Skip to comments.Wanted: Blue-Collar Workers - Who will power America’s new industrial revolution?
Posted on 12/09/2011 8:43:24 PM PST by neverdem
T o many, Americas industrial heartland may look like a place mired in the economic past—a place that, outcompeted by manufacturing countries around the world, has too little work to offer its residents. But things look very different to Karen Wright, the CEO of Ariel Corporation in Mount Vernon, Ohio. Wrights biggest problem isnt a lack of work; its a lack of skilled workers. We have a very skilled workforce, but they are getting older, says Wright, who employs 1,200 people at three Ohio factories. I dont know where we are going to find replacements.
That may sound odd, given that the region has suffered from unemployment for a generation and is just emerging from the worst recession in decades. Yet across the heartland, even in high-unemployment areas, one hears the same concern: a shortage of skilled workers capable of running increasingly sophisticated, globally competitive factories. That shortage is surely a problem for manufacturers like Wright. But it also represents an opportunity, should Americans be wise enough to embrace it, to reduce the nations stubbornly high unemployment rate.
Driving the skilled-labor shortage is a remarkable resurgence in American manufacturing. Since 2009, the number of job openings in manufacturing has been rising, with average annual earnings of $73,000, well above the average earnings in education, health services, and many other fields, according to Bureau of Labor Statistics data. Production has been on the upswing for over 20 months, thanks to productivity improvements, the growth of export markets (especially China and Brazil), and the lower dollar, which makes American goods cheaper for foreign customers. Also, as wages have risen in developing countries, notably China, the production of goods for export to the United States has become less profitable, creating an opening for American firms. The American Chamber of Commerce in Beijing expects Chinas low-wage advantage to be all but gone within five years.
Its also true that American industry hasnt faded as much as you might think. Though industrial employment has certainly plummeted over the long term, economist Mark Perry notes that the U.S. share of the worlds manufacturing output, as measured in dollars, has remained fairly stable over the last 20 years, at about one-fifth. Indeed, U.S. factories produce twice what they did back in the 1970s, though productivity improvements mean that they do it with fewer employees. Recent export growth has particularly helped companies producing capital equipment, such as John Deere and Caterpillar, and many industrial firms are even hiring more people for their plants, especially in the Midwest, the Southeast, and Texas.
One area in which industry is positively roaring: firms that service the thriving oil and natural-gas industries, from Montana and the Dakotas to Pennsylvania. In Ohio alone, there are already 65,000 wells, with more on the way, says Rhonda Reda, executive director of the Ohio Oil and Gas Energy Education Foundation—while a new finding, the Utica shale formation in eastern Ohio, could hold more than $20 billion worth of natural gas. As a result, Karen Wrights business—selling compressors for natural-gas wells—has been soaring, leading her to add more than 300 positions over the past two years. Theres a huge amount of drilling throughout the Midwest, Wright says. This is a game changer.
Wright isnt alone. Firms throughout the Midwest are moving aggressively to meet the demand for natural-gas-related products. Take the $650 million expansion of the V&M Star steel mill in Youngstown, Ohio, which builds pipes for transporting gas. The expansion will add 350 permanent jobs to the factory after its completed next year.
As the natural-gas boom continues, it could have another effect beneficial to industry: keeping energy prices low, which will give American manufacturers a leg up on their global rivals. Companies in the business-friendly midwestern and Plains states will profit the most, while New York and California—though each has ample fossil-fuel resources—will probably be too concerned with potential environmental problems to cash in.
The industrial resurgence comes with a price: a soaring demand for skilled workers. Even as overall manufacturing employment has dropped, employment in high-skill manufacturing professions has soared 37 percent since the early 1980s, according to a New York Federal Reserve study. These jobs can pay handsomely. An experienced machinist at Ariel Corporation earns over $75,000, a very good wage in an area where you can buy a nice single-family house for less than $150,000.
A big reason for the demand is changes on the factory floor. At Ariel, Wright points out, the operator of a modern CNC (computer numerical control) machine, which programs repetitive tasks such as drilling, is running equipment that can cost over $5 million. A new hire in this position must have knowledge of programming, metallurgy, cutting-tool technology, geometry, drafting, and engineering. Todays factory worker is less Joe Six-Pack and more Renaissance man.
So perhaps it isnt surprising that American employers are hard-pressed to find the skilled workers they need. Delore Zimmerman, the CEO of Praxis Strategy Group (for which I consult), observes that this shortage extends to virtually any industrial operation. In his hometown of Wishek, North Dakota, whose population is just 800, one company making farm machinery has 17 openings that it cant fill. Skilled-labor shortages grip the whole of this energy-rich state. Demand for skilled workers in the North Dakota oilfields—from petroleum engineers to roustabouts—exceeds supply by nearly 30 percent. The shortage of machinists is 10 percent. The HELP WANTED signs in North Dakota are as common as FOR SALE signs in much of the rest of the country, Zimmerman reports.
