Factory jobs aren't coming back

The Cincinnati Enquirer ^ | December 6, 2003 | Greg Barrett

[sarcasm]

WASHINGTON - Laid-off factory worker Ruth Schumacher rises before the sun most days and earns $7 an hour tending the breakfast bar at a Holiday Inn in Celina, Ohio. She would like to set out a tip jar for the occasional dollar, but management forbids it.

After work, she occasionally goes next door to shop at Wal-Mart or at Kmart one town away.

"They've got real good bargains," she said of Wal-Mart, echoing a generation of thrifty shoppers.

Never mind that Wal-Mart is a major reason Schumacher no longer has a $12-per-hour job at Huffy Corp.'s bicycle plant. Five years ago, Wal-Mart pressured Huffy to lower the cost of its bikes, so Huffy closed its Celina plant. Schumacher's job and the job her husband held at Huffy eventually ended up in China.

"We can't go out to eat every Friday, Saturday and Sunday like we used to," Bob Schumacher said in a tone suggesting there are worse things. "When you lose a job like that you cut back on everything, that's all. I guess that's life."

Despite the announcement from the private Institute for Supply Management that manufacturing employment grew in November, the factory jobs that have disappeared will not come back, said Richard Berner, chief U.S. economist for Morgan Stanley Dean Witter.

The economic forces that have led U.S. companies to go overseas to manufacture low-end commodities - toys, jeans, towels, computers - are unlikely to change.

"Dauntingly high costs in manufacturing is the key reason why manufacturing employment has been uncharacteristically weak," Berner said. "My guess is manufacturing employment is now stabilizing, and I don't expect rapid job growth."

The past three years have produced manufacturing's worst job recession since the Great Depression:

• Since July 2000, the United States has lost nearly 3 million manufacturing jobs, more than 15 percent of its factory work force.

• In July, Pillowtex Corp., a giant U.S. manufacturer of towels and sheets, announced it was bankrupt and was laying off 7,650 workers in one of the nation's worst one-day textile layoffs ever.

Manufacturers large and small, from jean-makers in California to toy-makers in Kentucky, are lured abroad en masse because it is cheaper to manufacture those goods elsewhere.

Economists predict this trend will continue because so many people benefit. Consumers pay lower prices for retail, Wal-Mart and other discount stores make bigger profits, and CEOs earn fat bonuses.

Even manufacturers who don't flee the relatively high cost of doing business in the United States are likely to rely more and more on technology to produce more with less. That's why manufacturing's portion of the U.S. gross domestic product barely fluctuates, even as factories shut down.

Economy evolves

But as one door closes, another opens. It's the maturation - and growing pains - of a new economy.

By 2010, an additional 22 million jobs will be created in the United States, bringing the total to 168 million, the Department of Labor reports. Nearly 14 million, or three out of every five, will be in service occupations such as home health care, food preparation, child care and transportation.

In a report titled "Tomorrow's Jobs," the Labor Department projects that employment agencies that supply temporary workers - who are frequently excluded from health and retirement benefits - will be among the largest single sources of growth, creating 1.9 million new jobs.

Meanwhile, occupations that require a bachelor's degree and usually offer higher pay and benefits will account for 7.3 million jobs. Of the 50 best-paying jobs listed today by the Labor Department, 48 require at least a college degree. The two exceptions are air traffic controllers and nuclear power reactor operators.

"As bleak as it sounds, we just have to say to our fellow citizens, 'Get a skill, an education, learn a (second) language,'" said economist Richardson. "That is sometimes called tough love."

It's a lesson that Ruth Schumacher, a 64-year-old great-grandmother who never graduated from high school, lives every day.

Her husband earns $9.15 per hour today as a part-time church janitor, about $4 less per hour than he did welding bike rims for Huffy. Together, he and Ruth draw $518 per month in pension money, but their AARP health insurance eats up half of that. All told, their income is enough to get by on and nothing to celebrate.

