The latest numbers on manufacturing are encouraging. Now accounting for nearly 12% of our GDP (up from a low of 11% in 2009), the positive trend has many people – though not all – talking about a rebound for U.S. manufacturing. Here’s a look at both sides of the debate.
According to GE CEO Jeff Immelt, “We are probably the most competitive, on a global basis, than we’ve been in the past 30 years” when it comes to manufacturing. Immelt and other “renaissance” advocates base that opinion on factors such as:
- Rising factory output - Figures from February show that the January decline was reversed, with output rising nearly a full percentage point.
- Lower labor costs - As the cost of labor falls here, and continues to rise in China, American companies are “re-shoring” jobs.
- The natural gas boom - An abundant supply of natural gas means lower energy costs – and higher profit margins – for U.S. manufacturers.
Industry pundits holding opposite views concede the current upswing in some numbers. But Goldman Sachs economist Jan Hatzuis writes in a recent economic report that although “. . . the manufacturing sector should continue to grow a bit faster than the overall economy . . . the main reason is likely to be a broad improvement in aggregate demand rather than a structural U.S. manufacturing renaissance.” Other challenges to the “rebound” scenario include:
- Export performance – Hatzius notes in his report that, “Measured productivity growth has been strong, but U.S. export performance – arguably a more reliable indicator of competitiveness—remains middling at best.”
- Number of jobs - Yes, there are currently 600,000 vacant U.S. manufacturing jobs, unfilled mostly due to a lack of skilled workers. But as technological advances continue, critics argue that the number of jobs will actually decrease as robots and other automation take over.
- Job insecurity - Manufacturing jobs are among the most vulnerable to business cycles. In fact, the unemployment rate for blue collar jobs during the most recent economic crisis was more than three times that of professionals (14.6% versus 4.1%).
President Obama and the Alliance for American Manufacturing recently released a plan to help support U.S. manufacturing that includes tactics such as keeping trade laws strong, reducing the trade deficit, supporting “buy American” initiatives and improving vocational/technical training. Even with all that support, however, people may have to adjust their vision of what a successful manufacturing industry looks like. “Yes, manufacturing is coming back, but it’s evolving into a very different type of animal than the one most people recognize today,” says James Manyika, director of McKinsey Global Institute, in his recent in-depth study entitled “Manufacturing the Future.”
Bayside Solutions offers the many options to meet your manufacturing staffing needs, no matter what the market looks like. From contract to contract-to-hire to direct placement, we deliver highly qualified, pre-screened professionals to manufacturing companies in the Bay Area and beyond. Contact us today to learn more.