There are very few unskilled jobs any more, says Wright. You cant make it any more just pushing a button. These jobs require thinking and ability to act autonomously. But such people are not very thick on the ground. Among the affected industries will be the auto companies, which lost some 230,000 jobs in the recession. David Cole, chairman of the Center for Automotive Research, predicts that as the industry tries to hire more than 100,000 workers by 2013, it will start running out of people with the proper skills as early as next year. The ability to make things in America is at risk, says Jeannine Kunz, director of professional development for the Society of Manufacturing Engineers in Dearborn, Michigan. If the skilled-labor shortage persists, she fears, hundreds of thousands of jobs will go unfilled by 2021.
The shortage of industrial skills points to a wide gap between the American education system and the demands of the world economy. For decades, Americans have been told that the future lies in high-end services, such as law, and creative professions, such as software-writing and systems design. This has led many pundits to think that the only real way to improve opportunities for the countrys middle class is to increase its access to higher education.
That attitude is a relic of the postWorld War II era, a time when a college education almost guaranteed you a good job. These days, the returns on higher education, particularly on higher education gained outside the elite schools, are declining, as they have been for about a decade. Earnings for holders of four-year degrees have actually dropped over the past decade, according to the left-of-center Economic Policy Institute, which also predicts that the pattern will persist for the foreseeable future. In 2008, more than one-third of college graduates worked at occupations such as waiting tables and manning cash registers, traditionally held by noncollege graduates. Mid-career salaries for social work, graphic design, and art history majors are less than $60,000 annually.
The reason for the low rewards is that many of the skills learned in college are now in oversupply. A recent study by the economic forecasting firm EMSI found that fewer computer programmers have jobs now than in 2008. Through 2016, EMSI estimates, the number of new graduates in the information field will be three times the number of job openings.
Theres a similar excess of many postgraduate skills. Take law, which flourished in a society that had easy access to credit. Now, with the economy tepid, law schools are churning out many more graduates than the market wants. Roughly 30 percent of those passing the bar exam arent even working in the profession, according to a survey by the National Association for Law Placement. Another EMSI study indicates that last year, in New York State alone, the difference between the number of students graduating from law school and the number of jobs waiting for them was a whopping 7,000.
The oversupply of college-educated workers is especially striking when you contrast it with the growing shortage of skilled manufacturing workers. A 2005 study by Deloitte Consulting found that 80 percent of manufacturers expected a shortage of skilled production workers, more than twice the percentage that expected a lack of scientists and engineers and five times the percentage that expected a lack of managerial and administration workers. We dont just need people—we need people who can meet our standards, worries Patrick Gibson, a senior manufacturing executive at Boeings plant in Heath, Ohio.
Some of Gibsons fellow manufacturers blame the shortage of skilled workers on the decline of vocational education, which has been taking place for two decades now. Such training is unpopular for several reasons. For one thing, many working-class and minority children were once steered into vocational programs even if they had aptitude for other things, an unfair practice that many people havent forgotten. Todays young people, moreover, tend to regard craft work—plumbing, masonry, and carpentry, for instance—as unfashionable and dead-end, no doubt because theyve been instructed to aspire to college. People go to college not because they want to but because their parents tell them thats the thing to do, says Jeff Kirk, manager of human relations at Kaiser Aluminums plant in Heath, Ohio. Kids need to become aware of the reality that much of what they learn in school is not really needed in the workplace. They dont realize a pipe fitter makes three times as much as a social worker.
Fortunately, there are signs that some schools are getting that message and passing it along to their students. Funded by industry sources, the Houston Independent School Districts Academy for Petroleum Exploration and Production Technology trains working-class, mostly minority high school students in the skills theyll need to perform high-wage industrial jobs. Tennessee—like Texas, a growth-oriented state—has developed 27 publicly funded technical centers that teach skills in just months and carry a far lower price tag than a conventional college does.
Two-year colleges will be crucial to the effort to train skilled workers. One of these schools, Central Ohio Technical College, has recently expanded by 70 welding students and 50 aspiring machinists per year. Many of the colleges certificate programs are designed and partly funded by companies, which figure that theyre making a wise investment. You have a lot of people sitting in the city doing nothing. They did not succeed in college. But this way, they can find a way up, says Kelly Wallace, who runs the colleges Career and Technology Education Center.
Such shorter educational alternatives will become ever more important as industrial workers retire. The average skilled worker in the industries supplying the gas boom is in his mid-fifties. At our plant, you have lots of people with 20 to 30 years experience, says Kirk, who has three high-skill openings that he cant fill. But theres no apprenticeship program—no way to fill the future growth. We are simply running out of people.
