Tuesday, May 22, 2012

Manufacturing, Education, and the Future of the US Economy

There were a few recent articles that provided positive facts about manufacturing in the US, but these positives both came with a specific warning.

Hal Weitzman provided an article in the Financial Times that discussed the recent trend towards reshoring of manufacturing jobs and production back into the US. The focus was on new manufacturing operations in general, and, in particular, on the effort by an outfit called Element to make a go of manufacturing large-scale television sets in the US. Weitzman details the costs and benefits of local manufacture and explains the issues that Element faced in generating a successful operation. One of the problems encountered was quite disturbing.

"The company faced another barrier to reshoring: the lack of skills in the US. It came up with an ingenious solution, bringing workers from factories in China to the US for one month to train their American counterparts."

"Other US manufacturers may not be able to copy that idea. The sector has 600,000 unfilled positions because of a lack of qualified skilled workers, according to a report by Deloitte, the consultants, and the National Association of Manufacturers. "There is certainly a question that the lack of skills could hamper the short-term reshoring efforts," says Deloitte’s Craig Giffi."

Our high schools and colleges are cranking out millions of graduates who face the prospect of unemployment or underemployment, and yet our manufacturing sector is hampered by a lack of skilled applicants! What is going on?

A second article from the University of Michigan’s Ross School of Business elaborates on the state of manufacturing and its need for trained employees. It reports on results from a study performed by some of its staff.

"The potential gains are huge, and manufacturing still is ripe for a rebound. U.S. factories produce about 75 percent of what the country consumes, according to the study. The right decisions by both business and political leaders could push that to 95 percent. The wrong decisions could drive it below 40 percent. Manufacturing directly accounts for 11 percent, or $1.47 trillion, of U.S. GDP. That rises to 15 percent of GDP when including economic activity directly linked to manufacturing."

One of the issues that business and political leaders must deal with if this potential growth is to be realized is a lack of appropriately trained individuals.

"An issue that looms particularly large in the U.S. is finding technically trained production workers such as machine operators and maintenance specialists. Low-skill jobs may be disappearing, but high-skill ones are not. Since 1980 the number of high-skill manufacturing jobs in the U.S. has increased by about 40 percent despite a drop in total manufacturing employment."

"The U.S. risks becoming a country with wide divergence between rich skilled workers and poor unskilled workers, Hopp says. Industry leaders surveyed by the study's authors confirmed that technically savvy production workers are hard to find in the U.S. but are more abundant in other countries."

An explanation is suggested for why we cannot provide the necessary workers.

"But other countries have caught up and passed the U.S. in education. American preoccupation with college preparation has marginalized vocation education and industrial arts programs, according to the study. To meet future employment needs, schools must recover their vocational training roles and also become more adept at vocational guidance to ensure that young people realize the diverse career paths in manufacturing."

"’If you talk about manufacturing long enough, all roads eventually lead to education,’ Hopp says. ‘A huge determinant of how many manufacturing jobs remain in the U.S. will be our ability to create a skilled workforce’."

Many countries provide alternate educational paths for their children. At some point they are encouraged, or coerced by rigid testing standards, to follow either a university-bound path or a vocational path. In our school system one graduates from high school and either goes to a college or is pushed out onto the street. It doesn’t have to be that way.

Neither article emphasized sufficiently the role that the manufacturing industry must play in addressing this issue. It is easy to blame our educational system for not providing competent machine operators, but can a single school system really be expected to address all the various and specific needs of such a diverse sector of the economy? Only industry itself can provide the trainers and the tools to be trained on.

Our politicians should be willing to fund and organize such a nationwide training path with subsidized industry participation. It will not work unless there is someone waiting to employ the successful trainee. And it will be cheaper than supporting an unemployed person for the rest of their lives.

Not every child should be vectored towards a four-year college. We would be better off if the marginally interested had some other form of education, and the motivated and capable students were provided better opportunities to get the advanced degrees and skill sets that the economy is demanding today.

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