Hey, is anybody home?
www.nanowerk.com
President Obama was in Wisconsin yesterday celebrating the "onshoring" of 100 manufacturing jobs that returned to Milwaukee-based Master Lock. That’s nice. But it hardly matters. The Master Lock move is a slight counter-cyclical uptick against an inexorable current of offshore momentum.
The larger question at issue is a two-part question really: does manufacturing really matter and if so what should we do about it? Manufacturing today employs about 12 percent of the nation’s workforce; down from 30 percent in the 1970s. According to The American Prospect: “In October 2009, more people were officially unemployed (15.7 million) than were working in manufacturing.” The economic forces that fueled the post-war boom, built the middle class, and strengthened the union movement have waned—and we mostly seem to wring our hands about it, or cheerlead for minor miracles.
The revelation that Apple builds its new generation of personal electronic devices using exploited labor in China says more about China than Apple. That’s the way labor works in China. Virtually any personal electronics device sold by any manufacturer in the world is steeped in the same pedigree.
In 1959, manufacturing accounted for 28 percent of GNP; in 2008, it accounted for 11.5 percent. It has fallen since 2008 of course, then in the past year or so has shown a slight uptick. But it’s not enough to get all hot and bothered about. And it doesn’t mean manufacturing is dead, either. As Master Lock points out, rising wages in China, logistical costs, and the increased cost of fuel for shipping brought a few jobs back. Master Lock's total job count remains 30 percent lower than its late 1980s peak, while production capacity has grown significantly.
The future of high-end, technologically advanced manufacturing, while it may grow market share, won’t grow jobs counts by any appreciable measure because of technology, electronics, and robotics. The future of manufacturing in the U.S. is a few men and women controlling vast arrays of automated processes. Knowledge-driven jobs that propel the production line—jobs Robert Reich calls symbolic-analytic work—establish machine design, control, intercommunication, sourcing, logistics and quality control. These are good jobs; jobs that require higher education, specialized training and, to varying degrees, graduate degrees. Manufacturing in the future may support a decent number of these jobs, but never, in anyone’s wildest dreams, will it require the army of middle-class aspirants who made careers out of the shop floor. Those days are over, period.
The crisis we face now is that lower skilled, less educated workers aren’t needed anywhere. Not in manufacturing, not in assembly, because we not longer support assembly, not anywhere, except in low-paying service jobs that will never support upwardly mobile families. The army of surplus and/or underemployed workers, some 18 to 25 million of them, is effectively dead in the water. Given their weakness in educational fundamentals, these folks are never destined to become machine control engineers. Recent trends would seem to indicate that, should they enroll in occupationally-driven job training up to and including two-year degrees, they should choose health care aide and specialist positions, because while health care accounts for 17 percent of the nation’s economic output, it’s steady growth will require far more semi-skilled workers than will manufacturing.
In economics, weakness begets weakness. So while manufacturing shifted offshore, so did its parts streams. Now parts sourcing is far more Asia-centric than not, and we’re talking worldwide. The New York Times reports that, contrary to popular conception, R&D is increasingly heading to Asia. U.S. automobile manufacturing is an exception to that trend because we still retain a modicum of parts manufacturing around our domestic auto industry. Certainly, that merits a shout-out to the Obama administration for perhaps its best-executed intervention in the shock-and-awe phase of the meltdown. And its serves as a cautionary tale to illustrating the effects of new kinds of critical mass in offshoring.
It isn’t just Apple. We should be clear about that. Dow Chemical’s CEO Andrew N. Liveris said, in a September 2011 New York Times article, China offers him little short of the moon to locate manufacturing and research there:
“I get tax incentives, and I get incentives to go to certain locations where they offer us utilities, infrastructure and land. I get access to human capital. I get all sorts of support to help train that human capital.”
Yet that’s only part of the story. “We put things overseas,” Mr. Liveris says, “because markets were growing there and we wanted to be close to them.” That’s exactly what Apple said.
