Posted on 04/17/2010 10:37:26 AM PDT by Chi-townChief
The views expressed here are those of the author and do not necessarily reflect those of SHRM.
It has been well-documented that manufacturing has lost hundreds of thousands of jobs in recent years. But what is the biggest misconception about the industry right now?
The biggest misconception is that the United States no longer makes anything. But the fact is that the United States remains the largest manufacturing economy in the world by a healthy margin. As recently as 2008, the U.S. accounted for more than a fifth (21%) of worldwide manufacturing output, far ahead of the next two leading manufacturing economies of Japan (13%) and China (12%). And until the recession began in late 2007, U.S. manufacturing output was at an all-time high.
Another misconception is that the decline in manufacturing jobs has only taken place in the United States, when the fact is it has been a global phenomenon, as increases in productivity have reduced employment needs in many nations. Over the past 15 years, manufacturing jobs in China, South Korea, the UK, Japan, Germany, France and Italy have also declined.
Finally, there is a belief that most of the job losses have been due to rising imports and a deteriorating trade deficit. That is wrong and far from the case. Over the past 20 years, manufacturing employment has fallen by 6.1 million. Two-thirds of this decline took place in two recessionary periods (2001-2002 and 2008-2009), when there were deep declines in manufacturing production and imports generally fell due to the U.S. recession.
What types of jobs that have been lost will likely not return to the U.S. economy?
The U.S. manufacturing workforce is becoming more highly skilled as manufacturing has evolved into a more technology intensive sector.
In terms of production employment, we expect employment gains in coming years in several areas specifically those supported by exports. Between 2003 and 2008, manufacturing employment supported by export grew by 446,000. A recovery in the global economy in coming years will likely be a strong source of employment growth for U.S. manufacturers.
For manufacturing sectors more dependent on the domestic economy, the number and areas of job growth will be chiefly determined by three factors: the strength of the U.S. recovery, pace of productivity growth which will factor into the employment required for production and the global competitiveness of U.S. manufacturers.
Finally, it is important to note, the industrial composition of manufacturing 25 years ago is different from what it is today. And the composition 25 years from now will also be different, as new technologies and production methods are used to manufacture new products that today may only be an idea at an R&D facility.
What are the most promising sectors of growth in the U.S. manufacturing industry?
While it appears that a recovery is underway, the U.S. economy remains in a fragile state. A robust rebound in the domestic economy will not likely take hold until next year. However, the global economy, led by the developing economies, appears to be rebounding at a faster pace. As a result, manufacturers with a global portfolio are seeing activity pick up now.
In general this would include sectors such as textiles, primary metals, machinery, computer and electronics, and transportation products, where over a third of domestic production is supported by exports of manufactured products abroad.
Many American manufacturers have faced increased overseas competition from companies that have cheaper labor costs. To what extent will that continue in the near future?
U.S. manufacturers face stiff competition not just from countries with cheap labor costs, but also with industrialized economies. This competition is not just for the U.S. economy, but also for markets abroad. This global contest for market share will not disappear. It is simply the reality of a world economy that has become increasingly interdependent over the past quarter century.
The advantage that U.S. manufacturers hold is that our workforce is the most productive in the world. However, our global competitors are not sitting still, which is why it is critical that American industry continues to invest in research and development to maintain our competitive edge. At the same time, it is important to recognize that increases in domestic costs in the areas of taxes, healthcare, regulations or excessive litigation, will undercut U.S. manufacturers’ global competitiveness and weaken our country’s manufacturing base.
How important is the role of human resources as the manufacturing industry is redefined in the coming years?
With the nature of manufacturing jobs and skill requirements changing, human resources managers will play an increasingly important role helping companies focus on their most important asset: their workers. Human resource executives will be on the front line for ensuring that entry-level workers have achieved the core workforce readiness, academic and manufacturing technical skills that enable individuals to swiftly enter careers ranging from aerospace to computers, metal fabrication to food processing, pharmaceutical to transportation and logistics.
We believe a quantum leap is needed regarding People Management Practices, with companies taking proactive steps toward preparing workers for the significant challenges that lie ahead. “People and Profitability: A Time for Change” by Deloitte, Oracle and The Manufacturing Institute (the research, education and workforce affiliate of the NAM), found that the most profitable companies consistently assign a higher importance to talent and People Management Practices compared to the least profitable companies.
