Washington, DC (International Economic Development Council, 2011):  This report explores the evolution of the manufacturing sector and what communities can do to foster its viability. It combines high-level discussions of important market trends with nuts-and-bolts guidance on what those trends mean for local communities that are working to protect and grow manufacturing jobs.  Click here for a downloadable copy of the report.

Manufacturing is Viable and Vital

Pundits have been predicting the total demise of manufacturing in developed countries for decades. As labor-intensive assembly work moved to regions of the globe with low wages and few worker protections, it often seemed that manufacturing had entered an inexorable race to the bottom. Manufacturing employment in many developed nations fell, manufacturing communities were ravaged, and many talented young people no longer saw manufacturing as an appealing career.

All of this was before the onset of the Great Recession, which hit manufacturing faster and harder than many other sectors. Yet even after 30 years of declining employment, the United States remains the world's leading manufacturer and accounts for $1.4 trillion in goods produced in 2009 and 12 million direct jobs.

Even as many developing nations have become major global players, a number of developed nations have remained manufacturing powerhouses. Pressured by an integrating and dynamic global marketplace, manufacturing in developed nations is experiencing a dramatic transformation into a more high-tech, nimble, and innovative sector.  The perception that manufacturing in developed nations is dead lingers, but writing off the sector would be a grave mistake.

New York (New York Times, January 21, 2012):  When Barack Obama joined Silicon Valley's top luminaries for dinner in California last February, each guest was asked to come with a question for the president.  But as Steven P. Jobs of Apple spoke, President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.  Why can't that work come home? Mr. Obama asked.  Mr. Jobs's reply was unambiguous. "Those jobs aren't coming back," he said, according to another dinner guest.

The president's question touched upon a central conviction at Apple. It isn't just that workers are cheaper abroad. Rather, Apple's executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that "Made in the U.S.A." is no longer a viable option for most Apple products.

Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.

However, what has vexed Mr. Obama as well as economists and policy makers is that Apple — and many of its high-technology peers — are not nearly as avid in creating American jobs as other famous companies were in their heydays.

Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s. Many more people work for Apple's contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple's other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.

"Apple's an example of why it's so hard to create middle-class jobs in the U.S. now," said Jared Bernstein, who until last year was an economic adviser to the White House.

"If it's the pinnacle of capitalism, we should be worried."

Washington, DC (Brookings Institution, February 22, 2012): According to a recent forum conducted by the Metropolitan Policy Program of the Brookings Institution, manufacturing matters to the United States because it provides high-wage jobs, commercial innovation (the nation's largest source), a key to trade deficit reduction, and a disproportionately large contribution to environmental sustainability. The manufacturing industries and firms that make the greatest contribution to these four objectives are also those that have the greatest potential to maintain or expand employment in the United States. Computers and electronics, chemicals (including pharmaceuticals), transportation equipment (including aerospace and motor vehicles and parts), and machinery are especially important.  Click here for a downloadable copy of the report.

Productivity and wages vary greatly within as well as between industries. In any industry, manufacturers that are not already at the top have room to improve their performance by adopting "high-road" production, in which skilled workers make innovative products that provide value for consumers and profits for owners.

American manufacturing will not realize its potential automatically. While U.S. manufacturing performs well compared to the rest of the U.S. economy, it performs poorly compared to manufacturing in other high-wage countries. American manufacturing needs strengthening in four key areas:

• Research and development.
• Lifelong training of workers at all levels.
• Improved access to finance.
• An increased role for workers and communities in creating and sharing in the gains from innovative manufacturing.

These problems can be solved with the help of public policies that do the following:

• Promote high-road production.
• Include a mix of policies that operate at the level of the entire economy, individual industries, and individual manufacturers.
• Encourage workers, employers, unions, and government to share responsibility for improving the nation's manufacturing base and to share in the gains from such improvements.

New York (Deloitte, February 23, 2012):As most U.S. manufacturers look to regain momentum in the wake of the global economic crisis, they face some well-documented challenges – starting with talent. For many, this isn't news. For years, manufacturers have reported a significant gap between the talent they need to keep growing their business, and what they can actually find. So Deloitte Consulting LLP and the Manufacturing Institute recently commissioned a survey to dig deeper into this stubborn trend, asking U.S. manufacturing leaders questions such as:

What impact is the skills gap having on company performance?

How is it evolving in the face of continued economic and competitive challenges?

Which manufacturing jobs are being affected the most?

What does the future of talent look like? What trends are manufacturers preparing for today – and how?

A look at our results turns up some surprising insights into the talent gap and how surveyed manufacturers are responding. Here are some highlights in addition to those included in the accompanying graphic that should be of interest to anyone whose business is affected by the fortunes of U.S. manufacturers.[1]

Among the hardest jobs to fill are those that have the biggest impact on performance.

Shortages in skilled production jobs such as machinists, operators, craft workers, distributors, technicians, and more are taking their toll on manufacturers' ability to expand operations, drive innovation, and improve productivity. Seventy-four percent of respondents indicated that workforce shortages or skills deficiencies in skilled production roles are having a significant impact on their ability to expand operations or improve productivity. Unfortunately, these jobs require the most training and are traditionally among the hardest jobs to find existing talent to fill.

High unemployment isn't making things any easier.

There's no way around it: respondents report, on median, that 5 percent of their jobs remain unfilled simply because they can't find people with the right skills. Translated to raw numbers, this means that as many as 600,000 jobs are going unfilled – a remarkable fact when the country is facing an unemployment rate that hovers around 9 percent.[2] Respondents report that the national education curriculum is not producing workers with the basic skills they need.