So what do we do about it? One of the worst, and most facile arguments against a national manufacturing policy is the one that says the government should not pick winners and losers. Would that include agriculture, where federal corn and soybeans subsidies dwarf the entire output of all other vegetative food production? How about aerospace, where defense contracts to Boeing represent the last vestiges of a system where defense contracts meant life or death to contractors. Speaking of contractors, about the government no-bid security contractors in Iraq and Afghanistan? Even in cancer research, the winner of an NIH grant prospers while 20 losing grant apps denote projects that go moribund. This list is endless.
There is no mistaking; the government picks winners and losers every day. And it should begin to pick some winners in high-end manufacturing, knowing full well that job growth in the sector will have a miniscule effect on macroeconomics.
Experts like Christina Romer and Robert Reich, both of whom I greatly admire, advise us to remain sanguine about our abilities to grow jobs in new, emerging, even as-yet unknown fields. Reich writes:
Any job that’s even slightly routine is disappearing from the U.S. But this doesn’t mean we are left with fewer jobs. It means only that we have fewer routine jobs, including traditional manufacturing. When the U.S. economy gets back on track, many routine jobs won’t be returning—but new jobs will take their place. A quarter of all Americans now work in jobs that weren’t listed in the Census Bureau’s occupation codes in 1967. Technophobes, neo-Luddites and anti-globalists be warned: You’re on the wrong side of history. You see only the loss of old jobs. You’re overlooking all the new ones.
That’s quite a shot across the bow to pessimists. But nowhere does Reich offer a glimpse into where the massive numbers of jobs that we did to make a dent in low-income worker unemployment are going to come from. This economy—and any economy I can see on the horizon—simply doesn’t need them. And the answer is not merely, as Reich posits, to increase the wages of hotel workers, chambermaids and janitors. Increasing those wages requires, if you can believe it, a rising tide to lift all the boats, and hard-core unionization. Sadly, neither is in the cards, and trickle-down economics seems to refer in this epoch to the dynamic that misery trickles down, not money.
So, if you want to “fix” manufacturing: less cheerleading, more pro-active government policy, picking winners based on hard data and leveraged strengths, but don’t ever expect a manufacturing renaissance to counter the chronic and structural joblessness of a burgeoning new underclass.
TIP:
Enter the amount, and click "Tip" to submit!
Richard B. Simon
Marcie J
Ben Sen
Barbara Weicksel
Nancy Davis Kho
Sally Swift
Salon.com
Comments
He should have remembered Henry Ford's retort to the robber baron's of his day when they criticized him for DOUBLING the existing daily wage: "Who the hell do you think is going to buy my cars?"
I have no idea how we are going to replace all those lost jobs -- and neither does anyone else, most especially Republican politicians -- but one thing will never be replaced thanks to corporate capitalists -- the loyalty and trust of the American worker.
By the way, the best book I've read on this subject is The Reckoning by David Halberstram, and he did predict the future back in 1977.
Look at what happened in Japan with the erthquakes, tsunamis and reactor meltdowns. The stoppage of high end consumer products, parts for other countries producing same, and the slippage in the economies around the world, BECAUSE none of those countries made the parts for the things they were producing.
These are natural events causing disruptions, like Thailand's series of overactive monsoon floods. Now instead of flooding the market with products, the floods have dried up harddrive sales, solid state drive sales and all the consumer end products that depend on them, causing a manufacturing dip that ultimately affects final sales and quarterly reports everywhere those products are needed.
Imagine what a country like Japan or China could do when they decide to take their Economic Cold War hot. We, and other countries performing the same critical economic errors, are left in the position of being the militarily strongest nation in the world, left to rot and be defenseless in the wake of someone else shutting off the spigot of manufactured goods, parts, and materiel for this nation (and others) to even honestly provide for their own defense -- becuase a larger portion of the equipment that makes an Army effective is no longer made here -- the internal parts.
Even if it doesn't employ the American Dream level of American workers, it is important for us to be industrially independant from start to finish for at least a percentage of every thing we use, consume or expect to make a difference in our Economic, Military and Social Security as a nation.
But what the hell do I know? I'm not in politics. I'm not an econmist. I don't have a manufacturing job or a Higher Degree to allow me to benefit from the few Engineering jobs that still remain in this nation.
