The President’s State of the Union proposal to reinvigorate manufacturing domestically was welcome news, and there have been many thoughtful pieces written since that speech, both critical and supportive. Many contentious issues will be clarified as this discussion eventually leads to a clear policy, and some of those issues are discussed below.
First, it should be understood that the vision of manufacturing that many still hold – the picture of a large plant employing hundreds repeating the same action on an assembly line – is much less prevalent today than decades ago. A more accurate picture is a much smaller facility, with more automation, and fewer employees producing a much more sophisticated product, and earning a significantly higher wage. Terms like “Agile Manufacturing” or “Advanced Assembly” are increasingly used to describe this new vision.
The classic image of U.S. manufacturing is one that has been eroding for many years, but the picture that is emerging is not necessarily a less-preferred alternative. While it is very true that manufacturing jobs have decreased consistently – in Tulare County the number is about 60% of the peak of manufacturing during the mid-1990’s – overall output and productivity have consistently increased over the last few decades. Higher productivity leads to higher wages.
Second, that classic picture will likely never return, but that’s not necessarily a bad thing. The U.S. and global economy have been in continuous, gradual shift for many decades, and the Great Recession could be described as an economic earthquake creating a more sudden, extensive, and permanent change.
The manufacturing companies that exist domestically tend to be smaller, more agile, more automated, but still need employees with broad job skills and extensive training – and the wages those firms pay reflect that need, and compensate for that training. Of the approximately 300 manufacturing firms in Tulare County, roughly one-third employ five or fewer employees, according to the Census Bureau, more than half employ 10 or fewer. Only a handful of companies employ more than 200. Yes, jobs have been lost, but it might help to understand the kind of jobs that were lost: low-skill, low-wage jobs from high-volume manufacturers.
Looking at the most recent data and the overall composition of the industrial sector in Tulare County, there are some interesting realities. The average manufacturer in Tulare County is a dairy processor or ag-related durables goods manufacturer, employs about 38 full-time, and the average wage paid is about $28/hour. In 2010, the overall Gross Product of the manufacturing sector in Tulare County was $1.1 billion… with a “B.”
Manufacturing also has one of the highest economic impact and jobs multiplier of all business sectors. In Tulare County, manufacturing results in a jobs multiplier of nearly 4.0, with an earnings multiplier of 2.8, and a sales multiplier of 1.6. Other than Government, there is no other business sector in the County that offers this high of an economic impact, while also paying high wages and attracting capital to the region. In fact, manufacturing, as a sector, exports more value than even the ag sector.
Many experts agree there can be a resurgence of the manufacturing sector in the U.S., but when any advocate of manufacturing growth talks about a renaissance in domestic manufacturing, this new vision should be kept in perspective. The reality of the smaller, more agile manufacturing firm must be prominent when developing any kind of policy to support the sector.
Below is a sample of the recent articles on Manufacturing and policy since the State of the Union. While they represent very different viewpoints, there are common threads running through all of them, which we’ve attempted to summarize.
Why Most U.S. Manufacturing Jobs are Gone Forever
Manufacturing Jobs Start Year With Strong Gains
Do Manufacturers Need Special Treatment
Why We Don't Need a New Program...
Manufacturing's Big Comeback
How to Bring Back Manufacturing
Manufacturing Jobs Going to...
Why America Shouldn't Focus on Manufacturing
How Many Manufacturing Jobs Can the U.S. Realistically Sustain?
Chris Anderson -- One-Off Manufacturing
This article is from 2009, but still very interesting -- regards a new trend in manufacturing with the advent of 3-D printers.