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By: Bob Carville
Via: Daily Local News
UWCHLAN, PENNSYLVANIA — More than 40 Chester County businesses, health care and educational institutions and non-profit organizations Thursday joined Chester County Commissioners to launch what organizers say is a unique public-private partnership.
The goal is to help guide economic development efforts in Chester County for the next 10 years.
The guiding philosophy of initiative, VISTA 2025, will be “to maintain a balance between progress and preservation that ensures continued economic prosperity while protecting the valuable natural resources that define Chester County,” a news release from the Chester County Economic Development Council says.
Officials said the effort dovetails with the county’s comprehensive land-use plan, Landscapes II, which calls on civic leaders to develop an over-arching economic vision for the county to prosper while preserving its endearing characteristics. It addresses growth management and preservation strategies in collaboration with public, private and corporate citizens.
“VISTA 2025 seeks to maintain and build upon Chester County’s position as one of the leading counties in the country in areas such as best place to raise a family, health of its citizens, household income, low unemployment, and a range of other demographic and economic data,” the news release explains. “The last few decades have seen the emergence of a strong, vibrant and diversified Chester County economy, an economy that VISTA 2025 seeks to maintain in the future. That economy has brought family sustaining jobs to the County and provided the resources needed to support a high quality of life in terms of open space preservation and other amenities.”
Commissioners’ Chairman Ryan Costello attended Thursday’s news briefing for the partnership he will co-chair. The name VISTA 2025 was selected because it serves as an acronym for the elements of the strategy process: Vision, Ideas, Strategy, Teams, Actions. The word vista also describes a view of the distance, in this case looking and planning for the future of Chester County’s economy, organizers say.
“VISTA 2025 will enable us to put in place a coordinated strategy to maintain a strong county economy now and in the future, while ensuring we preserve the natural resources that make Chester County such an attractive location to live, work, and operate a business,” Costello wrote in a news release.
“Chester County is ranked as the No. 1 county in Pennsylvania in a number of areas, including the health of our residents, percentage of residents with bachelor’s and graduate degrees, median household income, and wages. Our goal is to take advantage of the opportunity to build on our competitive strengths, identify emerging economic trends, and renew our focus on work force development efforts in key sectors to enhance continued economic growth in Chester County.”
The VISTA 2025 initiative is being coordinated by the Chester County Economic Development Council, a private, nonprofit, economic development organization promoting smart growth in Chester County and the surrounding region. To help guide the process the council has hired TIP Strategies, a nationally recognized consulting firm that focuses on strategic economic development planning. The project is being funded through a combination of public and private contributions.
Tom Fillippo, president of Devault Foods, is also a VISTA 2025 co-chair.
“This is an exciting opportunity where the private and public sector are working together toward a common goal of ensuring Chester County has a strong economy represented by diverse sectors that will enable the region to withstand economic downturns and events that may impact specific sectors,” Fillippo wrote. “This is not just about maintaining Chester County’s high rankings in various economic areas, it is also about positioning the county for the future.”
Organizers say VISTA 2025 will:
• examine trends that are likely to impact Chester County’s economy in the next decade;
• identify opportunities and strategies to leverage the county’s many significant assets;
• identify locations for future economic development;
• determine incentives and tools that would assist with attracting investment;
• examine existing policies or regulations that may create barriers to desired growth; and
• look at how Chester County can best manage its existing talent and work force skills.
Community input is an integral part of the process and will be generated through out the preparation of the economic development strategy, organizers said. Key business, agricultural and nonprofit sectors will be solicited for input and views through a series of targeted focus groups.
As information, opinions, and data are collected and analyzed, the public will have opportunities to comment on draft recommendations on the VISTA 2025 economic development strategy.
In addition, a VISTA 2025 Website will be established to share updates with and solicit input from the public and stakeholders. Primary work on the VISTA 2025 economic development strategy will take place over the spring and early summer 2014 with an anticipated completion in mid to late summer.
By: Rob Sentz
Click here to see the interactive map
Which industries are the top drivers of job growth for each of the 100 largest U.S. markets? Which metros have added the most jobs post-recession? Which metros have the biggest concentration of jobs in healthcare, technology, construction, manufacturing, energy and other top fields?
The U.S. economy is composed of hundreds of industries that are spread across thousands of counties, and the interactions of these industries are huge engines for job formation and economic prosperity.
CareerBuilder and EMSI have teamed up to create a powerful interactive map that applies big data to visualize the enormous size, scope and diversity of the U.S. economy. The map uses EMSI’s rich labor market database of over 90 national and state employment resources to identify key industries that are driving job growth for the 100 most populous U.S. metros. 1
Viewers can click on each metro and the map reveals 10 of the most important detailed industries for that location, based on number of 2013 jobs, job growth since 2010 and job concentration. From well-known economic forces (e.g., finance in New York City and aerospace products and parts manufacturing in Seattle) to emerging sectors (e.g., motor vehicle body and trailer manufacturing in Nashville and data processing and hosting in San Antonio), the map provides comprehensive – and often surprising – insights.
Viewers can also click on an industry menu to see a list of metros where a specific industry is a major economic driver.
“Since 2010, the national workforce has grown four percent, but more than 40 large metros have eclipsed the national growth rate,” said Matt Ferguson, CEO of CareerBuilder. “These are metros with a strong concentration of computer systems design, software publishing and data processing and hosting firms. These are metros benefiting from the resurgence in U.S. manufacturing, and the nation’s need to find new energy sources and expand healthcare services.”
