Why U.S. Manufacturing Won't Die
WSJ ^ | July 3, 2003 | CLARE ANSBERRY
Staff Reporter of THE WALL STREET JOURNAL
Posted on 07/04/2003 12:25 AM EDT by edsheppa
http://www.freerepublic.com/focus/f-news/940250/posts What role will U.S. manufacturing play in the national and global economies in the coming years? What jobs will be left for American workers?
It's more than an academic question for many company owners. Stan Donnelly, who owns Donnelly Custom Manufacturing Co. in Minnesota, is studying Mandarin in case he has to move his machines to China. Already, he buys molds from China to make his custom-designed plastic parts. To date, Mr. Donnelly has been able to keep production of those parts in the U.S. But as his customers increasingly demand lower prices, he wonders if he will one day need to move production to Asia as well.
Many experts believe that the pattern of past years will continue -- that low-skilled jobs making lower-value, mass-produced items will keep migrating to countries where labor is plentiful and cheap, while manufacturing in industrial nations, such as the U.S., Japan and Western Europe, will center on complex, value-added products and systems. Demand for more sophisticated luxury cars and ever-more elaborate communication systems will keep fueling highly automated machinery and processes. Many of those higher-margin, technology-intensive production will remain in the U.S., and should help keep jobs here becoming steadily better, safer and higher paid than in earlier generations.
Other jobs serving certain protected markets, like medical instruments that are carefully monitored and require collaboration between doctors, hospitals and producers, should also remain, as will those involved with making something big and bulky, like kitchen cabinets that are costly to ship, or perishable items like frozen food and bread.
"There's not enough boats in the world to bring all that Americans want into the U.S.," says W.R. Timken Jr., chairman of the century-old maker of bearings as small as marbles or big enough for a person to walk through. His company has operations all over the world, but still needs plants in the U.S. to make bearings for cars, trucks, helicopters and X-ray machines made here.
Demand will also escalate for basic goods like washing machines, cars and telephones in parts of the world where many people have never had them before. That will keep global assembly lines humming, as well as fueling demand for ever-more automated systems to operate them more efficiently.
In short, demand for manufacturing will remain robust for both the developed and developing world, concluded a two-year study by the Manufacturers Alliance, a public policy and business research group in Arlington, Va. "Every industry has certain pieces of manufacturing that will shift abroad, but also pieces that will remain in the U.S. because they embody high technology within that product," says Daniel Meckstroth, chief economist with the Manufacturers Alliance. "Over time it will evolve."
That isn't to say higher-skilled jobs won't also move overseas eventually. Already work forces in some developing nations are upgrading their skills and winning contracts to produce higher-end products. At the same time, the wage gap will continue to narrow as workers in developing nations grow more prosperous and develop a taste for a better standard of living.
So, what is likely to pull manufacturing overseas in coming decades? Cheap and available energy. Signs of such a trend are already here: Aluminum producer Alcoa Inc. is building a smelter in Iceland because of cheap hydroelectric power. The same plentiful power has attracted interest from Russian Aluminum and Alcan.
What will ensure U.S. manufacturing's future is innovation, just as it has in the past. A sheet of glass made by Pittsburgh-based PPG Industries Inc. is now self-cleaning, its coating breaks down and loosens organic dirt, which means less work for cleaning-averse consumers. The average car contains between 200 and 300 types of steel designed to be lighter for better fuel efficiency, yet strong enough to protect a passenger. In a decade, there will be yet more composite materials.
Beyond automobiles, even clothes and computers will be increasingly customized. It will require tremendous flexibility to innovate and get a product to the market quickly, as well as to integrate new technology and processes.
The U.S. will undoubtedly continue to lose jobs in areas like textiles, where both labor and materials are plentiful overseas. But positions in computer and mathematical occupations are expected to increase 29% in the coming decade.
Other hot jobs are expected to focus on industrial automation equipment, such as robotics. The U.S. Department of Labor projects that those jobs will grow faster than the economy as a whole and, in particular, even exceed growth in manufacturing. Toys and sporting goods, drugs, garden machinery, motor vehicles, metal coating and screw machine products, bolts and rivets industries are all in the top 25% manufacturing industries for both productivity growth and job growth, the Labor Department says.
In fact, U.S. manufacturers are increasingly worried about a serious projected shortage in skilled machinists and other factory workers.
That kind of demand will continue to make blue-collar life not only better, but also more critical to the health of the nation's economy. As Mr. Donnelly, the owner of the small Minnesota manufacturer, notes, a brilliant idea is worthless unless it can be made into something tangible and distributed. "That is what drives the economy and wealth of a society," he says.
Write to Clare Ansberry at
clare.ansberry@wsj.com whether you like it or not the Joe Lunchpails of this country are getting scared and they want something done to bring back the jobs. If GWB won't or can't they will vote ofr someone else. And stories like this only feed this.