Manufacturing's Relative Shrinking Presence (employee, degrees, percentage, profit)

[bobtn]

http://www.nytimes.com/2011/09/11/bu...gewanted=print

[andywire]

Manufacturing should be a focus of the government, but it must be realized that manufacturing will never employee 25% of the population again here. It should be the focus however because it is a huge contributer to actual and physical GDP. Unlike so much of the shuffling act on Wallstreet.

Now, in terms of employment potential... 8%-10% may be more practical, but not for too long. Technology has been killing manufacturing jobs for decades. Every new development has had one common focus... Eliminating workers. What your left with are a few highly skilled programmers and set up workers, and a handful of operators. To give an example... I came in to work today on Saturday at 2 PM and left at 10 PM. I saw 4 other people there, and we are a decent sized factory. During that time, over 8,000 parts we're made, and machines we're being set up for new jobs while all that was happening. All with 5 people total! Is this a bad thing? Yes and no. Less employees, but cheaper products for the consumer down the line. Those 5 workers are paid pretty good, but 30 years ago, it would have taken well over 1000 VERY productive workers to achieve that level of productivity.

So, do I worry about the Chinese? Not a bit. They will never achieve what we have here in the states. They can do menial tasks cheap. If I needed 100,000 simple screws made, with wide open tolerances, and could wait 6 months for them, I'd be on the phone with someone in China. But If I needed a small order of complex parts made at a reasonable price and delivered next week, there are plenty of options here in the states. the Chinese really aren't that good at handling the complex stuff. I've seen countless companies try to get them to do it, and they always fail. There are businesses that can do complex manufacturing there, but they are just as pricey as the U.S. stuff, and you have to wait at least a month to get it. Transportation costs are a killer. If you deal in cheap, you'll need to hire a few American's to fix all the mistakes, and more then likely, make a second order for your stuff and hope they get it right. Dealing in China is not profitable for anything requiring a brain and skill.

Don't view manufacturing as a lost cause. It's not going anywhere. As long as intelligent people see a good cause in providing high quality stuff here, manufacturing will continue to be done in this country. It's just not going to put people back to work like before though. Anything requiring a warm body will be done in China. Anything requiring a brain and someone who has pride in their work will be done in the U.S., Germany, England, etc.

I would also like to point out an example of what we are seeing today. The industrial revolution kicked off in England originally. Once the labor became too expensive, menial work was shifted to America, somewhat of a developing country. Jobs we're lost in England, but tons were created here in America. It became attractive to have the menial stuff done here, and the complex stuff done in England. Eventually, the American workforce had a thriving skilled workforce as well, and we overtook England as the top manufacturing nation. What we are seeing today is similar to that time period. The thing is, China is loosing plenty of manufacturing jobs to even cheaper labor countries like Malaysia and Vietnam. They are either going to evolve or go belly up in this sector. Over 150,000 manufacturing businesses went belly up last year in China. The same thing happened in Japan during the 70's... They started as a cheap labor country like China, but the jobs shifted, leaving only the high quality businesses to compete. As of today, Japan's manufacturing sector is doing well, and is capable of competing with America in high quality products, but they are just as expensive as our products. China will either evolve, or go bust. Interesting to note... All the machines I've worked on in the past year we're made in Japan, and the manuals we're translated to English from Japanese... Quite poorly. Manufacturing is very much a global sector. Countries either excel or make pennies on the crap work.

The biggest challenge I see here in America is... Not enough young people looking to take up the work. I take that back... Not enough intelligent young people! Mathematics have been neglected on the high school level, and college graduates view a factory job as a last resort. The ones who work at my shop are generally there because it is their last resort. Manufacturing WILL be lost as long as we tell our young people to give up on it. I'm seeing a huge graying of the workforce, and no new blood willing to take their place. The ones that do stagger in don't seem to be very passionate about the work, they're just looking for the paycheck and skate by with the least amount of effect possible. We can't compete in the crap work that China does, those days are over. We have to compete in the hard stuff, but to do that, we need an intelligent young people willing to put in the effort and learn the trade. It's a hard sell for the young folks when all you hear about is doom and gloom.

[bobtn]

andy, I am very pessimistic since mfg's percentage has not bottomed out, and when one moves production, as the article states well, R & D largely goes, too. My last employers customers would look like a semi-who's who in America, and all will reduce US mfg headcount significantly over the years to come. With that will go some , but not nearly as high a percentage of the white-collar jobs not directly on the shop floor (supervisors), so to a degree, the professionals tied to these corps will not care.

Most importantly, service sector corps do not need as many support folks for each of their jobs.

Finally, China is moving up the food chain, it will be doing more high-tech stuff at increasing rates long-term, and India is the best at producing good engineers in massive amounts. By your account, America 200 years back was like China now, but we moved up, and you assume China won't..LOL!!..spend some time there as I have, and you will see their hunger to keep moving up. We have become complacent, and are doing as Roberto Duran did with "No mas". We fell for the grand lie that service jobs would be our salvation. (Biggest BLS service employer would be Wal Mart..yippee!)

[andywire]

Originally Posted by bobtn

andy, I am very pessimistic since mfg's perecntage has not bottomed out, and when one moves production, as the article states well, R & D goes, too. My last employers customers would look like a semi-who's who in America, and all will reduce US mfg headcount significantly over the years to come. With that will go some , but not nearly as high a percentage of the white-collar jobs not directly on the shop floor (supervisors), so to a degree, the professionals tied to these corps will not care.

Most importantly, service sector corps do not need as many support folks for each of their jobs.