New programs may not produce enough graduates to fill all these openings. But Karen Wright, at least, suspects that more young people will start looking for careers that offer them the prospect of a decent living and less debt. This may not be the postindustrial future envisioned by Ivy League economists and Information Age enthusiasts. But it could spell better times for a country in sore need of jobs.
Joel Kotkin is a Distinguished Presidential Fellow at Chapman University in Orange County, California.
A good part of the US population has simply dropped out. I know firms that simply can not find enough young people who can read, don’t do drugs, are willing to learn something new, and will show up on time. Its surprising the amount of people who can’t manage even that.
People who can read a teleprompter. Can't have too many of 'em.
Good article, forwarded to a couple of community college administrators I know. This is the message they need to hear - that there is a need for post-secondary education options that span the range from technical through traditional universities, and community colleges which offer vocational and transfer programs at a very affordable cost need to take a much bigger role.
Thanks for posting. Being from Ohio originally I find this very interesting.
Joel does not know what in the hell he is talking about. Same old crap someone posted here a week back about a company in Texas that could not find cdl drivers, he wanted to pay them 1980 labor rates. He used a company in Ohio as an example, does he have any idea how many companies in Ohio have gone broke the last few years, hell there are thousands of home vacant in Cleveland.
But Obama said the kids should get a free college education on the taxpayers’ dime, and then go to work for the government. How could he be wrong on this? (sarc)
Here’s a thought for Karen Wright:
Put out Help Wanted ads for retired people who are suffering under The Messiah’s economy. Offer them jobs AS PRIVATE CONTRACTORS. They only need to work 4 hours per day but receive a generous hourly wage; they receive NO BENEFITS since they are private contractors. Give them classes to upgrade their skills; they will be quick learners, then turn them loose on the job with bonuses available if they exceed their quota.
You’ll be amazed at how much productivity results.
Advertise to military members that are separating from the service.
When you have to work to eat is when that will change.
The reason that community colleges are "affordable" is because they are very heavily subsidized by the state governments. For example, in Virginia, our community college system depends on state government funds far more heavily than public four-year colleges and universities.
That's exactly how American workers earn higher wages than their counterparts in less-developed states: with the proper know-how, they produce more value per worker.
For decades, Americans have been told that the future lies in high-end services, such as law, and creative professions, such as software-writing and systems design. This has led many pundits to think that the only real way to improve opportunities for the countrys middle class is to increase its access to higher education.
There is plenty of value in knowing how to properly design, implement, operate, and secure networked computer systems, both software and hardware.
“A new hire in this position must have knowledge of programming, metallurgy, cutting-tool technology, geometry, drafting, and engineering. Todays factory worker is less Joe Six-Pack and more Renaissance man.”
Yeah, good luck with that. If you need more than a handful of those, then your business plan is skewed.
“Joel does not know what in the hell he is talking about.”
Yes he does.
I live it.
The easiest way to make $75,000 a year as an Ohio resident is to become a public school teacher. I wish I was kidding.
start at the middle school and high school level bring back the shop classes
CDL? Check into North Dakota. Most places up here are paying upwards of $25 an hour. Sure, housing is expensive and scarce, but the money is here. Most oilfield service jobs are making good money up here because labor is in short supply. I talked with a young man today who was working part time as a greeter at WalMart ($16/hr) while going to college.
There are advantages all around.
This article is just a rehash of many I’ve read over the past few years.
“Industry can’t find enough skilled workers, jobs going unfilled, blah, blah.” What they mean is they can’t find skilled labor at eight to ten dollars an hour.
What a crock of crap.
I know plenty of intelligent people who could be easily trained to do any such job mentioned in the article, The fact is that most of these business owners want highly trained (usually implicitly on the public dime) workers who will work for little more than unskilled illegals. *ANY* company that even slightly tried to have anything resembling ‘on the job training’ that would pay people a low, but livable wage while they learned skills to eventually join the ranks of the highly skilled would be BESIEGED by hundreds, even thousands of intelligent, hard working, God fearing, grateful, English speaking native born Americans. While I don’t like taxes any more than anyone else, the fact is that a really good vocational education program is going to cost money. One cannot gripe about the lack of trained workers and promulgate cutting funding for the high schools and the junior colleges, at least where I live.
We need to model our vocational system after that of Germany. A non college but still rigorous technical training program available to any citizen at a reasonable cost.
“...average annual earnings of $73,000...”
65,000 oil wells in Ohio.
At 40 barrels a day, about the national average, that means Ohio pumps 25% of USA production - wrong!
Besides that, though...
The most important thing about manufacturing jobs is that almost all of them are blue collar.
The air temp is too hot or too cold - you often get dirty - you often sweat - you often stand the whole day - you usually do highly repetitive tasks - you get physically tired - your co-workers tend to have below average verbal skills and below average curiosity - managers treat you with less respect and less tolerance than they treat their white collar peers - and the production quota, there is always, always, always a vigorously enforced quota.
