A survey by Deloitte in 2015 on the public perception of the manufacturing industry showed that most Americans think that the U.S. manufacturing sector is getting weaker and that many American citizens are steering their children away from careers in manufacturing in favor of other industries they view as more stable. Nearly eighty percent of the respondents to the survey believe manufacturing jobs are the first to be moved to other countries, according to the research.
Nuts, Bolts & Thingamajigs (NBT), The Foundation of the Fabricators & Manufacturers Association, International, “showed a majority of teens—52%—have little or no interest in a manufacturing career. Another 21% are ambivalent. When asked why, a whopping 61% said they seek a professional career, far surpassing other issues, such as pay (17%), career growth (15%0 and physical work (14%).
It will be a big challenge for American manufacturing companies to convince students seeking careers that they should invest in a manufacturing career. The perception by high school and college students is that there seems to be no sense of loyalty from the manufacturing companies and very little security
For the last 40 years the large public corporations have been on a crusade to lower labor costs. They have used automation, union busting, two–tier pay systems and outsourcing to reduce labor costs—and they have been very successful. Manufacturing has eliminated 6 million jobs since 2000, and has only replaced about 828,000 of those jobs. There is no evidence that these big manufacturers have changed their strategies as they continue to lay-off or outsource manufacturing jobs. The following is my list of jobs lost just in 2015.
Company - Jobs Lost
Hewlett Packard - 30,000
Schlumberger - 11,000
Caterpillar - 10,000
Nabisco - 600
U.S. Steel - 12, 000
Baker Hughes - 7,000
Procter and Gamble - 6,000
Boeing - 4,500
Wet Seal - 3,700
Carrier - 2,300
Cardone - 1,336
Dematic - 300
General Electric - 350
John Deere - 200
The loss of manufacturing jobs has continued into 2016. In fact, in March 2016 the manufacturing sector lost 29,000 jobs. The manufacturing sector has been in a manufacturing jobs recession since December 2014
A good example that explains the job security doubts can be found at the Carrier plant in Indiana where the company has decided to close the HVAC plant and send 1,400 jobs to Mexico.
Labor’s reaction to the closing is expressed by Juan Martin one of the plant workers. He said “I am very angry. I feel disrespected. I feel like they pulled the rug out from under me and they don’t care about the American workers.” Robert James who is Vice President of their union says, “There is a large amount of anger and a large amount of hurt. You give your life to the job, and they treat you like nothing, and that is the way the majority of employees feel.”
On the other hand a story in the New York Times shows the management side of the issue. United Technologies (the parent company for Carrier) had their annual investor’s meeting at the plaza hotel in New York as part of “investor’s day” where management sits down with shareholders and stock analysts. Akhil Johri, the chief financial officer said, job cuts “are painful but are necessary for the long term, competitive nature of the business and shareholder value creation. We feel good about being able to execute on that. ”Mr. McDonough, the president of this manufacturing group said, Wall Street is looking for United Technologies to post 17% increase in earnings per share over the next two years even though sales will rise only 8%. Bridging the gap means cutting costs wherever savings can be found.” Another way to read this is that publicly held corporations will always throw the workers under the bus to satisfy shareholders and Wall Street.
To be fair, I must also note that 83% of the stock of United Technologies (the parent company) is owned by mutual funds or institutional investors like the Indiana Teachers retirement fund who demand good returns on their investment.
When you look critically at these facts you must ask yourself why any parent or counselor would recommend that a student join the manufacturing industry.
When you look critically at these facts you must ask yourself why any parent or counselor would recommend that a student join the manufacturing industry. The inconvenient truth is that there is no evidence that these corporations will not continue finding ways to lower labor costs and will continue to close plants and outsource jobs. There is a possibility that the drive to reduce labor costs will continue around the world until an equilibrium is reached with the world’s median wages. The U.S. Department of Labor projects that manufacturing will lose 814,000 jobs between 2014 and 2024, which does not support the projections of job growth by other economists and the Boston Consulting Group.
A Look on the Bright Side: Reshoring Manufacturing Jobs
The Boston Consulting Group makes a case that American Corporations are planning to reshore manufacturing jobs because of rising costs in Asia: "Thirty-one percent of respondents to BCG’s fourth annual survey of senior U.S.-based manufacturing executives at companies with at least $1 billion in annual revenues said that their companies are most likely to add production capacity in the U.S. within five years for goods sold in the U.S., while 20% said they are most likely to add capacity in China."
