Let's start by exploding a common misconception. American manufacturing is not on the decline. U.S. manufacturing production has grown by 11 percent since the dotcom bust of 2000 and the recessions of 2001 and 2007, according to a new report from the Ball State Center for Business and Economic Research (CBER) and Conexus Indiana. According to CBER director Michael Hicks, 2015 was a "record" year for manufacturing production in inflation-adjusted dollars.
Data from multiple sources shows an increasingly strong U.S. manufacturing base, agrees Will Eadie, vice president of sales and strategy with WorkJam, maker of a mobile app for boosting employee engagement. “It’s a palpable feeing,” he says.
Without question, manufacturing employment is down. Since the peak level of 1979, the U.S. has lost between three and 7.5 million manufacturing jobs, depending on whose statistics you believe.
The reason for the decline, however, is subject to dispute. Many blame it on the offshoring of manufacturing to China and other countries with cheaper labor. Other chalk it up to automation and greater efficiencies within the plant. “The fact is,” says Hicks, “manufacturing firms have become very lean, and productivity growth means more goods produced with fewer workers.”
Put aside the argument over causation, though, and reflect on the emergence of an opposite trend that is not in doubt: the need for more skilled American workers to support the continued growth of the country’s modern, technology-based manufacturing sector.
Producers are well aware of the need for a newly skilled generation of workers. Apple, Inc. chief executive officer Tim Cook recently announced plans to invest at least $1bn in U.S. advanced manufacturing companies. He said the company spent more than $50bn on U.S. manufacturing last year, and plans to hire thousands of additional workers for domestic production.
All well and good — as long as industry can find enough skilled workers to fill the plants of the future. A recent survey by the National Association of Manufacturers revealed that 40 percent of producers see a major skills gap standing in the way of advanced manufacturing opportunities.
Step one for domestic manufacturers is getting their current workers to stay on the job, says Eadie. They need to be motivated, trained in new skills, guided toward fuller employment and placed on upward career trajectories.
“It’s not just about line-based skills, or using a new machine or procedure,” says Eadie. “It’s about how to increase their skills so they can become line leaders, and move into management.”
Automation, particularly robotics, continues to mechanize jobs that were once performed exclusively by humans. But Eadie prefers to look on the positive side of that development. “People need to come in and learn how to work with machines,” he says. Automation, he claims, leads to the redeployment of people, not their elimination. (The declining manufacturing employment figures of recent years suggests otherwise, at least in a good number of cases.)
Some advocates of domestic production, particularly the Reshoring Institute, believe that all of the jobs lost to cheaper overseas labor can be brought back to the U.S. Eadie doesn’t agree. “We’re not going to see a one-for-one comparison.” Given advancements in plant technology, he says, one could expect the return of between 25 and 35 percent of lost American jobs.
Those that do materialize in the U.S. won’t look like the ones that disappeared 20 years ago. They will call for much higher levels of skill and education — and it’s up to manufacturers to create the necessary environment for making that happen.
It’s not a question of turning every line worker into an engineer. But companies can promote certification, testing and training programs to produce skilled technicians that don’t necessary possess advanced degrees. By offering a range of opportunities for advancement, they can make themselves employers of choice — a crucial identity in times of labor scarcity.
Fresh thinking on the part of manufacturers is also key when it comes to new hires. Eadie says companies should be looking at onboarding programs that get new workers up to speed more quickly, and sharpen their skills in the process. One solution is the use of tablets and video that walk workers through the various stations of the plant. Not only do they result in faster acclimation, they cut down significantly on the cost of training.
Modern-day communications tools can also be deployed in a manner that will motivate seasonal workers to return to the plant when needed, Eadie says. The challenge for manufacturers today lies in ensuring a skilled talent pool, both actual and in reserve, that can handle the peaks and valleys of production.
Even as they take steps to retain and attract skilled labor, U.S. manufacturers face a number of uncertainties. The Trump Administration’s industrial policy remains unclear, especially with respect to some kind of border tax that might be imposed on imported goods. Such a policy could result in retaliation by U.S. trading partners, and the closure of foreign markets for American-made goods.
Eadie says companies have reason for concern. “If we’re going to be isolationist with closed borders, they have to be really careful. You can’t hire people to produce goods that only stay in the U.S.”