
What’s going on with American Manufacturing?
Introduction
Historic levels of federal dollars have flowed into our American manufacturing sector. This money has resulted in the largest boom in manufacturing construction in decades. Plants are being built and supply chains are being modified and shortened. New technology in these facilities and updated working conditions have influenced existing plant owners to retool their facilities or risk losing front line workers to newer plants. Couple this with the pandemic response to reshore manufacturing and America could be looking at a coming boom in production, which could even begin to tip the scales of our trade imbalance back in our favor. Regardless, we know that this is the largest post NAFTA investment and could yield increased manufacturing hiring needs as these jobs begin to come online. But these job increases proportional to investments are not guaranteed and could be much less than anticipated, which could dramatically impact manufacturing employment.
Manufacturing Jobs Lost to NAFTA and China
On January 1, 1994 the North American Free Trade Agreement (NAFTA) was kicked into high gear. More than anything else, this prompted manufacturers here in the United States to seek more profitable labor conditions elsewhere. While not intending to diminish production in the States, it nevertheless created an exodus of manufacturing jobs while creating a much more pronounced trade imbalance.
The impact of trade agreements like NAFTA and the rise of free trade with China has led to significant job losses in the American manufacturing sector.
Manufacturing Jobs Lost to NAFTA
According to various studies by the Economic Policy Institute, the enactment of NAFTA resulted in displacement of hundreds of thousands of jobs. From 1993 to 2002, it is estimated that NAFTA displaced production and manufacturing that supported approximately 879,280 U.S. jobs. This was only the beginning.
Jobs Lost to Trade with China
Prior to China joining the World Trade Organization (WTO), outsourcing wasn’t as big of an issue in the United States. While it had begun with NAFTA, it escalated in earnest after China joined the WTO.
This has resulted in an ever increasing trade imbalance with China and led to substantial job losses in the United States.
Of the estimated 3.7 million jobs lost to outsourcing to China, 75% of them were in the manufacturing sector. Computer and electronic parts industry were the hardest hit, losing more than 1.3 million jobs during this time.
(Economic Policy Institute) (Alliance for American Manufacturing) (Alliance for American Manufacturing).
Why Invest in American Manufacturing Employment?
This is a complex question best left to the policy wonks. A consistent refusal to invest in American manufacturing coupled with jobs being outsourced to foreign lands created massive obstacles to domestic manufacturing even prior to the 2008 Great Recession. However, it became apparent to anyone paying attention that change was needed. The Pandemic laid bare too many vulnerabilities created by trade imbalances, long supply chains, and too much of a reliance on foreign sourcing and production for what we need. Add in heated political rhetoric about a lack of domestic manufacturing jobs, lack of competition with technology production, and a need and desire for clean energy competition, and you have incentives to act.
Global competition in the marketplace is only enhanced by controlling sources of production. That can’t be done if our nation’s entire production base is outsourced, especially if our trade alliance with said nations becomes frayed. It stands to reason, then, that manufacturing jobs can be a core function of our economic resilience. Manufactured goods have tangible value that services don’t necessarily hold, long term.
Carbon Emission Reduction and Sustainable Manufacturing Production
A large focus of the federal investments centers on reducing carbon emissions for manufacturers as well as producing the technology and resources necessary to reduce said emissions.
Some of the industries impacted by these investments include:
- Chemicals and Refining
- Cement and Concrete
- Food and Beverage
- Pulp and Paper
- Coal Mines
- microchips
Economic and energy issues became a focus of reinvestment following the Pandemic. Geographic locales of interest centered around areas that could benefit from clean energy upgrades. These investments not only reduce reliance on foreign sources of production of sustainable energy but also create higher paying jobs. The hope is that communities will benefit from more consumer spending, which ultimately is what drives the economy. Businesses will also benefit from local resources and shortened supply chains for things like microchips. This capital investment has already had immediate economic impacts.
Talent Impacts of this Investment and Boomer Drain
The hiring needs as a result of this new manufacturing investment will be significant. It is estimated that 3.9 million new jobs will be created in manufacturing in the next 10 years. However, experts are not confident that there will be enough people needed to fill these new roles. The boomer exodus will create even more talent gaps that require filling. These roles could have been upskilled to meet current standards of machine learning, robotics, and automation. But they will now be filled from scratch with hopes that employers have been developing supply chain and manufacturing talent pipelines.
New plants will be built. Others will be upgraded and upfit for new production standards. More will simply be expanded. The skill sets required will be traditional but will also be some more nuanced roles to include a knowledge of sustainable business practice and implementation of technology and automation.
Key manufacturing roles and hiring needs that could increase include:
- Director of Plant Operations
- Continuous Improvement Director
- Maintenance technicians
- Software developers
- Clean energy jobs
- Chip production and manufacturing in the tech and automotive industries
Specialized manufacturing recruiters will be more in demand as employers seek to build out teams. The need for these services wasn’t as prevalent prior to these investments. However, engaging a supply chain firm that can hire in this space frees up much needed time to continue building out these new business runways. Specialized recruiters have better access to the talent which will be crucial to success and maintaining a competitive edge when the federal investments stop flowing.
Counterpoint: Maybe the Federal Money won’t create a lot of jobs
The $300 billion investment in the manufacturing base may not result in a flood of new jobs, at least not in the proportion that many are forecasting. Technology and automation have streamlined operations in a lot of these plants which means less of a physical human presence. Machinery, hardware, and software will be accounting for a lot of these expenditures. Manufacturing career paths will be created and modified, but how and to what event and proportion remain to be seen.
Nations like Germany and South Korea boast robust manufacturing bases relative to the size of their economy, outpacing our own. However, their share of manufacturing employees has declined precipitously because of the advances in technology. This means that the hires made within this sector could be even more crucial and competitive than previously imagined, making your choice of a talent partner even more important.
Conclusion
Resilience, agility, and sustainability have become new pillars of supply chain management and manufacturing. Your supply chain hiring needs to reflect these shifts in priority and additional pillars of need. Manufacturing is also reflecting this growth and evolution, most especially focused on sustainability skill sets and experience. Domestic manufacturing growth being spurred by massive cash injections from the government will stabilize. We will begin to see a gradual expansion of production and hopefully a more balanced import/export ratio. These gains are not guaranteed to spur proportional job growth. It remains to be seen how much impact will be created and the ripple effects, therein. However, the construction spurred by these investments has already greatly aided in the pandemic economic recovery and helped to bolster consumer spending, driving the American economy. Once these plants are built, however, the key will be how they are staffed and equipped. The new landscape of competition is for talent which will drive economic success into the future.