Manufacturing decline has benefits


President Barack Obama’s performance in his first debate against Republican presidential candidate Mitt Romney was far from spirited, making the passion Obama expressed for American manufacturing stand out.

Xingzhou Zhu | Daily Trojan

In his proposed revamp of America’s corporate tax rate to improve the economy, Obama promised a big tax cut for American manufacturers, “taking it down to 25 percent.” This cut would be offset by closing tax loopholes across all other lines of business, with additional incentives to bring jobs overseas back home to America, according to The Kansas City Star.

Though generally more robust on tax cuts, Romney supports a similar tax proposal that also promises a 25 percent cut to American manufacturers across the board.

Throughout the presidential race, both Obama and Romney have held America’s declining manufacturing industry accountable for the country’s high unemployment rate and lethargic economic growth. But isolating corporate tax cuts around American manufacturing in an attempt to reinvigorate this dying industry is a colossal mistake.

Giving tax breaks to American manufacturers would be a foolish attempt to bring antiquated 20th-century solutions to a technologically proficient economy. Any candidate who proposes similar tax policies should especially raise concern among students, as they are the voters who have the most to gain or lose from the country’s financial future.

It’s no secret that American manufacturing is decreasing across almost every industry. In the past 20 years, 6.4 million manufacturing jobs have been lost. Today, there are fewer manufacturing jobs than there were in 1955. Outsourcing slashes corporations’ costs to the bone, allowing quantities to soar and prices to plummet. And new advances in technology allow these same benefits to be achieved on American soil.

Though politicians paint this trend as a tragic blow to the working class, the truth is quite the opposite. In fact, the gradual decline of American manufacturing greatly benefits our country — not simply by lowering the price of goods for consumers, but by eliminating subprime jobs from the market.

Contrary to popular belief, phasing out manufacturing jobs actually makes room for more advanced, robust industries offering higher-paying jobs for American workers.

Take the music industry, for example. Though record stores experienced a 76.3 percent decline in revenue from 2000-10, the music industry has far from faded. According to Strategy Analytics’ Global Recording Music forecast, worldwide digital music sales are slated to top $8.6 billion in 2012, the highest amount ever recorded. Overall digital music spending is projected to increase by 17.8 percent this year while packaged sales — mostly audio CDs — are expected to see a 12.1 percent decline.

As a result, new opportunities are flourishing in the digital sales world, event management, social media integration and marketing. And this trend is hardly limited to the music industry.

By 2020, there will be 123 million high-skill, high-paying jobs in this country — but only 50 million Americans with the qualifications to fill them, according to Edward Gordon, an author and former college professor with expertise in workforce issues. Any economic plan that attempts to artificially sustain dying, largely low-skill manufacturing jobs for adults while funneling students into the jobs of the future would be detrimental to society. But even though Trojans and other college students will be prepared for these positions, there will still be millions of jobs left unfilled, sure to result in a net decrease in our nation’s productivity.

Washington’s policies should prepare Americans — from students to adults — for these kinds of jobs, not spending money to sustain an industry that is slowly growing obsolete.

To do this, corporations should receive incentives for providing training for high-skill, high-paying jobs for Americans. Many states already provide monetary benefits to companies that hire American veterans or released convicts. Company- and government-provided resources to help train manufacturing workers for high-skill jobs should be a central point of the next president’s economic policy.

After all, the road to a more prosperous United States lies in technological innovation in fields like software, biotechnology and financial services — not in bringing poor manufacturing jobs back from China.

Companies should not be penalized for having efficient manufacturing procedures overseas. These jobs are not valuable to the American economy, and the government ought to acknowledge this reality.

Any politician’s inability to understand the road to American economic prosperity is troubling. In light of the impending financial future, it’s crucial for students to be clear on America’s manufacturing problems — or, more accurately, the lack thereof.

 

Ryan Townsend is a sophomore majoring in business administration. His column “The Blame Game” runs Tuesdays. 


  • libertyMinded

    think of unemployment as an advance on your retirement

  • Ryan,

    You should be commended. Your article is now making it’s rounds within the manufacturing community and you are quickly becoming the poster child example of where our educational system has dropped the ball as it relates to manufacturing.

