Manufacturing Jobs not the Biggest Reason to Grow Manufacturing in the US

posted on: Monday September 30, 2013

The manufacturing industry is back on the rise after the loss of 6 million factory jobs between 2000 and 2009. The rise has been significant (520,000 jobs since January 2010), but small compared to the hit in the first decade of the millennium. The US currently has about 11.9 million manufacturing employees – a number that makes the labor statistics of the diminished 1990’s (17 million) look healthy. When it comes to explaining why the numbers are so far apart, there are several reasons for the gap. They reveal that growing the manufacturing industry isn’t all about more jobs.

The recession is the primary reason that comes to mind when analyzing the loss of jobs in manufacturing. The numbers fell just as they have with every recession in the last forty years. As far as an upswing, though, not since the 1970s have the number of manufacturing workers exceeded pre-recession years or even matched them. There are other things happening in the industry.

Anyone working in manufacturing right now knows that there are plenty of open jobs in the field. The issue is finding skilled people to fill the jobs. Historically speaking, unionization somewhat fits into this issue, too. Manufacturing is unionized while many jobs in the services sector are not. Different parts of the country reflect different ideas on unions. The simplest explanation, of course, is that kids these days just don’t want the jobs. The ones who do might not be able to enroll in the programs that make them qualified to work in the field.

What we sometimes forget is the very thing that manufacturing does to scale itself back: innovation. Manufacturing may have fewer people than ever before, but boy is it ever productive. Technologies, systems, equipment, machinery, and more have all evolved over the years to make the manufacturing processes more efficient and productive. As automation has increased, manual labor has decreased. The number of people actually required to a job now is fewer than it was in the boom of the industry.

And this is a good thing. Fewer people accomplishing more work doesn’t mean that unemployment has to stay high. Innovation creates more jobs, not less – it’s why many people today have jobs that didn’t even exist twenty or even ten years ago. This trend will continue, and experts say that manufacturing is the driving force behind research and development. In the blog post, “Is U.S. manufacturing making a comeback — or is it just hype?”, Brad Plummer writes, “Manufacturing firms tend to spend more on research and development than other businesses, and recent research has focused on the fact that the act of building things can lead to key innovations. Procter & Gamble and Gillette are two companies known for their run-of-the-mill products — diapers and razors — that have turned innovations in the manufacturing process into a key part of their business.”

Several other sources support this.

In “Innovation: The jackpot for American manufacturers,” Jim Tankersley writes, “Manufacturers account for about a tenth of the U.S. economy, but they conduct nearly seven-tenths of the nation’s research and development, researchers Susan Helper, Timothy Krueger and Howard Wial wrote in a Brookings report this year. Production and innovation are linked: When America stops making certain products, the authors write, it unsurprisingly loses its lead in designing cutting-edge versions of those products.”

Scott Andes and Mark Muro write in “Jobs Alone Do Not Explain the Importance of Manufacturing”: “While the sector makes up just 11 percent of the economy, manufacturers conduct 68 percent of private sector R&D, as reported by our colleagues Sue Helper and Howard Wial last year. And on average, they noted, 22 percent of manufacturers introduce new processes to increase productivity compared to just 8 percent of non-manufacturers. This is important because innovation that emerges from America’s manufacturing sector also fuels growth within the service sector because intermediary goods—the machines used by services (e.g. automated self check-out kiosks at grocery stores)—drive service sector productivity.”

The connection to the service industry is interlaced throughout many experts’ arguments for a focus on growing manufacturing. Plummer also wrote, “What’s more, the MIT report says, manufacturing can be a potent driver of other service-industry jobs. A small company in Ohio that makes protective sleeves for pipelines, say, will be in a good position to offer technical support for oil platforms and other companies.”

The decrease in manufacturing jobs is not wholly attributed to the recession(s). There are several other factors that will continue to influence the amount of employees in the field regardless of the state of the economy. This issue continues to be a political platform – more so in a recession, but really, also regardless of the economy. It is deserving of attention, but not necessarily in the way it is usually discussed.

As Tankersley wrote, “At the same time, factory output per worker is continuing a steady upward march. Manufacturers keep getting better and better at doing more with fewer people. This makes factory production critical to the health of the economy — but not in the jobs-centered way most politicians like to frame the issue.”

Manufacturing will continue to find ways to do more work with fewer people. It’s how business keeps up with demand. This leads to jobs working with machinery that hasn’t yet been built, engineers improving equipment that has yet to be invented, books that need to be written, trainings that will need to be conducted, curricula that has to be developed, and much more. Even though innovation means that the need for people is diminished in one sector, the flip side is the higher demand for people in other sectors. This is how more manufacturing will truly lead to more jobs.

Load Movers Inc. builds quality power tugs that reduce injury and increase productivity in manual material handling. We support the manufacturing industry and applaud growth and upgrades that benefit businesses, people, and the economy. For information about our products, search this site, email, or call 952-767-1720.