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MANUFACTURING

1787 Plan of Action (click HERE)

According to the U.S. Bureau of Labor Statistics, “The manufacturing sector is projected to lose 444,800 jobs [by 2029], the most of any sector over the projections decade.  This sector also contains 12 of the 20 industries projected to have the most rapid employment declines.” 

Already, our manufacturing sector has taken an absolute beating.  In the 1940s, more than a third of Americans worked in a factory.  In 1990, that number was 17.2 percent.  In 2018, manufacturing accounted for just 8.5 percent of the jobs in the private sector.

Then there are manufacturing wages, which have fallen.  The U.S. Bureau of Labor Statistics reports that “in 1990, average hourly earnings of production workers in manufacturing ($10.78) were about 6 percent greater than those of production or nonsupervisory workers in the total private sector ($10.20).  By 2018, however, manufacturing workers were earning approximately 5 percent less ($21.54) than their total private sector counterparts ($22.71).”

“On an annualized basis, hourly earnings of manufacturing workers rose by 2.5 percent per year from 1990 to 2018, while private sector average earnings rose by 2.9 percent.  As a result of this disparity in the rate of growth over the period, the level of the two data series converged in July 2006.  Since then, earnings in manufacturing have remained below those of private sector workers, on average.”    

Donald Trump and his trade wars certainly did not improve things for the manufacturing sector, although you would never know it by listening to him.  During his failed reelection campaign, he told the crowd at a Michigan rally, “You better vote for me, I got you so many damn car plants.  And we’re going to bring you a lot more!" 

 

Nope.  In truth, Michigan’s manufacturing sector lost 66,500 workers from July 2019 to 2020 alone.  As you can see from the dates, this was already happening before Covid.  On the 2020 campaign trail in Ohio, Donald said, “Over the last six months, we’ve witnessed one manufacturing miracle after another.”  Nope.  Ohio’s manufacturing sector lost 48,000 workers from July 2019 to 2020.

The manufacturing sector was in a technical recession — which is triggered when output falls for at least six months — for the entirety of 2019 (we're excluding 2020 from this discussion because of the outliers inherent to the Covid disruption).  In 2019, U.S. factory production decreased 1.3 percent, making it the worst year for manufacturing since 2015. 

The PMI, or the Purchasing Managers’ Index — the most common way to measure the health of manufacturing – plummeted.  In December 2019, another popular gauge of the manufacturing sector’s health — a survey of purchasing managers from the Institute for Supply Management — fell to its lowest level since the Great Recession.

These numbers point to a troubling trend, to say the least, which is why we have no time to waste.  Artificially propping up pockets of manufacturing by making things we don’t need will only make the long-term problem worse.  It’s not a solution; it’s a band-aid that will soon be ripped off to reveal a wound that has gotten progressively more infected.  Wouldn’t it make more sense to just proactively solve the problem instead of trying to constantly camouflage it? 

We CAN solve this.  Without question, the United States can once again be a global leader in manufacturing — and both save and create jobs — but our strategy to revitalize manufacturing must be smart and aggressive because we face stiff competition in automation alone.

In a July 2020 survey, Honeywell, a Fortune 100 technology company, found that American companies are planning to increase automation investments, in large part because of the fallout from Covid-19.  The survey found that the e-commerce (66 percent); grocery, food and beverage (59 percent); and logistics (55 percent) industries are the most interested in doing this.  Tyson, the second largest processor of chicken, beef, and pork in the entire world, is moving toward robot butchers, and the car manufacturer BMW is beginning to use automation for its quality control.

 

To succeed, we need to look forward, not backward.  The McKinsey Global Institute — the business and economics research arm of the management consultant firm McKinsey & Company — reminds us that:

“A successful U.S. manufacturing revitalization will not restore 1960s-style mass employment on assembly lines.  But it can raise manufacturing GDP by more than $500 billion annually above the current trend, spurring income growth, new jobs, local investment, and ripple effects across other industries.

The decline of U.S. manufacturing is not solely the result of technology and globalization — and it is not inevitable.  The United States can make policy and investment decisions to change the current trajectory.  But this effort has to be focused on competing in the future rather than recreating the past.”

1787 Plan of Action

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