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Why The USA Needs To Manufacture Again

Economy
Why The USA Needs To Manufacture Again

According to the Bureau of Labor Statistics, US manufacturing employment experienced a sharp decline from 1979 to 2007. More than half the decline occurred during the 2000s –in fact, the 90s experienced steady levels of manufacturing employment,  and it wasn’t until 2000 that millions of jobs began to disappear. Today, “Made in China” is not just the norm or expectation. For most of the consumer products that we enjoy, it’s simply the way things are. From furniture to electronics, clothes to kids’ toys, China represents a majority of US imports. America imports nearly four times more manufactured goods than it exports to China, making foreign trade a lot less of a trade and a lot more of a one-way street. The emergence of Chinese manufacturing and America’s approach to imports has caused a shift in America’s labor and consumer market.

The labor market has experienced a significant change, with jobs today looking completely different than they did 30 years ago. The workforce has moved away from traditional manufacturing plants to placing a heavier emphasis on retail.  Apple Inc is an excellent example of this shift.  In 2011, Apple had nearly 250 retail stores in America and employed approximately 30,000 employees. At the same time, Apple employed approximately 700,000 employees in China. Traditionally, America has never been regarded as an electronics manufacturer, but the model and ratios of Apple’s example is commonly shared with other companies and industries across the US – design in America, build in China, sell in America.

This model has certainly provided its fair share of pros and cons. For starters, it created a demand for knowledge, design, and development jobs in the US (Apple employs over 200,000 American employees specifically in iOS development).  Secondly, it created a dependency on another nation, which has heavily impacted America’s foreign policy. Finally, it shifted the focus from building to selling. Now, more Americans work in retail selling iPods than do building them.

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In the consumer market, expectations for quality and cost of a product have completely changed. In the 70s, an American would buy furniture with the expectation it would last 20-25 years. By the year 2000, furniture was sold in Wal-Mart and manufactured in China at a fraction of the cost. Today, the consumer has no intention of keeping furniture longer than a couple of years, and generally expects to assemble it themselves.

As a result of these many changes, the most important thing to take away is that the West has begun to recognize the significance of manufacturing, which is key as 2014 approaches. Manufacturing has also undeniably changed from what it was when last it held sway in America It no longer consists of a traditional factory line, morphing instead into a hybrid of machines, software, and knowledgeable workers. The blue collar worker has become a specialized technician with an education and ambition.

With consumer markets and the work force shifting, the turning point is now. Although still in its infancy, the reboot of American manufacturing is undoubtedly here. Here are 4 reasons America needs to continue to reboot their role in global and domestic manufacturing.

Domestic Manufacturing Creates Growth

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For every $1 of goods produced, manufacturing generates an additional $1.43 for the economy. The spillover of domestic manufacturing provides an inherent production of growth across other sectors. When products are manufactured domestically, they can be distributed domestically (or exported), and retailed domestically. The consequence of importing goods produced in other countries is that the process can eliminate distributors and even retailers, with internet retailers often delivering directly to your door. Americans are building less because it’s cheaper to get goods elsewhere, and the consequence is limited involvement from domestic companies and people, which causes other sectors to feel a dip in demand.

It Leads To More Employment

More Employment

Each manufacturing job creates about 2.91 more jobs in other sectors, specifically distribution and retail. Building cars in Detroit and bailing out giant car manufacturers will not reboot America. Creating employment requires a spark that leads to development of other sectors. When American companies manufacture goods at home, it ignites a sequence of activity that demands the use of people to physically apply their skills in designing, building, transporting, and shelving, or to build technologies facilitating those processes. There is a need to start over again to create this spark, which if it ignited would create a flurry of activity that drives up employment and business opportunities.

It Would Help Make Manufacturing A Viable Career Choice

Career

Despite what is being debated about the unemployment rate in America, the truth is that there are a growing number of job vacancies relative to qualified workers in the manufacturing sector. The skills gap is growing, and the current manufacturing workforce is experiencing real trouble, with not enough skilled workers looking for manufacturing jobs that provide pay, health benefits, and pension. Industry certification and vocational training are available, but the demand from youth is simply not strong enough to reboot American industry.

Only 17% of people view manufacturing as a top career choice, yet 77% of Americans fear the loss of domestic manufacturing jobs to other countries. Only 30% of parents encourage their children to enter manufacturing, while over 70% of Americans view manufacturing as the most important industry to rebuilding the economy.  Americans recognize the importance of domestic manufacturing, but only bringing back manufacturing in a significant way will let people view those jobs as being valuable, worthwhile contributions to society.

It Would Encourage Innovation

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The controversy in America surrounding the environment is quite perplexing. Science aside, the global demand for environmental initiatives is incredibly high, and filled with significant opportunity. Rather than debate the validity of scientific claims, American politicians and businesses might want to consider one fact: there are plenty of people who care about the environment, and are willing to pay a little extra to help it out. Many countries are leading the way in seizing opportunities to supply global demand for environmental protection with emerging technologies, science, and innovation.

The solar panel was invented by an American in America, yet Japan leads all countries in manufacturing solar panels, and is in the top five among all nations in solar PV installations. It is this very lack of innovation that does not support the workforce or lead to growth in other sectors or spinoff technologies. When countries are truly innovative, as America was in WWII or during their trip to the moon, then the advancement of manufacturing workforces and technologies is inevitable, and all the better for their economies.

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