The surprising truth about American manufacturing
| GRAND RAPIDS, MICH.
The decline in American manufacturing is a common refrain, particularly from Donald Trump. 鈥淲e don鈥檛 make anything anymore,鈥� he told Fox News last October, while defending his own made-in-Mexico clothing line. 听
On Tuesday, in rust belt Pennsylvania, he doubled down, saying that he had "visited cities and towns across this country where a third or even half of manufacturing jobs have been wiped out in the last 20 years." The Pacific trade deal, he added, "would be the death blow for American manufacturing."
Without question, manufacturing has taken a significant hit听during recent decades, and further trade deals raise questions about whether new shocks could hit听manufacturing.
But there is also a different way to look at the data.
In reality, United States manufacturing output is at an all-time high, worth $2.2 trillion in 2015, up from $1.7 trillion in 2009. And while total employment has fallen by nearly a third since 1970, the jobs that remain are increasingly skilled.
Across the country, factory owners are now grappling with a new challenge: Instead of having too many workers, as they did during the Great Recession, they may end up with too few. Despite trade competition and outsourcing, American manufacturing still needs to replace tens of thousands of retiring boomers every year. Millennials may not be that interested in taking their place. Other industries are recruiting them with similar or better pay. And those industries don鈥檛 have the stigma of 40 years of recurring layoffs and downsizing.
鈥淲e鈥檝e never had so much attention from manufacturers. They鈥檙e calling and saying: 鈥楥an we meet your students?鈥� They鈥檙e asking, 鈥榃hy aren鈥檛 they looking at my job postings?' 鈥� says Julie Parks, executive director of workforce training at Grand Rapids Community College in western Michigan.
The region is a microcosm of the national challenge. Unemployment here is low (around 3 percent, compared with a statewide average of 5 percent). There aren鈥檛 many extra workers waiting for a job. And the need is high:1 in 5 people work in manufacturing, churning out auto parts, machinery, plastics, office furniture, and medical devices. Other industries, including agribusiness and life sciences, are vying for the same workers.
The factory owner who's recruiting high schoolers
For factory owners, it all adds up to stiff competition for workers 鈥� and upward pressure on wages. 鈥淭hey鈥檙e harder to find and they have job offers,鈥� says Jay Dunwell, president of Wolverine Coil Spring, a family-owned firm. 鈥淭hey may be coming [into the workforce], but they鈥檝e been plucked by other industries that are also doing as well as manufacturing,鈥�
Mr. Dunwell has begun bringing high school juniors to the factory so they can get exposed to its culture. He is also part of a public-private initiative to promote manufacturing to students that includes job fairs and sending a mobile demonstration vehicle to rural schools. One of their messages is that factories are no longer dark, dirty, and dangerous; computer-run systems are the norm and recruits can receive apprenticeships that include paid-for college classes.
At RoMan Manufacturing, a maker of electrical transformers and welding equipment that his father cofounded in 1980, Robert Roth keeps a close eye on the age of his nearly 200 workers. Five are retiring this year. Mr. Roth has three community-college students enrolled in a work-placement program, with a starting wage of $13 an hour that rises to $17 after two years.
At a worktable inside the transformer plant, young Jason Stenquist looks flustered by the copper coils he鈥檚 trying to assemble and the arrival of two visitors. It鈥檚 his first week on the job; this is his first encounter with Roth, his boss. Asked about his choice of career, he says at high school he considered medical school before switching to electrical engineering.
鈥淚 love working with tools. I love creating,鈥� he says.
But to win over these young workers, manufacturers have to clear another major hurdle: parents, who lived through the worst US economic downturn since the Great Depression, telling them to avoid the factory. Millennials 鈥渞emember their father and mother both were laid off. They blame it on the manufacturing recession,鈥� says Birgit Klohs, chief executive of The Right Place, a business development agency for western Michigan.
These concerns aren鈥檛 misplaced: Employment in manufacturing has fallen from 17 million in 1970 to 12 million in 2015. The steepest declines came after 2001, when China gained entry to the World Trade Organization and ramped up exports of consumer goods to the US and other rich countries. In areas exposed to foreign trade, every additional $1,000 of imports per worker meant a $550 annual drop in household income per working-age adult, according to . And unemployment, Social Security, and other government benefits went up $60 per person.
The 2008-09 recession was another blow. And advances in computing and robotics offer new ways for factory owners to increase productivity using fewer workers.
Not your father's factory worker
When the recovery began, worker shortages first appeared in the high-skilled trades. Electricians, plumbers, and pipefitters are in in short supply across Michigan and elsewhere; vocational schools and union-run apprenticeships aren鈥檛 keeping pace with demand and older tradespeople are leaving the workforce. Now shortages are appearing at the mid-skill levels.
鈥淭he gap is between the jobs that take no skills and those that require a lot of skill,鈥� says Rob Spohr, a business professor at Montcalm Community College an hour from Grand Rapids. 鈥淭here鈥檚 enough people to fill the jobs at McDonalds and other places where you don鈥檛 need to have much skill. It鈥檚 that gap in between, and that鈥檚 where the problem is.鈥�
Ms. Parks of Grand Rapids Community College points to another key to luring Millennials into manufacturing: a work/life balance. While their parents were content to work long hours, young people value flexibility. 鈥淥vertime is not attractive to this generation. They really want to live their lives,鈥� she says.
Roth says he gets this distinction. At RoMan, workers can set set their own hours on their shift, choosing to start earlier or end later, provided they get the job done. That the factory floor isn鈥檛 a standard assembly line 鈥� everything is custom-built for industrial clients 鈥� makes it easier to drop the punch-clocks.
鈥淧eople have lives outside,鈥� Roth says. 鈥淚t鈥檚 not always easy to schedule doctors appointments around a 鈥榩unch-in at 7 and leave at 3:30鈥� schedule.鈥�
While factory owners like Roth like to stress the flexibility of manufacturing careers, one aspect is nonnegotiable: location. Millennials looking for a job that allow them to work from home are not likely to get a callback. "I'm not putting a machine tool in your garage," says Roth.
[Editor's note: The figure for the听United States manufacturing output has been corrected to $2.2 trillion.]
Free Trade in America
Part 1: The harsh downside of free trade 鈥� and the glimmer of hope
Part 2: The surprising truth about American manufacturing
Part 3:听What 'good' free trade looks like
Part 4:听Why, this time, free trade has hit American workers so hard
Part 5:听What can be done about free trade's 'victims'