    Let’s start with something simple: Take a look at your surroundings right now. EVERY physical thing that you see is MADE. It’s produced by a company somewhere. In fact, take a look around while you’re working at Disney and note some of the engineering that’s there and how intricate some of those mechanical rides are built.

    There is a higher volume of sales in the total amount of physical product than there ever will be in “digital sales world, event management, social media integration and marketing” … What exactly do you think that the bulk of those sales, events and marketing efforts are selling? Primarily something that is MADE. You seem to be promoting a purely service economy which is detrimental to a strong National Security stance where we have the ability to produce things for the DOD. If you do some modicum of research you will find that Admiral Yamamoto’s primary concern in attacking Pearl Harbor in 1941 was the industrial capacity of the US at the time. Manufacturing capacity is a big part of our homeland security.

    You state: “Today, there are fewer manufacturing jobs than there were in 1955” You are indeed correct. In 1955 there where 30 people standing in front of 30 Bridgeport knee mills producing one part at a time on each machine per hour for a total of 30 parts/hour. Today, we have one horizontal CNC (Computer Numerical Controlled) machine producing 30 parts in 30 minutes. These CNC machines require an understanding of Lean Process, computer programming, CAD, CAM, G-code and mechanical engineering to name but a few. None of this is “low skill”. So the foundation of your statement “Any economic plan that attempts to artificially sustain dying, largely low-skill manufacturing jobs” is completely incorrect. Our manufacturing industry in the US has the highest productivity rate in the world per unit of labor. CNC machines can run 24/7 in ‘lights out” environments if the programmer and operator have the technical skill set to make it happen. And ‘skills” are currently what manufacturing lacks…. but more about that later.

    This is not to say that we haven’t probably (permanently) lost a large portion of highly labor intensive work. Several years ago I had the opportunity to listen to the Ambassador from India. He had a rather candid appraisal of the movement of business from country to country. He observed that the Textile industry had moved from England to New England and then to the US south. It was now moving to places like Thailand and VietNam and someday (soon) it would move to Africa because of the high labor requirement. So, to paraphrase John McCain from several years ago “some jobs are not coming back.” So those kids shoe’s that you sold at Nordstom not so long ago will probably continue to be made off-shore unless a disruptive technology changes that labor requirement.

    Perhaps you are not aware of the something called the ‘Reshoring Initiative” started by a gentleman named Harry Moser. Harry has been talking about a concept called “Total Cost of Ownership” for some time and, within several industrial sectors, the TOC values are being considered and manufacturing jobs are indeed coming back the the US. You should ask about that in some of your Business classes.

    You state: “Contrary to popular belief, phasing out manufacturing jobs actually makes room for more advanced, robust industries offering higher-paying jobs for American workers” Back in 1998, I suppose your where about 8 or 9 years old at the time, I was asked to do some research related to rapid prototyping for NASA. I found a new technology that was called “Shape Deposition Manufacturing” That technology is the foundation of what you may know as 3D printing and within the industrial sector is called “Additive Manufacturing” I think, if you did a bit of research, into this particular field of manufacturing, you would find that you may wish to retract your ill informed statement.

    You also stated “…for these kinds of jobs, not spending money to sustain an industry that is slowly growing obsolete” Really? At what point, may I ask, will you not require “things” to be made? Right now it is estimated that there are over 600,000 open jobs in the manufacturing sector that are unfilled. A recent report out of Boston faults employers because the employers claim that the candidates don’t have the minimum skill sets required. That’s not just high school grads but college grads as well..

    Here’s an example. Over 12 years ago I was at the Pacific Coast Machine Tool Expo in Santa Clara and I ran into a young engineer who’s designs I had been looking at over the past several months. I congratulated him on his new job, to which he was surprised that I knew he was new. He explained he had only graduated a few months prior from college. I explained to him that I started to see his name pop up quite bit, to which he proudly puffed out his chest. That is, until I told him that he was costing his company 10,000 of thousands of dollars. You know when you screw a bolt in, that sometime the head of the bolt sits below the surface of the part? That’s called a counterbored hole. This young engineer had changed a part blueprint to require that several counterbored holes now had an 8 RMS finish around the wall that that bolt head nested. What’s an RMS value like that? It’s almost a mirror finish. I asked him why he changed that as it had no affect on part performance and was purely a cosmetic issue that no one would ever see because the part was an internal component of a larger product.. He explained that he merely had to “click the mouse.” I went on to explain to him that his mouse click took the cost of that hole from about a $1.50 drill that could produce 5,000 holes to a $350 tool that could only make about 700 holes and it increased the total cycle time to make the part. He didn’t realize that he admitted. He had never seen a CNC machine in actual operation in school. Therein lies the skills gap that the manufacturing community faces. in Germany, engineers such as this young man, are required to make parts for 2 years prior learning how to design anything.

