Where are the Manufacturing Jobs?


By Donald Applegarth

U.S. manufacturers continue to be more competitive with their foreign counterparts, while production is continuing to come back to the United States.  It sounds like good news that will add to the country’s gross domestic product; heck, U.S. strides toward greater productivity may even help right-size trade imbalance.

However, according to Bloomberg Business Week, manufacturers added only 4,000 jobs in September, bringing the total number of people with new jobs in manufacturing over the past 12 months to 161,000.  By the end of the month, slightly more than 12 million people were working in the manufacturing industry; but that’s only 8.7% of total labor employment versus 13% 15 years ago!

The story is and has been that technology is replacing much of the U.S. manufacturing labor force.  Increasing productivity using robotics and other technology-aided manufacturing equipment has supplanted many jobs over the past decade.  While it is unlikely for these opportunities to return to the industry, investment in equipment and technology has brought competitiveness back to the U.S; however, the irony is that it has been at the expense of manufacturing jobs.

An example: The coal industry has been depressed for some years now, hindered by declining demand, the movement towards cleaner energy, and also the pending environmental policies put forth by administration.  Jobs in the coal industry have been on the decline for years now and the impact has been felt by manufacturers of heavy industrial equipment and companies associated with the coal industry.  Perhaps, the most notable occurrence being the exit of this region’s largest coal company, Consol Energy, who divested itself of coal reserves for a keener focus on natural gas. 

While the emergence of the natural gas resource has fueled some job creation in the manufacturing arena, the technology employed to get to the natural gas permits minimal labor costs associated with a producing well. Let’s face it, it is not as labor intensive as extracting coal.

Another example: Automotive companies have long been replacing costly labor with robotics to achieve greater consistency in product as well as in productivity.  We all have heard the troubles of Detroit, a city that became reliant on a broad tax base of laborers to support the city’s infrastructure. 

Just one of the trends in today’s technologically adept manufacturer is “the movement to turn data into intelligence.”  While integration and storage tools that are essential to aggregate, analyze, integrate, and store diverse data were the focus of the last decade, the current business imperative of today’s manufacturer is to optimize production operations in a cost effective manner using tools that have gotten quicker or weren’t available until recent years.  More manufacturers are using key performance indicators to take decisive action in a timely fashion to adjust their operations. It’s about more than just the quality of the data.  It is about the speed in which technology has enables users to take the data and use it to make swift and accurate decisions on the plant floor. 

Greater connectivity across manufacturing departments and into the C-level suites through the use of mobile devices and cloud computing has opened up doors that didn’t even exist a decade ago.  Utilization of dashboards with key operating metrics and benchmarking actual to expected results has enabled the ability to make real time decisions that fundamentally impact productivity.  Employees can share information quickly and spot trends through the use of predictive analytics. 

One example where manufacturers have embraced technology is using predictive analytical benchmarks to better schedule and maintain plant equipment to avoid costly equipment failures and downtime. 

So, what is the answer to creating more manufacturing jobs?  I think the writing is on the wall.  Manufacturing as we knew it has changed and will likely to continue to change through advancing technologies. You can expect a manufacturing environment in which most physical tasks are done by automated machinery, while engineers, scientists and technology professionals take on a larger role in the industry. Technologies in the manufacturing plant are creating change which in turns requires the manufacturing labor force to rethink, retrain, and perhaps repurpose themselves by revamping skillsets.

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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