economy · Global economy · Global trends · US Economy

Are manufacturing jobs coming back?

Are jobs coming back ?

Like many others I contribute on Quora and one of the question that has received over 1 million views has been “Will the manufacturing jobs we lost come back to the US”. I felt compelled to write a quick blog post about this topic as the perspective and data is very important for all of us to know. Blog by Ketan Deshpande of MN

The loss …

The common answer to the question “why did we loose a lot of these manufacturing jobs” starts with the fact that companies need to ensure sustainable growth & profitability in order to survive in today’s global and competitive economy. No doubt recent political events such as “US first” approach by the US administration and Brexit are giving rise to Protectionism, which could present companies with new challenges. Today’s global economies are highly complex and dependent on the global scale. Link to blog by Ketan Deshpande of MN

Profitability of companies continues to be challenged by “OUR” ever increasing demand for higher and higher value for money.

“WE” create the demand and a target for what we are willing to pay (based on how we perceive value in the price of the product). If companies manufactured most products in the US then they will have to increase their prices to sustain the manufacturing cost and profitability expectations from the market place (stock market). The same stock market which “WE” are part of, 401K, stock investments, etc.. Here also “WE” expect a high rate of return. Blogger link to Ketan Deshpande of Minnesota

Search for “low manufacturing cost” have been going on for a long time and as economies and companies became more and more globalized the pace of the offshoring accelerated.

Elimination of process steps and/or automation of process step is how the global economies are going … this trends is also happening in China.

Options …

Financial benefit is the primary consideration for companies to consider re-shoring. Most point to “tax reform” as the answer or incentives by States to companies. Let’s look at actual data, remember the Carrier – the governor of the state granted exceptional tax credits to the company to tempt them to stay – 7 million dollars in tax credits and reduced regulations. $5 million is conditional tax credits. To save 1000 jobs.

Here’s How Much Indiana Is Paying to Keep 1,000 Carrier Jobs

What is the catch ….. tax incentives take money out of the tax revenue and allow companies to make more money. That can translate into jobs but it removes revenue within a state for services.

Tax reform with focus on education and building needed skills for the economy of today and tomorrow is the only way we can create and retain jobs in US. Mega trends in the economies such as Industry 4.0, additive manufacturing, IoT, etc. are changing the job landscape rapidly and the entire globe is getting ready to pursue these opportunities. Links to WordPress blog posts by Ketan Deshpande MN

The numbers …

US Census published excellent data on this in late 2016. It shows that, U.S. manufacturing revenue has actually grown from $4 trillion in 2002 to almost $6 trillion in 2014. Meanwhile, in the same time period, the number of people working in manufacturing fell by over 3 million. This suggests that the modern day factory is increasingly automated and needs fewer people to maintain the same output.

Measuring America: Manufacturing in the United States

[Source: U.S. Census Bureau]

Summary …

Some jobs have and will be coming back, how many will be very difficult to predict however we should be focused on how to capitalize on the current and upcoming mega trends to ensure that we create jobs and retain them. We should not distance ourselves from automation and the mega trends, we should embrace them.

Blog post by Ketan Deshpande, Minnesota, MN

2 thoughts on “Are manufacturing jobs coming back?

  1. As I am employed in manufacturing for over 35 years as a CNC machinist , I am going to share my thoughts. Yes less people employed could mean more automaion, but what I’ve experienced is that the demands for my job description over last 15 years alone has increased at least two fold. Meaning , I do the job of at least two people as compared to 15 years ago. More responsibility due to expanded use of computers and other technology as well as just more physical labor is demanded of one at my current level . Also over these years tooling and processes and just better and smart machining techniques have reduced cycle times on parts produced by over 40 percent total in our shop. This is based on my own personal experience comparing cycle times over this time. Also due to better design of said parts the assembly of our main product(CNC machines​) has gone from 20 a day to 52 in just 5 years. We compete world wide and are also based in So Cal which has very high cost of living and above average electricity costs compared to national average. Yes we do have more automaion but in my experience this has helped keep my pay higher as Ive had to learn new programming and manufacturing techniques. But most of the jobs that have been lost,if you will, by a robot have been low pay unskilled jobs that usually would have high turnover rate especially now as younger folks generally aren’t as happy to do that menial job for 3-5 yrs before slowly moved into other tasks to train to be a machinist, which takes many years of hands on and school training. So just plain numbers don’t always show whole picture of how a company that is very profitable actually has to change to compete globally. Also how much I as a higher level machinist has to get trained and stay trained for all the new technology , oh yeah all while working 50 plus hours a week with a family.

    1. Greatly appreciate your comments, I do understand and agree that “jobs” is and will continue to be a challenging topic for all of us in the future. As economies continue to grow and technology evolves, the equation continues to become more and more complicated.

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