The lowest skilled

These days, they depend more than ever on low prices at Wal-Mart and other stores.

"The buck stops with the folks with the lowest skills," Richardson said. "These people find themselves now in a world with a whole bunch of other low-skilled folks who are competing with them."

It's the yin and yang of the global economy. As the Schumachers worked last year to stretch every dollar, Wal-Mart, the world's largest retailer, reported $245 billion in sales, $40 billion more than any other U.S. company. American consumers saved tens of billions of dollars on retail, $20 billion just at Wal-Mart, according to market estimates. And CEOs earned about 250 times more than their workers, almost a tenfold increase from the wage gaps of 1965.

On the day after Thanksgiving this year, Wal-Mart posted a single-day sales record of more than $1.52 billion. The company makes no apologies for its market influence.

"We are in business to take care of the customer," spokeswoman Melissa Berryhill said. "We are going to do what we need to do to deliver everyday low prices to our customers, and we are going to go where we have to go in order to do that."

However, Berryhill added, Wal-Mart would "prefer to buy locally whenever viable."

Officials at Huffy declined to comment.

[sarcasm]

ping

[RLK]

More of the same. It will continue until we are an economically bankrupt third world country with atom bombs.

[doosee]

Reading this article, simplistic as it is, helps to bring out how complex and interdependent our economy is today. For example, how popular are bicycles today compared to the 50's, 60's, and 70's? Kids have shifted to skateboards and roller blades and who knows what else. Boomer bikers want specialty bikes now. Is this article really about how WM put Huffy under or how Huffy did not change with the times? It is too easy to say if only WM didnt exist and we all paid more for bikes the world would be great. Time for all Luddites to adapt!!!!!!!!!!!!

[sarcasm]

Do you really think that we'll still have a nation? I have my doubts.

[RaceBannon]

Yeah!

Why doesnt her husband build his own bikes!! Huh??

[Indie]

But as one door closes, another opens. It's the maturation - and growing pains - of a new economy. By 2010, an additional 22 million jobs will be created in the United States, bringing the total to 168 million, the Department of Labor reports. Nearly 14 million, or three out of every five, will be in service occupations such as home health care, food preparation, child care and transportation.

This sounds to me like a propaganda piece for the globalist freetraders. What the above paragraph left out was..."and those new jobs will be at considerably lower pay and benfits (if any) than the jobs lost."

Growing pains of a new economy?? HA! Pure bull. There will be no economy soon. No state has survived, or can survive, on purely a service economy. The ship is sinking and the officers are swimming away to retirement villas overseas.

[Recovering_Democrat]

But as one door closes, another opens. It's the maturation - and growing pains - of a new economy.

Holy crap...some real world writing...instead of the continual harangue of pessimism and "blame America" garbage.

In what world, besides pre-school, did societial norms begin to create and/or expect a "Nanny Society" where even employees are expected to be able to have everything all the same all the time?

[sarcasm]

They have other plans in mind

[carlo3b]

Stick with the Union Label, and raise minimum wage and wave bye bye to low cost jobs. After all these folks don't even have an education, or a work ethic, and Environ, Harassment, Workman's comp, Trial Lawyers, are breathing down corporate necks anyway.. Why fight city hall and Union thugs.. Hello India, China, Mexico..

[TalBlack]

"The buck stops with the folks with the lowest skills," Richardson said. "These people find themselves now in a world with a whole bunch of other low-skilled folks who are competing with them."

This doesn't seem to square with the mantra that "we need" to let in illegals because ther are no Americans who want to do their jobs.

Cut the illegals and lets see where the wages of the people in this article go.

He's a janitor and she's a waitress? I have to go a long way to see an american in those jobs in my neck of the woods.

[freeangel]

These articles remind me of Pittsburgh when they started shutting down the steel mills. Many "waited" several years knowing that their jobs at the mills would not be lost forever(big mistake). Some retrained into jobs that were ultimately more financially lucrative than their old jobs, and a few brave souls started their own businesses doing what they loved. We've been through tough times before and will weather this one too.