I mean, here's the true test...
How often have you seen your kids and their friends sit around and talk about their “dream” manufacturing job?
Never, that's how often.
“The easiest way to make $75,000 a year as an Ohio resident is to become a public school teacher. I wish I was kidding.”
Here in NJ that was the way, until Governor Christie capped our property taxes. This caused non-tenured teachers (as well as some tenured ones) to lose their jobs as the funds ran out to pay them while still giving the surviving teachers their ridiculous pay/benefits packages, and promised long-term unemployment to recent “education” graduates as those already in those positions dug in to keep them. They know they are an anomaly, and are unemployable outside of the public school classroom.
I agree; if these jobs were out there in any real numbers people would be flocking to them.
Since anyone can see that the employment picture is dismal, I guess the new strategy is to find a small niche where things are better and trumpet it as a success (or blame Americans for being too lazy to get the training/do the work).
My brother works for a company that builds large boats and ships...ferries etc. Recently his company let go of all the unskilled workers (younger ones not learning a craft) and kept all the older workers. What will they do without the older guys? My brother is now 57 years old.
The news gets worse.
Here in Seattle, ONE THIRD of computer programmers are foreign born.
This is absolutely a money issue.
Through so called “temporary” work visas and “internships,” companies like Microsoft have crushed salaries for first year and mid-level USA born programmers.
“Through so called temporary work visas and internships, companies like Microsoft have crushed salaries for first year and mid-level USA born programmers.”
That, BTW, is a mortal sin.
The situation in US Mfg is becoming very dire relative to an expected bulge of retirements in the next 5 years that will include a lot of the skilled/knowledge employees and managers. Predictions are varied but there will a shortfall of millions of employees of all types needed in manufacturing. I blame the failed ‘everybody must have a college degree’, the pig ignorant state and federal government and US business & business orgs which has been unable to stand up and be heard!
This organization, NTMA, the National Tooling and Machining Association list of small cap precision machining/metalworking companies...http://www.ntma.org/members/directory/.
The new machines for CNC are so sophisticated that Mechanical engineers receive top dollar pay to run them at Honeywell in Kansas. And they are picky about where the engineers come from - local talent is best they have said on more than one occasion. Preferably Kansas and Missouri graduates do best. And they get top dollar. But they (the engineers) aren’t in a design or a career track so there is that tradeoff. But the future is extremely bright for anyone who knows how to run any kind of manufacturing equipment.
Nobody; as it costs too much.
The ONLY way to get the 'jobs' back is to make it cost effective.
It COSTS too much!
Does ANYone really think that the worker bees in foreign factorys are more SKILLED than us?
And just WHY are they looking for YOUNG people?
They'll work for LESS than the older ones!
Nope; plain ol' supply and demand: Economics 101
I am amazed at the work ethic of the young college grads I have hired. They really feel a job is simply an unnecessary requirement to their providing themselves liesure time.
Getting in before 8 and staying past 5 is a major inconvenience to them.
Where is the opportunist who runs and RV dealership who can trundle a few hundred up their and start camps to lease out?
That is the American way!
The story of American jobs and labor is deeply intertwined with predatory Federal, state and local taxation and regulation....
South Koreans sleep soundly on their border with NORKS because of American Taxpayer dollars and the American GI.
Why cant Texans, New Mexicans, Arizonans and Californians?....BECAUSE
Illegal immigration is THE KEY to the perpetuation of the status quo in DC......
Predatory tax and regulatory policies-actions that basically serve to perpetuate and grow governments-leave what business is left in the country seeking disposable labor.
Illegal Labor is the Feds out for preserving the status quo regarding Taxes and Regulation. Interestingly, that is WHY the Feds encourage in-state tuition etc for illegals under-the-table -their presence providing disposable labor allows Federal, State and local regulatory and tax excess in the status quo to continue
Pings for later.
It takes about ten years to become a journeyman machinist and the work is stressful, demanding and not many people are successful at it.
Most successful machinists start at an earlier age, as it requires a high level of discipline which needs to be forced into a younger man's ego.
...and near the end of the article is the money quote that explains why
But theres no apprenticeship programno way to fill the future growth."
Heh-heh. Got inturrupted by a phone call between finishing my comment and clicking “post” and you jumped right in..GMTA
Didn’t mean to do that!! :)
Here in NJ it's about 90% Indians in IT. Most Americans and Asians have been pushed out by third world labor at half the price. Did you know the average IQ in India is 80, lower than Arab countries? The Indians here average around 110 my guess, so India must be exporting half their brains.
We're at a low in the business cycle. What happens during the next boom once Barky is evicted? There won't be many Americans that know how to do current technologies. They will be able to name their price.
Windows 7 is a mishmash of crap. How does Apple produce a much better user experience with fewer programmers? I doubt they hire so many half-priced imports.