Are U.S. Manufacturing Jobs Coming Back?

The idea of a renaissance in the U.S. manufacturing industry has been something of a mini-trend in the business press of late.  You could be forgiven for taking the various predictions with a grain of salt, given what we've seen over the past decade—and particularly the one just past. After all, it's common knowledge: the U.S. just doesn't do manufacturing any more, right? It's just too hard for U.S. workers to compete with employees in low cost countries—especially those with less stringent labor laws and protections. Anything else must surely be the result of wishful thinking—right?

As it turns out, there are some very compelling reasons for companies to ramp up production on this side of the Pacific. Whether there's enough evidence to suggest that it's actually happening in any significant numbers is another question, however.

The "Made in America" difference

The pick of the recent pieces on the rebirth of U.S. manufacturing is Charles Fishman's recent examination of the subject for The Atlantic. In it, he charts the revitalization of a manufacturing facility at GE's Appliance Park in Lousiville, Kentucky, and lays out many of the factors behind the company's switch back from China. While many are related to cost (higher oil prices and rising wages in China have eroded many of the benefits of offshoring), one reason stands above the rest: firms that outsource the making of their products risk losing the expertise and ingenuity that made the products—and the companies that make them—successful in the first place. Apple CEO Tim Cook made a similar point when announcing a recent decision to shift more of its manufacturing back to the U.S.: "Honestly it's not so much about price, it's about the skills, etc. Over time there are skills that are associated with manufacturing that have left the U.S. ... It's a concerted effort to get them back." (Quote truncated by source).

That ability to deliver better quality through innovative manufacturing is a theme that also runs through a recent Consulting magazine article titled "Manufacturing's Tipping Point." Examining the issue from the perspective of strategy and supply chain consultants, the piece is also bullish about U.S. manufacturing's future, but with one key caveat: there is currently a shortage of workers with the skills to take up the type of highly-skilled manufacturing jobs that are likely to exist in this country in the future—jobs such as "machinists, operators, craft workers, distributors and technicians." 

By the numbers

That same Consulting article noted that a recent report conducted by Deloitte and the Manufacturing Institute "found that U.S. manufacturers could not fill as many as 600,000 skilled positions last October (when the unemployment rate was higher)"—a figure that suggests that there is indeed a strong future within manufacturing for those who can gain the necessary skills and experience. 

However, it's also important to note that none of the commentary on the subject is suggesting that we'll be returning to anything like manufacturing's 1970's heyday, when the industry employed more than 19 million workers in the U.S.

For an idea of how rapidly the industry has declined in the last decade or so, consider that in January 2000, almost 17.3 million U.S. workers were employed in the manufacturing industry. Today, that figure sits at just under 12 million—a fact that in itself is something of a success story, given that the industry has actually added around 500,000 jobs since it hit its post-war low point of 11.4 million jobs at the beginning of 2010. 

The answer to the question in the title, then, seems to be two-fold. While the future of U.S. manufacturing undoubtedly seems brighter, it's something of a misnomer to suggest that jobs are "coming back." Rather, what seems to be happening is that the industry is becoming leaner, more innovative, and much more technologically driven. The jobs that will be available in that industry—and the skills required to do them—are not the same as those that disappeared since the turn of the millennium. While the downside is that they won't replace the sheer number of lost jobs, the upside is a serious one: they're also far less likely to be outsourced in the future.