Decisions, Decisions, Decisions about Maintaining U.S. Manufacturing Competitiveness

As the unemployment rate continues to weigh heavily on a turnaround in the U. S. economy, the national conversation seems to have turned, once again, to the manufacturing industry for analysis and answers.

And why not? Those of us who work in the industry know how important U.S. manufacturing is! Yes, it makes up 21% of the global manufacturing economy, and at $1.6 trillion in annual revenue accounts for 11.2% of GDP. Manufacturing employs some twelve million workers or 9% of the U.S. workforce down from a peak of about 19 million workers in 1970 or about 21% of the workforce. U.S. manufacturing workers are twice as productive as workers in the next ten economies. According to the U.S. Bureau of Labor Statistics, unit labor costs have declined 40% relative to the average unit labor cost of fourteen countries that are major competitors in global markets.

Still we know that many jobs have been outsourced overseas, but we now know that the trend to send part production for some items overseas is reversing because of low quality, high energy and transportation costs and wages that are beginning to increase. From 2005 to 2010, wages in China increased 69% and are expected to continue to increase about 17% annually.

As work continues to be re-shored back to the U.S., jobs will certainly follow. GE has announced that it will bring some appliance production back to the U.S. Caterpillar is bringing some excavator production back to Texas, NCR is bringing ATM production back and those are just a few of the re-shoring efforts by big name companies. There are thousands of small and medium-size manufacturers that are bringing parts production back as well.

Over the last couple of years since the end of the most recent economic downturn, U. S. manufacturing has added nearly a quarter of a million jobs back to the economy according to the National Association of Manufacturers (NAM), but there is a disconnect between the unemployment rate today when we know that many jobs in manufacturing are going unfilled because employers need a skilled workforce and are unable to find qualified candidates to meet their needs.

President Obama recently announced a major expansion of Skills for America’s Future, an industry-led initiative to improve industry partnerships with community colleges and build a nationwide network to maximize workforce development strategies, job training programs, and job placements.

The Manufacturing Institute, the affiliated non-profit of NAM, announced an effort to help provide 500,000 community college students with industry-recognized credentials that will help them get secure jobs in the manufacturing sector. The Society of Manufacturing Engineers (SME), the American Welding Society, (AWS) and the National Institute for Metalworking Skills (NIMS) are included in this credentialing program.

The President also announced an effort to develop a new credentialing system that works for industry and will give students the opportunity to earn manufacturing credentials that will travel across state lines and be of value to a wider range of employers.

A number of community colleges across the country that are part of the National Coalition of Advanced Technology Centers (NCATC) already have outstanding programs in place to supply industry with a qualified workforce, but more is needed and the President’s plan will be helpful, although it will take time.

To bridge the skills gap now, many companies are increasing expenditures in new capital equipment to become more productive and increase their global competitiveness by taking advantage of the continuation of Sec. 179 tax incentives. President Obama first proposed temporary 100% expensing for capital investments last September. The new law enacts the President’s proposal by increasing bonus depreciation to 100% for new equipment purchased and placed into service after September 8, 2010 and through December 31, 2011.

This September, while many American companies join with educators on solutions for workforce development and re-training efforts, they will also attend the imX event and Learning Labs for insight and answers about how they can innovate, become more productive and more competitive in the global marketplace.

Positioned as the Epicenter of Innovation, imX is the forum that will provide a preview of the technologies that this revived workforce will manage in the coming resurgence of U.S. manufacturing.

Peter Borden, President

AMTDA