train the manufacturing equivalent of master painters and sculptors if our renaissance is to truly take hold.
We’ve seen significant losses in workers both in number and ability. Part of that is from the off-shoring trend over the past 30 years, because we did not train workers for jobs that weren’t here. However, America’s technical aptitude has also struggled in processes that never left.
One of the largest gaps in our industry is workers who are skilled at repairing our machinery, including new plant and line technology. Those jobs are still here, but often sit empty or under-filled because we simply can’t find the right people with the right experience.
Filling that gap leads to the biggest question mark about our recovery: will we get the education we need? The U.S. political climate has shifted more positive toward manufacturers and we’re seeing an uptick in incentives to bring operations here, but will this turn into the improved education that we need most?
The conversation can’t just be cost savings and tax reductions for new openings. It also shouldn’t focus on rising healthcare expenses and infrastructure troubles. To get American manufacturing back to a steady growth, we need true investment in education and incentives for our younger generations to consider a job that depends more on social cohesion than social media.