The New Era of US Manufacturing: Good News and Bad News

by Andrew McAfee on August 8, 2012

Recessions usually hit manufacturing industries hard, and the Great Recession was no exception to this rule in America. But since its end, manufacturing has bounced back very quickly, and we’re now producing almost as much stuff in this country as we did in 2007:

US manufacturing output (source: research.stlouisfed.org )

As production expanded after the recession’s end companies started hiring people, and manufacturing employment has (for now at least) stopped its long, steady slide, and has employed a steady percentage of the American workforce for more than two years:

US manufacturing employment as a percentage of total employment

As a great new article from the BBC points out, however, these people are not like the manufacturing workers of a generation or two ago; instead, they’re much better educated and/or trained. Author Jonny Dymond gathered a group of former workers at GM’s enormous Willow Run plant. The insights are fascinating:

Gathered round a table at a nearby diner, former Willow Run workers remember their first days at the plant. Now in their 50s, they reminisce about what it took to get a job at the plant.

“You didn’t need a high school diploma,” says Sterling Mullins.

“You just needed to be a hard worker,” says Gerry Gardner, “and you needed to show up every day, because it wasn’t easy work.”

Tom White grew up on a farm, “so the skills I had weren’t really applicable”.

Those were the days when manufacturing lifted poorly educated men and put them into America’s industrial middle class.

“You could put the kids through college, we had a couple of weeks vacation,” Mr Gardner says.

“And you had enough money to go out and buy a new car. We weren’t rich – I’m not driving no Rolls Royce or anything – but I bought me a GM car.”

But new manufacturing facilities in America and elsewhere today don’t need large numbers of hard-working-but-unskilled workers; they need small numbers of hard-working-and-highly-skilled ones. As consultant Ron Glazer says in the article, “The only high-paid factory work left is going be people who both programme and maintain machines. That work is going to be high-paid but it requires much higher skills.”

Unlike some other observers, I’m optimistic about the future of manufacturing in America. As I wrote in my last post, our companies are really good at adapting to changing circumstances and adopting new tools and techniques. But I’m not at all optimistic that even a large manufacturing sector will be  what it’s been in the past: the foundation for a large, stable, and prosperous middle class. It’s just not going to employ enough people to serve that purpose, and the ones it does employ will have to be ever-more literate, numerate, and good at teamwork and problem-solving.

Are we preparing our young people and those trying to re-enter the workforce with these skills? How is America doing at developing a 21st century labor force? What needs to change? Leave a comment, please, and let us know.

  • David Henderson

    The BBC article is eye opening; really appreciated it.  It’s a bit scary how people’s futures can be turned on its head within a relatively short space of time.  I’m not sure that  I agree with Mr Glazer that “The only high-paid factory work left is going be people who both programme and maintain machines”. I suspect that when high def real time 3D images can be communicated across the world that workers won’t even need to be based in the same continent. When this happens as surely it will,  manufacturing companies will have even fewer western based employees.

  • Larry Bouthillier

    There’s a clear trend towards a need for quality, focused vocational education. I’ve heard many in the liberal arts tradition lament the idea of education as a “means to an end”.   It seems to me that that that “end” is increasingly important to both individuals wanting to maintain middle-class standing and to the health of our economy, which needs qualified workers who actually know how to do things.  I see the importance of vocational high schools and technical colleges increasing.  Schools that offer hands-on, experiential learning will be crucial to our collective success.   These are growth industries, I think.

    One problem these institutions are encountering, however, is fundamental – insufficient literacy in the student body.    Vocational training often involves the ability to use and understand “technotes”, operations manuals, and other documentation. The real question is, how can we address this inadequacy immediately?  Everything else depends on it. 

  • Gary Mintchell

    You are correct. There were maybe two generations of workers who could live middle class life styles on one unskilled manufacturing job. Already by the 80s, it began to take two incomes to be middle class. Now it’s even harder to be unskilled and middle class.

    I write about automation, so I think about this a lot. Manufacturing will still be a driver of overall prosperity. Jobs, however, will continue to demand higher skill levels.

  • Tom Peterek

    I’m not sure I agree that all manufacturing jobs now require highly skilled hard working labor.  Just look at the factories in China and other eastern nations.  They have taken over the low skilled jobs, simply because they would do the same jobs for less money.  Do you think that your clothes are manufactured on CNC machines, and that the workers in Bangladesh simply program these machines?  The bottom line is that our expectations are so high that nobody on this continent will do these repetitive jobs for low pay, especially when they can make more money from social assistance. I have seen many clothing, footwear, automotive factories disappear from this area over the years, driven out by the high demands of the workers, expressed by their unions.  Keeping up with the Jones’ became the motivating factor in North America in the 70’s and earlier, and persuaded business owners to seek more profitable venues in which to create their goods.  Although in Canada there are far fewer people that don’t finish high school now, than in the 70’s and 80’s, I seriously suspect that our overall skill level has only risen marginally.  With the absence of factories to employ those who chose or were forced to drop out of school early, that leaves only the retail sector to employ that portion of our  population.  On the bright side, China is now evolved tot he state we were in 40 years ago. They are no longer willing to put in hard day’s work for low pay.  They now want to “keep up with the Jones’ (or in their case the Wongs’).  Has this shift given us enough time to reconsider what services we are willing to perform, and what rate of pay is sufficient to pay the bills?  Only time will tell.

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  • http://andrewmcafee.org/blog Andrew McAfee

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  • business directory

    The only high-paid factory work left is going be people who both programme and maintain machines.
    There were maybe two generations of workers who could live middle class life styles on one unskilled manufacturing job.

  • http://mainline.openid.35.com/ Sonny Blaise

    The Chinese are very interested in making the move to roboticized factories. Factory owners in Taiwan’s high-tech manufactorys (like the ones that Foxconn runs to create Apple products) have explicitly stated that their interest is in substantially automating their floors within the decade.

    This attitude crosses over to the mainland as well, where even small-business owners (such as one who runs a noodle shop) are purchasing noodle-making robots (for about US $1500) to automate a function that was done by hand for many centuries.

    The cost of automation is decreasing so rapidly that it’s penetration into all of Asia’s vast domestic labor markets (including those of India, The Philippines, Vietnam, and Indonesia) can probably be taken for granted over the next decade.

  • Tan Nguyen

    who says the asian won’t take away about the high skill jobs too ? What will be the job of the middle class that able the employ millions of people ?

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