Manufacturing realities
We have moved our manufacturing jobs overseas because the labor is cheaper. The labor needs to be cheaper so the price of the products can be less expensive. The price of the products need to be less expensive because that is the price that the market will bear. The consumers want the product for a particularly price. Those consumers are us.
In essence, we can't have our cake and eat it too. We can not expect to pay low prices and have that product manufactured in America. It can work in some instances where the manufacturing plant has super high end technology and needs less people to field the assembly lines but it can not work in plants that are no different now than they were in 1970.
It is a catch-22. What is heartbreaking is all the people who are out of work and do not have the skills to do something different. The economy is shifting. We should be spending money on educating laborers to move to other jobs. Or the Governnment should be spending money building other parts of our country such as roads where those laborers can shift their skills and continue to bring in a paycheck. That is a win win for everyone.
I just find it disturbing when the whole picture is not told. The economy is shifting, jobs that were once an important part of our economy are no longer and a lot of that was created by our desire to buy products are affordable prices. Those prices don't add up when laborers are making more per hour than the product actually costs.
Comments (Archived):
Dear Gotham Gal,The problems you mentioned have deep structural reasons including as a headline the fact that China has been pursuing a Technology-based Strategic Planning model, while the United States, has, since ~1947 pursued an Economic Based Strategic planning imperative. I encourage you to look at a formerly top-secret 8 year study called SOCRATES on Wikipedia which outlined the sources of competitive advantage.Our planning model leads to short term policy and corporate planning that conveys distortions across the “global economy” and de facto economic and technical advantage to nations willing to manipulate their currencies, abuse their workers, and pollute the environment. This is an unsustainable path for the global commons as a whole.My partner and I started an advanced manufacturing firm in 2011 that is committed to re-shoring manufacturing where it makes sense, we are also committed to the idea that people do not need 100K in student debt to contribute to an economy in meaningful ways. In fact, they dont even need a college degree to be technologists. We know, we are building technologists who are New Industrialist Makers., and they do not have college degrees. Please check out the 5 minute Youtube video on our website, it tells the whole story: http://www.federatedprecision.com, or just click here: http://www.youtube.com/watc…. We sent a note to Christina to see if we could get a dialogue going with flatiron but are unsure if she ever took a look at the video or documents we sent.Bottom Line: We aren’t lamenting the loss of American Jobs and American Manufacturing. We are in the street – fighting hard to return them. We see a path at the cross roads of the Maker Movement and the Innovation economy, a third industrial revolution… if we could just get the attention, mentorship and care of America’s Technologists to see how interesting and cool advanced manufacturing really, truly, is.-Sam.
We see a path at the cross roads of the Maker Movement and the Innovation economy, a third industrial revolution…..I couldn’t agree more and looking forward to it!
I absolutely agree. Did you read the article in Sunday’s NYT biz section, “A Capitalist’s Dilemma, Whoever Wins on Tuesday”? It makes the same point. The kinds of businesses that will drive the job market are new innovations, not polishing up or increasing profitability of old businesses. The best way to promote innovation is by investing in education for areas/industries positioned for innovation.http://www.nytimes.com/2012…
thanks susan. i did not see that article. i actually wrote the post about a week ago and just got around to publishing.
Actually cheaper American energy helps reverse this (with the proper job training). As the labor content of goods has gone down and the energy content has gone up, manufacturers can afford to pay more for properly skilled workers so long as they are paying less for energy. I have a personal interest in the success of natural gas in the US but do see it as a big part of improving our manufacturing competitiveness without being in a race to the bottom on wages. Double effect when natural gas is also the feedstock as it is for much of the chemical industry, which is already making huge investments in new plants in the US.Training alone won’t reverse this decline if there aren’t jobs to train people for. On the other hand, without the training, the new jobs might as well not exist – and won’t.
very true. it is a bit of a catch-22 but we do need to create new economies vs trying to breathe life into old ones.
I think the problem is steeped in the overall greed of business owners who are not interest in leveling the playing field of wages, stockpile cash while paying employees poorly (see APPLE) and are more concerned with stock prices than creating a society in which there is more equity.I’m not suggesting that capitalists or owners should not make more than those who work on the factory line – they should, but the owners today make dramatically more than anyone – and it’s just not fair or good for our world. Until American business owners are willing to share a bit more, it may be impossible to ever bring manufacturing back to this country. It is shameful
What I would find refreshing would be a national leader (business, political ,educational arts etc) highlight poor choices that we as individuals have made in preparing ourselves for the workforce.More emphasis on reading, math, and science less on being the next sports or entertainment star.I remember in the mid 90s when I was 19 and in the Navy we had pulled into Singapore around the New Year. Their leader was addressing the nation and part of the message was he was upset about the personal conduct of the citizenery steps and he would like to see them correct it.I was completely blown away. I think we need that kind of candor here in this country.