    Why do we need encourage manufacturing? The short reason is that when you produce products you discover better and more efficient methods of producing products and then the technology transfers to other industries. Several years ago I was visiting a company that made the sails for the America’s Cup boats. You may not realize it but the sails are quite a piece of engineering. How the strands of thread are laced together to provide more strength in some areas while keeping the overall weight low is critical to performance. Making a big sail on a BIG jig and programming all of the CNC controlled sewing is rather complex. The technology that developed out of that was so innovative that when Boeing needed to lay up carbon fiber stranding for the Dreamliner they came to this very same company. Innovation begets innovation. So you see, your commentary “phasing out manufacturing jobs actually makes room for more advanced, robust industries” is very inaccurate: First hand experience over about 10,000 hours enables companies to become more proficient and able to think out of the box and innovate new process’

    I hope you don’t take offense to my comments and I certainly hope you will take the opportunity to research some of the items I discussed here and perhaps view manufacturing in a different light in the future

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  • Joe Doaked

    Ryan, you’re the man. Please ignore this liberal drivel exhibited in the above posts. Mfg jobs ARE low pay, low skill and worthless in comparison to superior tech service jobs like those of Microsoft or Paypal. And for the record, it’s the business administration majors that distribute the loans to small businesses and take entrepreneurial risk in this nation. Mr. Townsend, the silent majority is behind you! Your opinion column is the only one in this paper I actually care to read

    • Schmoe

      “it’s the business administration majors that distribute the loans to small businesses and take entrepreneurial risk in this nation.” that’s why a majority of business majors couldn’t run a lemonaide stand and turn a profit. I spoke to lots of people with business degrees from here and other schools. The ones who seem like they know how to run a business typically are taking over a family business, hence them seeming “like they know how to run a business.” Their families already set in motion a business, and all these people do is perpetuate what already works. How did the business education benefit that?

      Loan officers, bankers don’t need a formal business education per se. Many are trained OTJ. It’s a mechanical, repetitive, and cursory job that’s more contingent on cronyism and politics than smarts. It’s not brain surgery dude.

      And FYI, business degrees such as finance, accounting, HR, marketing, etc. were originally taught at LOWLY for-profit vocational schools e.g. Phoenix, ITT, Devry. G. Washington is correct that it’s an oversaturrated major hence its futility. It’s a shame that some 4-yr. accredited schools consider it a bona fide academic major…yeah right.

      Lastly, go talk to some Marshall alumni who are working minimum wage jobs even after earning 3.5+ GPAs, diligently networking, submitting resumes, etc. I’m sure they’re happy when the alumni center calls, asking them to drop $250 when they’re making 8$/hr scooping ice cream or tearing ticket stubs at movie theaters….And no, I ain’t scooping ice cream or tearing ticket stubs. I’m busting my ass in post-bacc. program because I should’ve had the gumption to pursue this originally instead of business.

  • mike

    Wow Ryan you are truly clueless. YOu do realize the only reason we have stuff on the shelves is because we ar able to export our dollar to get it?? When the dollar stops being the world reserve currency and we can no longer export the dollar for all the products we are going to have MASSIVE price inflation and we will have empty shelves almost until we start our manufacturing.

  • Anonymous

    Dear Ryan Townsend,

    You’re an idiot.

    Sincerely,
    A Non-idiot Marshall Senior

  • G. Washington

    So let me get this straight, you want to give up American manufacturing and the example you use is…the music industry?! And how many people can a country support with thriving music and financial services industries? Manufacturing jobs are not all low skill, low pay jobs. The perpetuation of this myth has decimated the American economy by funneling a whole generation of young people into the college system. This over saturation of people holding worthless degrees (i.e. Business Administration) and with no REAL skills has left the American manufacturing sector without enough skilled labor. The only reason we have the luxury of having a thriving music industry is because of our manufacturing base and deficit financing. Soon enough the music will stop though…