A strong US economy and middle class needs a strong manufacturing sector so I would not expect any arguing about wanting manufacturing to be great. However, when we add “again” to the end of that phrase, we need to be clear on what we mean by “again”. If we are referring to making manufacturing popular again then I totally agree with the idea, but if we are referring to taking manufacturing back to older practices then it sounds like a bad idea. Manufacturing practices are much better now than they were 20 or 40 years ago and will continue to get even better going forward as we implement more Smart Manufacturing practices.
Can we bring the old manufacturing jobs back? The straight answer is No.
We can’t because the old manufacturing jobs are gone and not just gone to other countries. The incentive of offshoring to pursue lower labor cost has dissipated over the last few years. [1, 3, 4, 5, 6, 7] Some manufacturers have even been reshoring factories over the last few years. However, it seems that most of the reshoring is also behind us. The manufacturing performed in other countries is usually there to make products sold to those markets. The old manufacturing jobs are gone because the manufacturing industry has evolved and the new processes and equipment require fewer personnel with higher skills.
The chart from MIT Technical Review contrasts the loss of manufacturing jobs against the increased manufacturing output as proof that the loss of manufacturing jobs over the past few decades has been related to huge productivity increases. While manufacturing output has been increasing, production employment has been decreasing, and that trend is not changing. We just do not make things like we used to. [1, 2]
Manufacturing has become a high-tech industry and the related jobs have evolved. There is no going back. Even schemes to tax robot labor will not bring those jobs back. Just like we are not going back to printing blueprints or faxing purchase orders, we are not going back to older labor intensive, unsafe, and error prone manufacturing methods.
Let’s face it, some of those old manufacturing jobs were not that great. The pay was okay, but many of those jobs were dirty and unsafe requiring handling of hazardous materials and dangerous equipment. I remember, during my first manufacturing job, meeting several people with missing fingers due to accidents with older unsafe machines.
The fact that manufacturing jobs have changed should be viewed as a positive and the sector is growing in the U.S. thanks to the use of modern technology. The higher level of productivity of smarter factories allows manufacturers to compete against lower labor cost countries that might be using older machines and processes. Smart factories can produce higher quality products quicker through highly flexible and innovative equipment and systems. We should view this manufacturing evolution as a great opportunity to develop a strong highly skilled workforce.
There are plenty of manufacturing jobs going unfulfilled.
Based on a Manufacturing Institute’s 2015 report, [9] if we continue current trends over the next decade nearly 3.5 million jobs will be needed and 2 million would go unfilled due to the skill gap. This is based on a combination of baby boomers retiring and expected growth in demand for high-tech manufactured goods. If the gap becomes that significant, manufacturers will have to look for alternate places to fulfill the gap. How can we keep those jobs in the US? What skills do we need to develop for the required workforce?
The manufacturing shop of the future is more like Iron Man’s workshop and less like the old factory with smokestacks and assembly lines where mechanics turned the same wrench and the same five lug nuts over and over all day.
We need to figure out how to get more people interested and trained in these new manufacturing jobs. We can no longer bring new people into factories and put them to work without training. Should government help manufacturers with the cost burdens related to training workers on highly specialized equipment?
What skills are needed for these manufacturing jobs?
Technical, computer, math, and problem-solving skills top the list of requirements for modern manufacturing jobs which are becoming increasingly more technical in nature due to the advanced equipment and the integration of digital computer-driven processes in the smart factory. [9, 11, 12, 13]
A recent study by Accenture [10] estimated that a U.S. manufacturer is losing on average 11 percent of their annual earnings (EBITDA) or $3000 per existing employee due to the talent shortage. Other reports estimate that it could be as high as $14,000 per employee. These additional costs are related to longer cycle times, higher overtime pay expense, higher downtime, and higher personnel training costs.
Will higher pay attract more people to manufacturing? Four out of five U.S. manufacturing companies surveyed [9] are willing to pay more than current market rates to hire and retain skilled workers to tackle talent shortage. An average manufacturing worker in the U.S. earned $77,506 in 2013 – 20 percent higher than what an average worker earned in other industries. However, while paying higher wages helps to attract talented candidates, it likely isn’t enough to solve the shortage.