[verity]

We can't go out to eat every Friday, Saturday and Sunday like we used to,"

That alone should save you a bunch of money!

[FITZ]

No state has survived, or can survive, on purely a service economy.

The region I'm living in has welfare rates approaching 40% --- health care is in worse shape with only 33% bothering with private insurance ---- the rest get their health care free from the government. Needless to say, about the only jobs are in health care and education ---- but it's taking massive federal and state bailouts to keep things going. If the bailouts stop rolling in, we're sunk.

[FITZ]

He's a janitor and she's a waitress? I have to go a long way to see an american in those jobs in my neck of the woods.

I've seen American waitresses and janitors --- but not where I'm living now --- not many because they are being driven out because it's cheaper to hire an immigrant. The immigrants don't expect any job benefits like employer provided insurance because they don't mind the free government insurance. So they're cheaper for the employers but not for the taxpayers.

[sarcasm]

That alone should save you a bunch of money!

Of course it means less money spent in restaurants which means that they hire fewer employees. Can you say downward spiral?

[verity]

Downward spiral.

[sarcasm]

You'll also be aghast when we get a national health insurance program and a massive tax increase to pay for the cost because these people will demand this of their politicians.

[ChadGore]

Re: This sounds to me like a propaganda piece for the globalist freetraders.

Agreed.

Re: No state has survived, or can survive, on purely a service economy.

This statement is based upon the assumtion that the manufacturing sector will no longer exists, and that is just flat out false.

Let me give you some examples.

Affordable information exchange has revolutionized the industry in a fundemental way. 10 years ago, the thought of a team of engineers in another country performing concurrent engineering on a PIM design would have been un do able.

Today, not only can a contractor in Bangladesh log in with a seat of UniGraphics or ProE and view, edit, and post on the same solid model everyone else is working on, but the entire shop floor can have access to the same information. It's cheap, distributable, and real time.

This decentralizes many of the functions that used to be performed only under the same roof on the "Nike Network" of people walking cubicle to cubicle to get questions asked and answered.

So a company hires 2 temp workers for next to nothing, and they may not get that much productivity out of them, but given the low price they're paying, that's ok, and if they're on the other side of the globe, their 3rd shift is your first shift, so your time to market is reduced because your compressing the schedule considerably.

So then the company hires different temp worker from different temp agencies and judges their performance, and eventually finds a few that really are performing with the same quality that they get out of their engineering team in the states, so they add a 3rd, then a 4th, . . .you get the idea.

Then one day, in a conferance call, one of the engineers in bangladesh says "I know a guy in this same industrail park that prototype this part in ____ time for ____ dollars, and they take him up on his offer.

Now they're getting some sample work done over there, so they add yet another temp, then the prototype guy in Bangladesh says he just bought a Trumph laser, a brand new HASS VNC and a Mits EDM, and can can to work in _____ amount of time for ____ dollars, so they try a few and they suck really bad, so they shop that around and . . .anyway

This is exactly the way it's happens with shop owners I know here in the states. It's not a planned thing, there's no mallice in it, it's just a question of keeping quality high, and not being afraid to shop around.

There are others who have sent and entire mold over to China, only to have a dup mold built to run knock-offs of the part to flood the black market, but that's another story.

[cp124]

or three out of every five, will be in service occupations such as home health care(changing diapers), food preparation(MacJobs), child care(more diapers) and transportation(driving from one minimum wage job to another).

[ctonious]

Of the 50 best-paying jobs listed today by the Labor Department, 48 require at least a college degree. The two exceptions are air traffic controllers and nuclear power reactor operators.

Scary little factoid that sounds like a line from the "Simpsons".

[RLK]

Do you really think that we'll still have a nation? I have my doubts.

---------------------------

The country will dissolve into balkanized politically correct nothing. When the eventual history is written, it will be properly recorded that massive accelleration of the collapse was due to the presidency of George Bush.