Agreed
.Great observations and a perfect example of the intersection and convergence of business regulation, tax policy, labor policy and energy policy.We have arbitrarily allowed manufacturers to offshore jobs — in great measure a political decision — while enjoying unfettered access to the American marketplace and the support of the American financial environment (stock markets, securities laws, banking, venture capital, property laws, intellectual property laws and a myriad of other favorable financial environment systems).The only missing ingredient? Employing American workers.And yet the cost of this political decision is one of the great issues of our time — rampant under- and unemployment.Worst still, we have allowed products being produced overseas to benefit from labor components that are literally prison labor, child labor and horrific working conditions. This is unfair competition at its most barbaric and basic. Obamacare will not cure this ill.Don’t get me started on the impact on the environment.Then we find ourselves with huge offshore profits wanting to come home when they were created in great part by not meeting the norms of production in America. They are “blood” profits.Energy policy is a very interesting subset of this issue as it is both a huge tax and a huge employment issue. High energy prices are a tax on consumers and producers.With the election in the rear view mirror, you can bet that Keystone will get built. More important, the willingness to explore and produce known reserves can create gobs of jobs.Unleash the nuclear power industry and you will create 2-3MM jobs in a year.The interconnectedness and convergence of these issues is obvious and apparent and it is time to make those links work for the American worker and economy..
I agree with your blog post today. America wants to purchase goods that are cheap, America cannot manufacture cheap goods so our plants moved to China. China has environmental and human relations issues so I think this whole topic needs to be addressed. American manufacturing has many environmental measures to control waste and toxic chemicals and regulations for employees. I guess this adds to the cost of goods. American’s calling for environmental and human rights for manufacturing here does drive up the cost of goods where in China, the Chinese are not asking for the same. I think it’s sad that American people are having a difficult time with jobs, you need some kind of degree or technological skill to make it. But that may be old thinking, we have to re-engineer our thinking to a more tech savvy way of producing goods. It’s a sign of the times to change our thinking and behaviors and maybe not buying so much cheap stuff too.
My initial thought was this is Econ 101, but try convincing Walmart shoppers. The industrial revolution as our parents knew and what we grew up with is at the end of its cycle. Coinciding with that is the uber consumer consumption cycle is also over. People are de-leveraging and becoming smarter in how they spend. As Seth Godin says, “How many pairs of jeans do you need in your closet?” A new economy is emerging and we’re unprepared. The transition is going to be both costly and painful. It is a shame that $2.5 billion was spent on this past presidential election and while both candidates pandered to their constituencies around this manufacturing issue they weren’t honest about it one bit. The truth of the matter is that we don’t really want those low paying manufacturing jobs back. I think Fred recently wrote about this and pointed to his partner Albert’s series on changes in the employment base, which is excellent.
2.6 billion spent on this election. What it could have gone to from jobs to healthcare to who knows.
I’d pay $400 for a great everyday shoe…. like Finn Comfort out of Germany. I’d love to buy an American shoe.
And this also has a human cost even in countries where labor is cheaper. I left a job many years ago, in part, because I was so demoralized by the human rights abuses that our company was very well aware of taking place in these factories and chose to ignore or make loop holes in their policies to still be able to justify selling the product. Disgusting. When the Gap was caught, everyone was outraged. Our company became extra cautious as I’m sure many other large retailers did. No one wanted to be the next Gap. Public relations disaster. But the same public that was screaming, is the same one that is demanding products that are so cheap that retailers are under extreme pressure to meet these price demands as well as their target margins. And these factories are extremely sophisticated when it comes to “passing” our lax human rights checks. I always think of child laborors when I see a pair of reading glasses or glasses frames. Children have better eyes and smaller hands and these factories were notorious for exploiting children. I wrote to Oprah’s producers many years ago when she was promoting Sarah Jessica Parker’s cheap line of clothing for some retailer. Oprah said with curiosity, “How do you make them so cheap?” I couldn’t believe it was a serious question. I explained why they were so cheap and why this issue needed press attention. I never got a response.
Great Oprah story. Not surprising
Joanne, I meant to comment on this post earlier but wanted to call out to you today’s segment on CBS re Lolly Wolly cbsn.ws/V8kcj7. What struck me about this piece was not only how Mrs. Tysinger-Temple started her business, but how she took the time to train her employees, bringing back a depressed region of North Carolina. At our company Hourly we constantly hear the “Skills Gap” excuse used by employers, especially in manufacturing sector. We have begun to see great strides being made at the Community & Trade school level, but more needs to be done, both on a national level and by independent business owners who must again invest in their own people and retrain them as the technology continues to evolve. Alcoa (& Lolly Wolly) provide great case studies. http://cbsn.ws/POpwp6
I know Lolly Wolly. Great company. She hired Emily Hickey who is fantastic to run the place. Good interview!