The buzz about the new jobs being created is catching on! Over the last 23 months, America has added 3.7 million new jobs, with many of them being in the manufacturing sector! Some manufacturers are adding the jobs, in the US while they have other units operating in China, Mexico and other countries. An industry which has seen nothing but lay-offs and pink slips since the 1990s is actually trying to hire more people. It is another matter that it is bitterly complaining of the lack of adequate and qualified personnel to fill certain roles like machinists and quality controllers. The number of manufacturing jobs today stands at the same level where the industry was in late 1940.
Manufacturing jobs started falling in the 1980s, with work being shipped off to lower cost locations. 41% of manufacturing jobs were lost between 1979 and 2009. The share of factory jobs in employment fell by 4.3% between 2000 till 2009. The ways in which the employment numbers in the sector have fluctuated over the last 70 years (to return almost to the same level) are illustrated by the following graph, based on data taken from the Bureau of Labor Statistics, which is more or less self-explanatory.
America is slowly getting back to making stuff and selling that stuff. The American manufacturing industry went into a free fall with jobs vanishing overnight since 2001 and bringing hardship to lot of workers and their families. Some auto giants were on the verge of being liquidated, with others not far behind. The auto industry alone saw job losses over 400,000. Investor confidence was almost non-existent but the industry has managed to withstand the travails of change and stayed resilient. The business is booming for defense and aerospace manufacturers who in turn create business for many job shops. Companies are seeing full order books and also bringing jobs back from overseas as the costs of outsourcing have grown significantly higher and match and reducing the margins. But any growth in manufacturing creates work in other sectors like business services, consultancies and accounting firms.
A study by Brookings Institution cites the lack of a coherent public policy on manufacturing as being responsible for the lack of growth in the sector, more than even the high wages. The study goes on to state that a lack of necessary policies and strategies to retain the jobs and higher wages was the reason why America has seen such drastic changes compared to Europe and Canada which had also seen outsourcing of jobs without equivalent job losses and wage revisions.
Using pre-election rhetoric, President Obama has addressed the workers at a Boeing plant he visited this month; about the plans to protect American manufacturing jobs, using tax policy changes and measures to boost sales of American products. Acknowledging the pain caused to whole communities by new technologies and outsourced manufacturing jobs, as also the fact that most of the jobs will not be coming back, he asserted that plans to keep manufacturing jobs in the US by removing the tax breaks for outsourcing and offering tax breaks for keeping work here – giving due praise to Boeing for its commitment to a US-based workforce. Banks will be roped in by the government to provide export finance at competitive rates to help establish American companies in manufacturing and support them against unfair trade practices. Exports shall be doubled and shall bring in more jobs in their wake. Everything sounds so positive and promising!
Government statistics do show an undeniable rebound for manufacturers in productivity as well as employment. Unemployment in manufacturing which was at 13% has come down to 8.4%, but it is hard to say if the current rebound is a trend or just a re-adjustment, caused by manufacturers hiring now to correct their earlier cost-cutting efforts which made them go too lean for comfort. There is scant chance of the sector regaining all the jobs it had lost over the years. Among other things like technological advances and fully automated plants, this possibility will be impacted by the critical shortages of manpower in the sector. While no one expects the country to regain all the manufacturing jobs it has lost over the last decade, it is to be seen how policy changes could make a difference to the sector going forward.
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