[harpseal]

Ping

On or off let me know

[RogueIsland]

"As bleak as it sounds, we just have to say to our fellow citizens, 'Get a skill, an education, learn a (second) language,'"

Yup. You'll need those skills when you're training the guy offshore who's just taken the latest new career you spent the last 6 years of night school acquiring a skill, education, and second language to do.

[Joe Hadenuf]

More of the same. It will continue until we are an economically bankrupt third world country with atom bombs.

Yep.

That's why our plans include owning everything we have, not making payments on *anything*, and stepping off the "get ahead" tread mill.

Most are just spinning their wheels, struggling to inch ahead, when in reality the cards are totally stacked against most of them.

We have found that it's much better to just make less money, pay as little taxes as possible, *own* everything, and stay the hell out of debt.

Life is just way too short to be running in place, day in and day out, trying to compete with Chinese that are paid fifty cents a day.....

And we are having much more fun, and have much more time for our families, fishing, etc, etc.

[only1percent]

Leverage isn't necessarily a bad thing. You're a lot more secure with $50,000 in reasonably-priced long-term debt and $60,000 in cash than you are with $10,000 in cash and no debt. The $50,000 in debt only costs you $3,000 or $4,000 a year, while the $60,000 in cash gives you a significant cushion against unemployment, significant ability to make opportunistic investments, etc. And, not to be indelicate, but it's a lot easier to move your $60,000 out of the grasp of your creditors than it is reborrow the $50,000 you've prepaid on your debt if you really need it.

[Joe Hadenuf]

Tell you what, you go into debt, I'll go fishing.....Hehehe..

[oceanview]

some new Hillary 2008 voters just created.

[oceanview]

that will be hillary's first law signed in early 2009.

[Long Cut]

What a fun, optimistic thread!

Just a question: Do you guys ENJOY looking hangdog at each other and whining about impending doom?

If so, continue, please. I'm one of those rare sorts whoo gets amusement aplenty by watching others in terror of the sky falling.

I get the same fun from watching Democrats in their hate-twitches.

[discostu]

Man you guys are hilarious with your little weeping circle. making the same ALWAYS WRONG claims about a didsappearing manufacturing sector for the last quarter of a century. Wrong then, wrng now, wrong ALWAYS AND FOREVER.

[BlueNgold]

So free market economies defined by the laws of supply and demand are bad? Or should those laws stop at our borders? Shall we thwart the growth prospects of our own economy to provide consumers with higher priced goods just because they are produced from within?

The American economy is far from a service only engine. It is American business and American consumer demands that drive a vast portion of the world economy. In recent years Honda, Toyota, and Mercedes (to name only 3) have opened massive manufacturing operations in the U.S. for the sole purpose of providing American consumers with products we demand at a price we are willing to pay.

Anecdotal evidence does not mean the sky is falling. And the Blame Wal-Mart, Blame Microsoft, Blame IBM crowd has no solutions that meet market demands. Of course, we could always elect Buchanen, isolate ourselves, pay artificially inflated prices, watch unemployment skyrocket, and remove ourselves from the import/export business altogether...
or we could lead the world economy as we have done for 60 years...

[Long Cut]

You mean this weepy "woe-is-me" circle has been going on THAT long, even after the boom of the '80s? Pathetic.

Sorry, this is pessimism at its worst. Yes, America's economy and general systems have problems, but after reading some of these threads, it seems that some people's families should visit, RIGHT NOW, and check on them. Start with the garage and the bathtub.

I'm sorry, but Americans do not improve things by whining and blaming "others" for their problems.

[Long Cut]

It would seem that there are, as on the Left, those who believe that the government can fix all problems with a law or two. As if any laws now would stop the globalization of the world's economy.

[Pkeel]

You may perish for lack of education.

Check out Davids Sling, a truly great book.

Welcome to the information age.

