The US Manufacturing Renaissance Is A Net Plus – However, it Wil l Not Solve Unemployment – High Tech Factories Employ Very Few W orkers

The US Manufacturing Renaissance Is A Net Plus – However, it Will Not Solve Unemployment – High Tech Factories Employ Very Few Workers

By Paolo von Schirach

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April 28, 2013

WASHINGTON – I recently wrote (see link above to related story) that outsourcing driven by globalization, coupled with relentless automation, translates into a new work force environment in which a few highly skilled people will get interesting, high paying jobs, while most of the others will get the scraps. Well, a TIME magazine cover story, (Made in the USA, April 22, 2013), while on the surface much more optimistic, says essentially the same thing. The article does present in rather glowing terms the marvels of highly sophisticated, state of the art US manufacturing facilities that now export all over the world innovative, high tech products. The story also points out that, given the great advantage of low energy costs, the US has now become a preferred location for many energy intensive industries, like steel, smelters or petrochemicals.

Hundreds of jobs

However, the article also points out that this new generation of high value, technology intensive industries require at most a few hundreds of workers. Yes “hundreds” as opposed to the thousands and thousands who used to toil in old fashioned factory assembly lines. Which is to say that a significant manufacturing revival –and we should all be grateful that it is actually taking place– will not mean an increase in manufacturing jobs. In fact, it is quite possible to increase output with fewer workers.

And here is the issue. The new, ultra competitive industries of the future will require very few, but highly competent workers. Which is to say that, if you want a job –even a simple entry level job– in manufacturing, you better have a solid match and science background. And you have to show proficiency in understanding and mastering the complex computer programs through which supply chains and factory floor operations are monitored and redirected.

The old high school diploma will not do it. You have to have college. And it better be good. However, even if you have all that, there will be fierce competition, because there will be very few openings in as much as the new industries, even in the growth sectors, will require very few workers.

Manufacturing feeds growth in other sectors

Still, even if we look at US manufacturing growth in a realistic context in terms of net jobs growth, its contribution to the broader economy should not be underestimated. Indeed, as the TIME story points out, it is often overlooked that manufacturing activities feed and sustain plenty of good jobs in other sectors.

Manufacturing needs suppliers and vendors. It needs accountants, advertisers and marketers. It feeds shipping and logistics firms, and so on. So, on balance, we should welcome and encourage manufacturing innovation and recognize it as the most strategic hub of economic development.

What about all the others?

That said, we should also recognize that, try as we may, we shall not curtail, let alone eliminate, our almost 8% unemployment rate in the USA through a manufacturing renaissance. Some skilled people will get great jobs in highly competitive enterprises. But most of the others will get nothing. The open questions for our society and economy is: “What are all the others going to do?”