What are manufacturers doing about the skills shortage?
Manufacturers realize they need to improve the perception of the industry as being clean, safe and high-tech rather than dirty and dangerous. [14] These perceptions are improving according to a more recent study but mostly among people closer to manufacturing and more aware of the great technology strides in the industry. [15] Programs like Manufacturing Day are helping change the awareness and attitudes towards manufacturing careers. According to the MfgDay.com website, an estimated 225,000 students had their attitudes toward manufacturing improved in 2016 thanks to over 1,600 Mfg Day events. [16]
Manufacturers are developing more internal training programs, recommending external certification programs, and working with local schools and community colleges to develop the training needed. They recognize the need for an integrated training approach that will depend on these partnerships. They are also more open to using some resources on contract for very specialized jobs like maintaining or programming sophisticated production equipment.
What can the federal government do to help manufacturing?
Manufacturing is of interest around the globe and is an important part of government agenda in many countries because it creates high paying jobs, drives technological innovation, and generates more economic activity than any other sector.
The competition to attract manufacturers is a global one and initiatives to promote and advance manufacturing from other governments include Germany’s “Industrie 4”, France’s “Industrie du Futur”, and China’s “Made in China 2025”. The U.S. should not fall behind in manufacturing technology leadership and the federal government has a role to play. The U.S. strategy to maintain and attract manufacturing needs to includes programs to help train the new manufacturing workforce.
In addition to helping with education, research and development programs, the federal government has an important role in maintaining and enhancing the infrastructure required by the manufacturing industry. See the related article on this site with the title “The Role of Government Supporting Smart Manufacturing” [19] for more information on how the federal government supports the manufacturing ecosystem.
What can states do to attract more manufacturers?
A state’s ability to attract and maintain manufacturers not only depends on the availability of resources including skilled labor, a rich infrastructure of universities, educational and research centers, and a strong network of suppliers of critical components like electronics. But also on the cost of doing business in the state which includes wages (which are tied to cost of living), utilities, taxation policies, and state and local regulations. [17]
Don’t rule out expensive areas. Sometimes cost of living can be offset by quality of life when trying to attract talent. Access to a good transportation infrastructure of ports, rail and highways is also important to help goods in from the supply and out to the distribution network. States should strive to develop areas like Silicon Valley in California with an abundance of suppliers in high-tech electronic components and software developers for embedded systems.
Some states are providing additional incentives to attract business including tax breaks for plant construction and expedited regulatory processes. Additional tax incentives can be provided as a proportion of business activity in the state including wages paid and sales tax generated. The states can also help with the cost of workforce training on the new skills required.
The U.S. is producing a lower percentage of college graduates with advanced degrees than Europe and Asia. The industry needs these higher skills as part of the workforce to support smart manufacturing factories. States with higher graduates in these advanced areas could have an edge.
In addition to the traditional Manufacturing Engineering, Industrial Engineering, and Quality Engineering degrees, more manufacturing certificate programs are needed in skills like CAD Drafting, Tool Design, Industrial Practices, Manufacturing Operations Management, and Quality Control Technology.
Industry-endorsed certifications can also be part of the training mix. These are third-party assessments based on standards that reflect the knowledge and skills required to do the work in a modern manufacturing workplace. For example, the American Society for Quality (ASQ) offers 16 different certifications including Quality Technician, Quality Inspector, and Quality Engineer. These do not substitute for, but rather complement, traditional education credentials. [18]
States can also work with industry to promote more “Learn and Earn” programs, more internships, and mentorships to align higher education with industry competency and skill requirements.
In summary, we want US manufacturing to have a great future and we want to continue the growth trends of recent years. However, growth will be hugely handicapped without development of the skilled workforce required for future smart manufacturing. Government, industry, and academia need to continue working together on solutions to really make US manufacturing’s future a great future.
Government’s role goes beyond helping with education of the new workforce. It also requires investment in infrastructure including smart grid, internet, transportation, communication standards, and research and development institutes to keep America competitive in this new global manufacturing landscape.