[oceanview]

we lost 17000 manufacturing jobs in the last employment report.

[discostu]

I remember hearing these same dire predictions of the imminent demise of our manufacturing sector and the wondering if we could survive as a "service economy" back in the Ford administration. And it's always the same basic structure, they take one town where things have gone to crap (it seems there's always one town where things have gone to crap, I think that's a function of just how many towns there are in America) and then present it as if that's the entire story of America's manufacturing economy. And the threat is always either those dangerous Chinese or shifty Mexicans, with of course the sub-bad guy being the evil CEOs lining their pockets with the blood of the working class. Same crap, different town.

[discostu]

280,000,000 people in this country and we're in a tizzy over 17,000 manufacturing jobs. Meanwhile it's still a higher percentage of our GDP than it was just prior to WWII and automanufacturers are still building and expanding factories in America. You'll have to excuse my steady unpaniced pulse.

[Long Cut]

Interesting. And I'm sure that many of those making those arguments would vehemently profess to be conservatives as hard as they would deny being socialists.

Isn't it funny when someone cannot see their own tree in the forest they create?

[oceanview]

china is just starting to get rolling on auto production, subassemblies first, in car electronics. give them 5 years.

[discostu]

Part of it is a liberal press that likes making things look bad during a GOP administration. Part of it is just that good news makes for boring TV. Part of it is that some people have a Dutch Boy complex and feel a desperate need to be the guy holding the tide back against some imminent catastrophe. Some folks actually live in the town that's gone to crap and just need to blame somebody. Some folks fear happiness and all that it implies. I wouldn't go so far as to call most of them socialists (though many of them call me a traitor for believing in the free market... I try to rise above), just addicted to bad news.

[taxed2death]

Hmmmmmm....interesting title.

I wasn't aware that being a machinist or tool maker in a factory was a low skill job. Is programming a 3 axis CNC low skilled?

When I tool manufacturing technologies for my degree in ME, working a piece of metal to .005 tolerences wasn't all that easy.

All I see is GWB pushing this country's workforce into a race to the bottom.

[discostu]

Ah yes the ever popular 5 year prediction. I gave China 5 years back in 1975, they STILL aren't the juggernaut that was predicted. Niether is Japan. Niether is Mexico. Niether is Germany. Niether is Australia. America has been "5 years" away from being a service economy for as long as I can remember, ain't happened yet and it doesn't look any more likely now than any other time in recent history.

[oceanview]

those other countries didn't make it longterm because its a race to the bottom. and we've now found the bottom, for manufacturing, its china. unless someone can figure out how to make africa into a manufacturing hub.

[oceanview]

its not low skilled, that's for sure. that's not to say someone in china cannot do it, they obviously can.

but what gets me is the arrogance of people who refer to manufacturing as "low skill", and then cheer when as in the last jobs report, "leisure" employment grew. yeah, checking someone into a hotel, or serving a meal, that's high skilled work. unreal.

[discostu]

Those other countries didn't make it long term because we're still the best manufacturers in the world, we're also the world's largest consumer and in the long run the closer you build your product to the guy that's going to use it the better. Business forget that periodically and we see a mass egress, but then they remember and expand in America. Huffy forgot, Toyota remembers. It's not a race to the bottom, that's just panic stricken silliness from the Chicken Little crowd.

[rintense]

Well the factory jobs at my company are coming back. We've re-hired many, MANY factory workers in the past nine months, and are looking at good forecasts.

[Indie]

Check out Davids Sling, a truly great book.

I am quite familiar with it. And your specific point is??

[Pkeel]

Not a manufacturing country anymore. Nothing to mourn just a change. Manufacturing has declined since at least the sixties.

What the US does best is in information based economies. Does Microsoft count as manufacturing or service? Should be neither it is information based.

Lets have some numbers on how many information based jobs have been created since the sixties.

[oceanview]

in case you haven't noticed, many of the "information" based activites are moving to India and China also.