A Driving Force in Recovery
This Contributed Column is brought to you by the International Economic Development Council's 2015 Annual Conference. Join the largest international gathering of economic development professionals in the world. Click here to learn more about this important event.
Economic Development Professionals are a Driving Force in the Revitalization of the U.S Manufacturing Workforce
After years of a decline in manufacturing jobs, a perfect storm is forming over American manufacturing, with both the public and private sectors focusing more on the industry. Even after three decades of declining employment, the United States remains an attractive market, and is still the world‘s leading manufacturer, accounting for $1.4 trillion in goods produced in 2009 and 12 million direct jobs. The growing recognition that the manufacturing sector is critical to our national well-being has helped elevate the revitalization of manufacturing to a top economic priority. Manufacturing is vital to U.S. global competitiveness, serving as major driver of investment in research and innovation, a key draw for foreign direct investment, and source of good jobs.
With technological advancements, disaggregation of the industrial supply chains, and new powerhouse nations challenging U.S. dominance, it had often seemed that manufacturing has entered an inexorable race to the bottom. And all of this was before the onset of the Great Recession, which hit manufacturing faster and harder than many other sectors, impacting 6 million jobs in the U.S. economy. Moreover, while there has been a prevailing image of manufacturing as a hard, dirty, and often dangerous industry, in the 21st century manufacturing has become a highly technical, innovative, dynamic, and networked sector. Indeed, today much of manufacturing requires workers with advanced training and technical skills that enable them to turn out innovative state-of-the-art products and collaborate with colleagues across the supply-chain. Indisputably, these are just the type of jobs that could help American companies remain globally competitive, yet manufacturing firms are struggling to find the skilled workers they need, and the outlook for the future is even more alarming.
As discussed in International Economic Development Council (IEDC)’s recent publication, “Jobs in the Making: Economic Development Strategies to Support Manufacturing”, manufacturing executives ranked their need for talented employees, from scientists to shop floor technicians, as more important than other factors including financing, taxes, transportation, labor rates, or energy costs. Despite the 2010 report from commercial real estate professionals at Cassidy Turley that estimated that roughly 5.5 million Americans today work in manufacturing – more than any other sector in the nation – U.S. manufacturers are rightly concerned about where they will find the skilled technical workforce that is required by modern manufacturing plants. According to Deloitte and Oracle, even during the depths of the Great Recession, a third of manufacturers reported moderate to severe workforce shortages.
Furthermore, the manufacturing workforce is aging, the baby-boomers are retiring, and many observers worry that not enough skilled production workers, engineers and scientists are ready to replace those that will be leaving. When we consider that the average age of a welder is 56, it drives home the 2011 prediction from McKinsey Global Institute that the United States could face a 1.9 million shortfall in technical and analytical workers in the near future. Faced with these challenges, employers are paying higher wages and providing increased opportunities for growth and development in the sector in order to attract and maintain a viable workforce. The importance of the economic development profession within this space often goes under the radar, yet an IEDC survey done to support the research for the “Jobs in the Making: Economic Development Strategies to Support Manufacturing” report found that 92 percent of economic development respondents said they act as liaisons between manufacturers and workforce training providers.
With countries like China, India, Korea, and Brazil growing as manufacturing giants thanks to their cheaper labor costs, less regulation and uncertain trading practices, expectations are that by 2015 all four of these countries will be ranked ahead of the United States in competitiveness for manufacturing. However, their strength is increasingly based on the emergence of domestic markets and is more labor intensive, as opposed to the advanced manufacturing that we are seeing in the U.S. today. Advanced manufacturing in the U.S. requires workers with a higher skill-set that can quickly adapt to changes in innovation and technology. This distinction will help American firms to remain globally competitive, and underscores the opportunity that the U.S. has to capitalize on its manufacturing base and to make it even stronger. Notably, this will require an investment in people and places, and a change in the way people are educated, particularly in terms of technical skills and training.
Ostensibly, the prevailing idea that manufacturing is an undesirable profession has not helped the industry, nor has the high U.S. dropout rate from schools. The national average dropout rate of 33 percent means that a third of the country or more is being eliminated from jobs for the future, and in many firms, you cannot even apply for a job if you do not have a high school diploma. The Boston Consulting Group recently released a report stating that the U.S. stood to gain 3 million jobs in the future as companies return home to meet their manufacturing needs. Be as that may, the successful re-shoring of jobs cannot occur without a skilled U.S. workforce and an innovation ecosystem to support it. The accelerated pace of technological innovation requires a deft and experienced workforce to keep up in this trendsetting industry, and education will be the key to the U.S. maintaining its competitive edge.
Beyond educating the people who influence career decisions—parents, teachers, guidance counselors, local leaders – about opportunities in manufacturing today, economic development professionals can play a role in ensuring that manufacturers find the workers they need. Some of the principle strategies that economic developers are pursuing to address workforce issues and leverage workforce assets in their communities include engaging manufacturers in identifying needed course offerings and updating curriculum at local training institutions, recruiting manufacturers for local workforce investment boards (WIBs), or even using local workforce data to inform existing manufacturers about opportunities in their local labor market.
The IEDC report “Jobs in the Making: Economic Development Strategies to Support Manufacturing”, expounds on these concepts and provides further details on the federal and local resources available to support manufacturing in communities throughout the nation, as well as case studies to demonstrate how others have built the manufacturing capacity of their locality. The report also includes a toolkit for economic developers who are working to support manufacturers in their communities. The report is free to IEDC members and can be purchased by non members for $75. To access this report please go to http://www.iedconline.org/?p=EDRP
Jay C. Moon, CEcD, FM, Chair, International Economic Development Council (IEDC) and President and CEO, Mississippi Manufacturers Association