A mediocre manufacturing day

As I was down a computer over the weekend thanks to the need for maintenance and a new part, I didn’t get a chance to talk about last Friday’s National Manufacturing Day; a day which coincided with the disappointing news that only 4,000 jobs were added in that sector last month (out of 248,000 total.) An industry insider I often cited when I did my American Certified blog is Scott Paul, president of the union-backed Alliance for American Manufacturing. His take:

The past two months show manufacturing job gains have again stalled, at least temporarily. Numbers like these are a blow to the president’s goal of 1 million new manufacturing jobs in his second term. A large and persistent trade deficit and a paucity of investment in infrastructure are two obstacles that stand in the way of actual progress.

AAM measures the progress toward that goal of one million, and current numbers place the additional manufacturing jobs at a puny 189,000. The total actually retreated thanks to negative revisions in July and August reports, but has not eclipsed 200,000 yet at a point when Obama is nearing the halfway mark to his term.

So again one has to ask the question: why isn’t the manufacturing that used to support a solid middle-class band of Americans coming back home? Are we not able to supply workers who Barack Obama noted last week are “not just punching in and pounding rivets anymore; you’re coding computers and you’re guiding robots. You’re mastering 3D printing. And these jobs require some higher education or technical training.” Perhaps the push toward getting everyone into a four-year college in order to get that liberal arts degree is affecting workforce readiness, but that’s only one part of the answer.

I have never been able to figure out just how it can be that a company moves to China to make money. The most obvious answer would seem to be the extremely cheap labor cost. One figure I found pegged Chinese manufacturing wages at 46,431 yuan annually, which is roughly $7,429 per year. Obviously that is significantly less than even our minimum wage would be ($15,080 a year) and the vast majority of factory workers make well above minimum wage. But there’s also the time and expense of shipping products back to market to consider, risks which could be mitigated to some extent by manufacturing locally but apparently those costs don’t affect the ledger sheet enough to bring a lot of the manufacturing we’ve lost back here. “Made in China” is still a familiar sight on consumer products.

But there’s still a large piece of the pie which we can help ourselves to locally, even without the protectionist trade theory AAM supports. America as a whole and Maryland in particular have some significant assets in place, but there’s so much room for improvement if the will to make these changes can be found. Tax policy on both the federal and state level can be made into a far smaller impediment, as would a more hands-off regulatory approach. And new infrastructure can be put in place within the transportation realm to make it easier for our products to get to the East Coast market of which we occupy the southern fringe.

Yet as a nation and state we continue to work in the opposite direction, and somehow are amazed that the results aren’t what we thought we would get. We’re on a pace well short of that million-job goal, and adding 4,000 a month won’t get us there. The number should be upwards of 20,000 a month on a normal pace and we’re going to need 30,000 a month the rest of the way to meet the goal. Put another way, we would need to open 10 new Chattanooga Volkswagen assembly plants a month, or each month add 300 more modest facilities employing 100 apiece. Public policy being what it is today, that’s not going to happen and it’s a shame.

It took the better part of a century to make America into a manufacturing power, and perhaps three decades to erode away our advantages. But if we put our nose to the grindstone, the next generation of Americans may bring us back to where we were.