Manufacturing a comeback
Whenever I get into a discussion about the economic state of our country, invariably somebody claims, “We don't make anything anymore.”
That is normally an allusion to the manufacturing might of China, home to 99 million factory jobs, according to U.S. Department of Labor statistics. That is by far the largest manufacturing base in the world and dwarfs the 14.2 million U.S. manufacturing jobs.
But is it true we don't really make anything anymore? Or are we just making less and less of what we do make? As someone who worked in seven factories in his youth (my first full-time job was making bombs for the U.S. government, but that's another blog for another day), I am very interested in the answer.
It certainly seems like most everyday items carry the "Made in China" label — from clothes to dishware to the stapler on my desk. China's lack of interest in human rights, and in paying anything resembling decent wages, adds to its manufacturing strength.
And, of course, the economic downturn at home hasn't improved our job growth. But a new report from the Joint Economic Committee of the U.S. Congress delivers a lot of good news on the manufacturing front.
Since the manufacturing low point of the recession in February 2010, 554,000 manufacturing jobs were added through November 2013, the report states. That figure represents a 4.8 percent increase and 24 percent of the manufacturing jobs lost during the recession.
Increasing exports have played a critical role in the growth of manufacturing. According to the report, manufacturing exports over the previous year (ending in November) totaled $1.2 trillion, or 38 percent more than 2009.
Need more good news? How about this: Many U.S. manufacturers, as well as several foreign companies, have plans to build factories here. Caterpillar, General Electric and Ford all have plans to relocate foreign production back to the U.S.
Likewise, Lenovo, a computer manufacturer based in Beijing, opened a manufacturing plant in North Carolina in June 2012 and BASF, a German-based chemical company, has similar plans. As I wrote about last week, Pennsylvania officials believe Taiwan-based Hon Hai is bringing 500 jobs to a facility it plans to build here.
The logical question here is why? Business is business, and the bottom line guides decision making. The congressional report has an answer here as well, citing strong productivity gains in U.S. factories.
Between 1987 and 2008, manufacturing productivity grew at an annual rate of 3.4 percent, compared to 2.2 percent for all nonfarm business, the report states.
So everything is great, right? Not quite. The manufacturing sector is recovering but has a long way to go. To be precise, another 1.7 million factory jobs are needed to return to prerecession levels, according to the report.
Other problematic trends loom. For one, the recession has sapped investment in research and development, the report concludes. Also, our crumbling infrastructure needs attention. And, finally, manufacturers say the U.S. lacks high-skill workers.
But overall, it seems the fear we are turning into a service economy isn't true. Manufacturing has taken a big hit, but it is slowly recovering. Continued investment in education and infrastructure will only help.
The congressional report sums up the state of manufacturing nicely:
"Conditions are ripe for a continued expansion of American manufacturing, but policy actions are needed to further these gains and close the skills gap for the manufacturing jobs of the future."