The Opportunities - The Case for U.S.-based Manufacturing Jobs
- Demand – A recent report from Deloitte and the Manufacturing Institute, The Skills Gap in U.S. Manufacturing 2015 and Beyond projects that, “Over the next decade, nearly three and a half million manufacturing jobs will likely need to be filled, and the skills gap is expected to result in 2 million of those jobs going unfilled.
- Technology Environment – Many students, parents, and teachers still identify with the old vision of a manufacturing plant as a dirty, grimy, and dangerous working environment where workers do low-skill and back-breaking jobs. But this vision today is far from the truth. As manufacturing has continuously automated over the last 40 years, there are few low skilled jobs left and many of the modern plants look more like laboratories then manufacturing plants. Manufacturers need people who can operate, maintain, and troubleshoot this high tech equipment.
- White-Collar Jobs - Many young people think that manufacturing is only about blue-collar jobs in the shop. But this is not true, as many types of manufacturing have as many white-collar jobs as blue-collar jobs. There are design engineering, production control, purchasing, sales, marketing, and general management jobs.
- Wages – The average manufacturing job pays about $20,000 more per year than the average service job. Getting the skills needed to be a craftsman or journeyman in manufacturing could really boost annual pay.
- Skilled Workers -The study goes on to say that among companies involved in skilled production (whose employees are machinists, craft workers, and technicians), 51% report shortages and see increased shortages ahead. A U.S. Bureau of Labor Statistics report shows that shortages of skilled workers are most serious for machinists, craft workers, technicians, electricians, and engineers.
If the BCG forecast on reshoring jobs were to happen, then the corporations would be in a position where they would have to attract new talent. They would have to consider changing their strategies on job security, training, wages and promoting manufacturing as a career.
Security – I think that to overcome the skilled worker shortage during a time of job growth, the large manufacturers would be forced to offer some type of job security or guarantees for a period of time. This idea would fly in the face of the current “free market" philosophy but it is the primary obstacle to recruiting the skilled people they need.
Career - To recruit the necessary people, manufacturing really needs to describe the opportunity as a career—not just another job. I think this will take a long-term commitment to job security for the recruits. It may also require offering internships and apprenticeships with a guaranteed job. The recruits will be interested in a career that defines starting wages and the training and skills that define advancement in terms of skills, pay and security.
Wages – America’s corporations have been on a forty year crusade to lower their labor costs. And it appears that they will continue this cost reduction effort. According to Ed Timmons, CEO of the National Association of Manufacturers, “our labor costs in the U.S. are still 20% too high.”
Students are very aware of vocations that pay well such as an electrician, plumber or nursing. It will probably take higher entry-level wages to attract the good students who have credentials in advanced math and science. Since the large manufacturers have been focused on lowering labor costs and getting rid of unions for the last 30 years, paying more to get the right people will test their resolve.
Apprentice Training – The high-skilled workers and craftsmen that are needed in manufacturing today will probably require some kind of apprentice type training. The recruits will probably want to be paid for skills learned and a job that is guaranteed after completing the training. Attaining the skills of a journeyman, as in other industries, should pay between $30 and $40 per hour and should include industry certification of their transferable skills.
Government Investment in Vocational Schools - Manufacturers do rate the community colleges as their preferred training providers. President Obama has asked the Congress for $8 billion to train community college students for high-growth industries. The President said the Community College Career Fund would train 2 million workers for jobs in potential growth areas.
Vocational Training - The community college problem is that many of the vocational courses are not sufficiently financed, “as a result of community college funding formulas established by state legislatures that limit the number of technical non-credit courses. Only four states provide equal per-capita subsidies for all students.” These formulas will have to be changed if the Community Career Fund is to work.
Shop classes - It is ironic that at the same time that manufacturing now needs skilled workers by the thousands, most shop or industrial arts classes have been shutdown and replaced by computer labs. I think the best thing we can do to interest both grade school and high school students is to bring back shop classes to these schools.
American manufacturing is at a cross roads. The question is, will the large corporations invest in the training, pay and security guarantees that will recruit the talent they need for the future. Or will they continue policies that have de-industrialized the nation. If the BCG projections of reshoring jobs and products are true, they will be forced to address the issues of security, career, pay and training. On the other hand, if they continue to lay-off, downsize and outsource; and it offsets reshored jobs, then they will probably continue the current policy of lower labor costs and no investment.
In the latter case I would not recommend manufacturing as a career for young people. In the words of Pat Panchak,”Why, pray tell, would someone invest time and training, then years of their careers building knowledge, skills and experience working in an industry that has a reputation of treating its workforce as costs to be cut.”