References
[1] “What it takes to bring back a manufacturing job”, S. Ben-Achour, Marketplace.org, 2016
https://www.marketplace.org/2016/09/26/world/what-it-takes-bring-back-manufacturing-job
[2] “Here's how -- and where -- U.S. manufacturing is coming back”, C. Schouten, Market Watch, 2017
http://www.cbsnews.com/news/america-manufacturing-hope-the-national-context-how-where-u-s-industry-is-coming-back/
[3] “Reshoring Gaining Strength Among Large Manufacturers, BCG Survey Finds”, IndustryWeek, 2015
http://www.industryweek.com/competitiveness/reshoring-gaining-strength-among-large-manufacturers-bcg-survey-finds
[4] “Why Donald Trump is Wrong about Manufacturing Jobs and China”, J. Rothfeder, The NewYorker, 2016
http://www.newyorker.com/business/currency/why-donald-trump-is-wrong-about-manufacturing-jobs-and-china
[5] “Manufacturers bringing the most jobs back to America”, M. B. Sauter and S. Stebbins, USA Today, 2016
https://www.usatoday.com/story/money/business/2016/04/23/24-7-wallst-economy-manufacturers-jobs-outsourcing/83406518/
[6] “Record number of manufacturing jobs returning to America”, A. Cheng, Market Watch, 2015
http://www.marketwatch.com/story/us-flips-the-script-on-jobs-reshoring-finally-outpaced-offshoring-in-2014-2015-05-01
[7] “Reshoring — An increasing trend in American manufacturing”, J. M. Kirschner, Hartford Business Journal, 2016
http://www.hartfordbusiness.com/article/20160523/PRINTEDITION/305199870
[8] “Americans Believe Manufacturing Industry Critical to Country’s Prosperity”, Industry Week, 2017
http://m.industryweek.com/competitiveness/americans-believe-manufacturing-industry-critical-country-s-prosperity
[9] “The Skills Gap in US Manufacturing 2015 and Beyond”, Deloitte, Manufacturing Institute, 2015
http://www.themanufacturinginstitute.org/~/media/827DBC76533942679A15EF7067A704CD.ashx
[10] “Out of Inventory: Skills shortage threatens growth for U.S. Manufacturing”, Accenture, The Manufacturing Institute, 2014
http://www.themanufacturinginstitute.org/Research/Skills-and-Training-Study/~/media/70965D0C4A944329894C96E0316DF336.ashx
[11] Why America Has a Shortage of Skilled Workers, Michael Collins, IndustryWeek, 2015
http://www.industryweek.com/skilled-workers
[12] Manufacturing Production Technician Career, MyMajors, 2017
https://www.mymajors.com/career/manufacturing-production-technicians/skills/
[13] Got Skills? Think Manufacturing, Elka Torpey,US Bureau Labor of Statistics, 2014
https://www.bls.gov/careeroutlook/2014/article/manufacturing.htm
[14] 2015 Manufacturing Perception Study, Deloitte, Manufacturing Institute, 2015
[15] Manufacturing matters: The public’s view of US manufacturing, Deloitte, Manufacturing Institute, 2017
https://www2.deloitte.com/us/en/pages/manufacturing/articles/public-perception-of-the-manufacturing-industry.html
[16] Mfg Day’s Effects on the Public Perception of Manufacturing, Blog post on mfgday.com, 2017
https://www.mfgday.com/blog/mfg-day%E2%80%99s-effects-public-perception-manufacturing
[17] Aerospace State’s Incentives to Attract the Industry, R.M. Moller PhD, California Research Bureau, 2008
https://www.library.ca.gov/crb/08/08-005.pdf
[18] Roadmap for Manufacturing Education, The Manufacturing Institute, 2012
http://www.themanufacturinginstitute.org/~/media/DDB4265AC2F243FB97AEBA2A56CC7523.ashx
[19] The Role of Government Supporting Smart Manufacturing, manufacturing-operations-management.com, 2017
http://www.manufacturing-operations-management.com/manufacturing/2017/07/the-role-of-government-supporting-smart-manufacturing.html