Well, white collar workers at General Motors we're all about eliminating blue collar jobs for the past couple decades. Then they got the boot. Who are they going to manage if they eliminate all the workers? Also, all the technology was sent to China. They we're given our best and newest ideas. Chinese corporations stole them, and used them to their advantage. That happened 100's of times over, and American corporations realized it wasn't such a good deal. You can be pessimistic all you want. This sector will never die here. I have never had a problem finding a manufacturing job. NEVER. Most of the people I know who are in skilled trades and good find something. There will always be a demand for quick turnout of manufactured goods, especially since small inventories are the order of the day. Some companies loose millions everyday a production line is such down. If one part is not there, that line is SHUT DOWN. As such, these companies know they have to deal in America if they want the parts made correctly and quickly. If a Chinese company is doing the work, 50% scrap rates are typical, and who knows when they will arrive. For many businesses, it is not practical to deal anywhere out of the country.

As I mentioned, technology is going to kill many manufacturing jobs. That is the single biggest threat to the common worker. Anyone with the skill and interest at least has a fighting chance to earn a good wage in this sector. Those who stay on top of their skills are very well compensated, and never have to worry about a job. Your seeing and hearing doom and gloom, and I just don't see it. There is a good reason I typically work 70 hours a week... There is just nobody around with the brains or interest to keep up with the demands of modern manufacturing, and no new blood willing to learn it.

[bobtn]

andy, The Rust Belt was in a deep recession during the low overall unemployment years 2003-2007. Why? Manufacturing was going bye-bye, so while you have found jobs, overall manufacturing employees whose plants closed have NOT found them as often as those in the financial sector. For the nation, that is not good.

BTW, You also work 70 hours so they can avoid hiring ANOTHER worker whose Health Care would add 15k to expenses. But I guess you never thought about that. Years back, that extra employee would have been hired. (We encourage our subsidiaries to do the same thing, OT, DO NOT add employees. Too high benefit costs tied to headcount, not gross pay, and if you have to fire, unemployment expenses rise significantly affecting all left for many years.)

[andywire]

Ugh, you can gripe all you want. Most of my friends with college degrees back in Michigan are living with their parents and working either retail or fast food. Do you think there are any better jobs for young people out there? If manufacturing ever dies in this country, that is it, game over. You need solid GDP producing industries, otherwise you have nothing. You better prey to god manufacturing does not die in this country. I've heard the "service sector" crap for the past decade. To those who told me that crap half a decade ago I say, hows that service sector treating you today?

And yes, the rust belt lost a lot of jobs. I've worked those types of jobs in my even younger days. Cranking parts manually on benders, or bending parts by hand on planks of wood. Or how about standing at a press for 12 hours a day? Those jobs suck, let the Chinese have them if they can do them cheaper. They require a warm body, and they don't even warrant minimum wage. The rust belt was heavily dependent on those types of jobs, especially for the bloated automotive sector. Michigan lost 50% of it's manufacturing jobs because that was the mainstay of their manufacturing sector. Well, now you are left with highly productive, highly skilled manufacturing jobs. Very much similar to the situation I described earlier with England shedding it's menial jobs and keeping it's skilled stuff. I've seen tons of these stamping plants close down because that kind of work can be sent to China, no problem. The problem encountered though is when they try to have the Chinese make the die for the press. They never get it right because it's a skilled trade. As such, the die must be shipped back to America where a well paid tool and die "repair man" fixes the mistake of the piece. IT DOES NOT SAVE MONEY. Obviously, it COSTS much more.

I recently read an article discussing which countries have weather the recent global downturn well. Germany was listed at the top. The reason given was Germany's thriving heavy manufacturing industry. When are people going to get it? If you don't actually produce something of value, you will never create physical wealth. Retail skims off the top. They make what, 3% a year selling stuff at Walmart? If your the one PRODUCING the goods, you stand to make a much better profit. Those solid profits continue to be had in manufacturing. The kicker is, it is not easy. It takes a highly skilled workforce, not some Joe Blow with the rivet gun. Manufacturing is just as much an art and science as any other profession you would recommend to young people. The thing is, it takes just as much brains as any other art and science. The days of walking at union General Motors and sweeping floors for $20/hr will never return.

And to give you a glimpse of how bad this economy is... We have guys with business degrees cleaning parts for $10/hr. It's still the best gig in town, just like the old days. Manufacturing ALWAYS paid better then anything else on a similar scale. It's sad that it required everything else to come down in pay scale for my generation. Bob, there will be no big return to the manufacturing glory days. For those who hone in on their skills and make themselves worth a good wage though, they will do just fine. If manufacturing legitimately died in this country, I would recommend everyone get the heck out of here. Rome is burning at that point. Perhaps I should reaffirm this... America is still the number one manufacturing nation in the world... Did you not read that?

[andywire]

Not to beat the subject to death bob, but you are dead wrong. While people like you were running for the hills a few years ago, I was buying tons of stock in $3 a share Ford, Sauer Danfrost ($5 a share SHS sold at $55) and Illinois Tool Works ($25 sold at $50). While the fear has returned and these stocks will plummet again, I will be waiting for the bottom... I will unload half my savings account soaking up these rock bottom stocks and make more than many Americans today earn a year in profit. Go ahead and spread your doomsday prophecies, your only helping to fatten my wallet.

[bobtn]

Andy, Arbitrage is profitable. I did well buying some auto related at their depths, too, sold some before they sunk again.

The Rust Belt will never reebound, Michigan while doing better, better is what 10%? Horrific.and it was a one industry state..always stupid.

I have yet to see DC understand and admit to the big service industry lie. Step 1 in any problem is to admit its existence. Barring a change in m indset, I doubt mfg will bottom out above 1/2 its present employment level. Sad.

[bobtn]

Robert Amter: China to Surpass USA as World Leader in Manufacturing?

[pvande55]

Manufacturing employment will be on a negative growth trend for a long time. This has been predicted for a long time. But some openings will occur due to retirements.