Interview conducted by Joseph Coombs, Workplace Trends and Forecasting Specialist
It would be nice if the author included a list of all the things made in the USA that could be bought in your local mall. Anyone have any idea what this guy has in mind?
All of the author's hyperbole aside, what were the numbers 30, 20 and ten years ago?
Also, it's been easy to maintain a high output by having people work seven days a week and cutting crews.
Where are the numbers on the man hours vs. production value?
What always strikes me as funny is that we make lots of parts for foreign cars but when you need a part for your American car, it’s foreign-made.
A lot of our liberal friends are surprised that the big fall-off in employment started when their ‘rats seized congress in ‘07 - they still won’t admit it.
My hubby is skilled labor in a plant that makes liquior bottles. When you buy Jack Daniels or several other hard liquiors they are made start to finish in the USA.
P.S. you really need to go back over 50 years ago.
He is right, as far as he goes. The problem is that in certain strategically important areas we’ve let our manufacturing sector decline, *not* that we have let our manufacturing sector decline to the point we are no longer an industrial nation. Steel and chip-making come to mind. I wouldn’t favor protectionism, but some sort of policies to see to it we have at least a reserve capacity in those areas would be a good idea.
Heck, even the U.K. is still a major industrial nation, and they’re further down the path we’ve been on in a lot of ways.
Chemicals, Caterpillar equipment and parts, Photosensitive printing plates, Pistons, water heaters, cotton labratory analysis equipment, valves, flat glass,cigarette filter tow, A/C compressors, stainless steel pipe and fittings, aluminum, mining equipment and supplies, pressure vessels
Just to name a few with which I have day to day experience.
Sorry, if we think that's the cause, unemployment will never be solved. The jobs were lost because labor is cheaper in other countries and American companies are motivated by profits. This trend did not start in '07.
This article is completely misleading. While we do have a good many places that ASSEMBLE, I would like to know how many of the parts of the items aren’t manufactured outside the US?
There was a couple who tried to find an item that was 100% made in the USA. That means nuts, bolts, electronic parts, etc... I don’t think they found anything.
With close to 10% unemployment, I get a real kick out of people who try to act as if all the manufacturing jobs we shipped off-shore, wouldn’t be helpful here at home right now.
Imagine, having to actually pay a U.S. Citizen to pick up a phone and handle customer service calls. Aren’t we proud that we have people out of work, so people in India and China can have a job?
Welfare, unemployment payments, and service sector jobs. What a rosy future...
to read later
I worked for Caterpillar until retiring 10 years ago. Back then roughly 50% of product was exported. The entire world economyy is down now, thanks in large part to Chris Dodd and Barney Frank and so is Caterpillar's business, the percentage is probably about the same though.
If we ever get rid of this communist administration and congress, I expect all businesses to rebound.
“
The biggest misconception is that the United States no longer
makes anything (A CONTRARIAN VIEW)
“
Whether or not this report is true...
we need to follow the sign that appeared in public places in the
devastated Germany soon after WWII was over:
EXPORT OR DIE
We’ve been fighting the wars for freedom, sometimes doing most of
the heavy lifting after WWII.
Time to come home and make things the rest of world wants/needs.
(and I say that with respect for the US Government doing all it could
to save a number of countries from enslavement)
I worked for 30+ years in a large manufacturing plant. (I am now retired.) The peak employment at that site was almost 24,000 people in the early to mid 1970s. The plant now employs well less than 5,000 people.
The output per employee (in terms of finished products) is much higher now than in past years, and improvements in productivity are partially responsible. A much larger reason is that almost all of the parts used in the plant are made elsewhere, many of them in Mexico, Central, or South America. When I first started working there, almost all of the parts were made in house. Essentially, the site is just an assembly plant now.
Of six main manufacturing buildings - once all full - two are now vacant, and three are only being partially used.
There are two auto assembly plants in my city. I took a tour of one of them a few years back. Engines came from Germany, transmissions from Brazil, axles from Mexico, smaller parts from all over the place. Yet this is supposed to be an "American" auto company.
So, who you gonna believe, your lying eyes or this shill? We are still a great manufacturing nation. Yeah, right.
The trend started when Americans got greedy in the early 60s, screwing themsleves and fellow Americans to save a few bucks.
Precisely. See my post (#17).
Obviously, the baby boomers did a major number on our economy - can we reverse the damage they caused over the last 45-50 years.
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