Don't mind me, nothing to see here, move along, move along.
Your article is depressing in it's facts, conclusions and implications. I believe you have the gist of it. My above answer is predicated on the larger issues and an abnormally wide point of view I realize the vast majority of my fellow American Citizens don't even recognize, much less see as important.
As to my elected officials and their ultra-rich and corporate overlords -- well they already proved they don't give a shit one way or the other as long as they keep the money rolling into their coffers.
I guess it's going to be up to us to realize how to fix it and then do it.
--r--
Manufacturing is way down. Agriculture requires fewer and fewer workers and more and more subsidy (think "dollars for ethanol"). And tourism is significantly dependent on people making a living and being able to afford to travel--what has tourism been like in Minneapolis or even Brainerd the last several years?
We have based our local budgets on the ability to generate TIF revenues at a time when industrial and business parks are not expanding and when housing development demands have plummeted. Here in California, the state has grabbed up the TIF--to provide dollars to education--and eliminated the development agencies.
What a hydra-headed monster. Much of it is predicated on the passion for major investors to secure immediate returns by spinning their dollars just for the sake of spinning them rather than by investing them in something like brick and mortar which will provide return over a broad spectrum for the long term.
I can't say that I blame them but these are the same predators who gave us the mortage meltdown.
Scary stuff. I'll just go to the kitchen and get myself another heaping bowlful of Soylent Green.
In lieu of our grandfathers' manufacturing jobs, I'd like to see a lot more spent on infrastructure - roads, bridges, rapid transit, high speed rail, water systems, electrical grids and the like. I'd also like to see a carbon tax that would approximate the costs of dealing with global warming. It could also have the effect of a tariff if it meant that products entering the country had to have carbon pricing embedded under the threat of having it imposed at the border. But a lot of devils in those details.
I heard a conservative think tank analyst today say that we should take away subsidies that are supporting the manufacture of 70 ton wind turbines in southern Pennsylvania "because the industry needs to stand on its own." Meanwhile we have oil industry subsidies in place that have lasted a generation while the industry has more cash than it knows what to do with.
So, we should subsidize wind turbines, just as one example, for as long as it takes for the industry to establish itself. And we should take China to the international trade court on its subsidies to Apple and Dow while erecting tariffs--yes, on iPhones!--until we get a verdict.
Our subsidies will generally take the form of tax breaks and university-based research incentives to develop knowledge that can improve the mfg processes used to produce next-generation turbines. That's a whole lot less than what China does, which is to say, giving the company the land, building the factory, and building dorms for the workers, just for starters. All of these perks were offered to Apple. We should do the same for solar batteries. So, yes, green technologies is a place to start, but I can think of scores more.
A national manufacturing policy would certainly have an uneasy coexistence with free-trade laws, but it all exists on a continuum with the U.S. on one extreme saying, "Oh heck, just give it all away." Germany, for just one example, doesn't work that way.
First, an anyone imagine what would happen if, God forbid, we had to *really* go to war as we did in 1941? Where would be the factories to convert to the war effort. Where would be the Willow Runs converted from making Fords to making B-24's, the soap factories converted to making explosives, the home appliance factories converted to making artillery shells? IOW, I doubt if we could actually have much of a manufacturing base to sustain a prolonged war. Manufacturing is, as was said above, also about national security.
Second, if the bell shaped curve is a statistical fact, then it follows that a significant portion of the population simply cannot survive in a post-manufacturing world. What do we do with them? Let them be wards of state support?
Reich is right to say that the nature of "work" evolves, as it will (in a hundred years???) in China. The Chinese know this and are rushing to acquire not only assembly jobs but R & D, too. (They do not offer foreign companies the sun, moon, and stars without said companies bringing their technological/R & D expertise over there, too.) But the question persists: What are we to do with that portion of the work force who simply cannot do much else than assemble something? How many jobs are there in public works? In service industries?
Yes. The Fed as always influenced how jobs grow, picking winners and losers. As it should. Otherwise, we'd never have have a transcontinental railroad in the 1860's or a man on the moon in the 1960's.