In a separate study of the same 100 metros, CareerBuilder and EMSI discovered which metros have added the most jobs per capita post-recession:
1. Salt Lake City, UT – added over 62,000 jobs since 2010, up 9% (534 new jobs per 10,000 people)
Originally a farming community, Salt Lake City has grown into an industrial center for the state. Industries that have experienced strong job growth in this metro include electronic shopping and mail order houses (up 43%), software publishing (up 28%), specialized freight trucking (up 23%) and credit intermediation (up 22%).
2. Grand Rapids-Wyoming, MI – added over 39,000 jobs since 2010, up 10% (513 new jobs per 10,000 people)
This manufacturing heavyweight has benefited from the rebound of production jobs after the recession. The metro saw job increases in various manufacturing segments such as plastics product (up 35%), motor vehicle parts (up 33%), metalworking machinery (up 30%) and office furniture (up 12%). Hospitals also accounted for an upswing in jobs (up 16%).
3. San Jose-Sunnyvale-Santa Clara, CA – added over 91,000 jobs since 2010, up 10% (498 new jobs per 10,000 people)
It’s no surprise that software publishing (up 30%), computer systems design (up 19%), data processing and hosting (up 16%), computer manufacturing (up 12%) and scientific research (up 9%) are big contributors to employment for this Silicon Valley metro.
4. Austin-Round Rock- San Marcos, TX – added over 90,000 jobs since 2010, up 11% (488 new jobs per 10,000 people)
Austin has made a name for itself as a technology and business hub, fueling job growth in management, scientific and consulting services (up 35%), computer systems design (up 35%), data processing and hosting (up 35%) and semiconductor manufacturing (up 17%).
5. Houston-Sugar Land-Baytown, TX – added over 281,000 jobs since 2010, up 10% (451 new jobs per 10,000 people)
Energy-rich Houston continues to see job growth in utility system construction (specifically, oil and gas pipeline, up 45%), mining support (up 38%), metal and mineral (except petroleum) wholesalers (up 31%), oil and gas extraction (up 25%), and architectural and engineering services (21%).
6. Nashville-Davidson-Murfreesboro-Franklin, TN – added over 71,000 jobs since 2010, up 9% (432 new jobs per 10,000 people)
A popular music center, Nashville saw a 25% increase in jobs for independent artists, writers and performers. The metro also saw notable jumps in jobs for motor vehicle manufacturing (up 61%), accounting services (up 37%), general freight trucking (up 17%) and specialty hospitals (up 15%).
7. Provo-Orem, UT – added over 24,000 jobs since 2010, up 12% (427 new jobs per 10,000 people)
The mid-sized Utah metro is well concentrated in a number of fast-growing tech industries: software publishing (up 51%), computer systems design (up 30%) and semiconductor manufacturing (up 14%).
8. Dallas-Fort Worth-Arlington, TX – added over 267,000 jobs since 2010, up 9% (400 new jobs per 10,000 people)
Part of the Silicon Prairie, Dallas saw a boost in jobs in computer systems design (up 32%) and communications equipment manufacturing (up 18%). Other key growth areas include oil and gas extraction (up 27%), office administration (up 22%) and credit intermediation (up 13%).
9. Bakersfield-Delano, CA – added 33,000 jobs since 2010, up 11% (394 new jobs per 10,000 people)
Growth in this metro has been fueled by agriculture-related industries such as crop production (up 14%) and dairy product manufacturing (up 11%). Bakersfield has also benefited from an upswing in utility system construction (specifically, oil and gas pipeline), an industry that has more than doubled in employment since 2010 and is nearly seven times as concentrated in Bakersfield than the national average.
10. Charlotte-Gastonia-Rock Hill, NC-SC – added over 70,000 jobs, up 8% (381 new jobs per 10,000 people)
In addition to spectator sports (up 37%), this metro also experienced growth in tech-related industries such as telecommunication carriers (up 31%), management, scientific and consulting services (up 22%), scheduled air transportation (up 17%) and data processing and hosting (up 14%).
Meanwhile, the poorest-performing labor markets are in Scranton–Wilkes-Barre and Albuquerque, both of which have roughly the same number of workers today as they did in 2010. Ten other metros, headlined by Providence, Dayton, and Syracuse, have only grown 1 percent.
The map also reveals pockets of the U.S. where key industries are clustered among the largest cities:
Oil and gas extraction is a major driver of high-wage job growth in Texas, Oklahoma and the surrounding region. It’s also becoming a driver of job growth in Denver.
General freight trucking is concentrated in the Mid-Atlantic and Southeast (Nashville, Memphis, Jacksonville, etc.), where transportation routes are plentiful and huge population centers are in close range.
Software publishing has a big presence in Silicon Valley, but is also growing in major markets such as Seattle, Boston, Atlanta and Denver.
General medical and surgical hospitals are driving jobs in Columbus, Chicago, Baltimore, Boston, Rochester and St. Louis, among others.
Highway, street and bridge construction has seen an uptick in jobs in Baton Rouge, Oklahoma City and San Antonio as cities rebuild after natural disasters and address other public concerns.
CareerBuilder and EMSI are national leaders in providing labor market data and tools to dig deeper and better understand national and local economies.
1 EMSI data is collected from more than 90 federal and state sources, such as the U.S. Bureau of Labor Statistics, the U.S. Census Bureau, and state labor departments. EMSI removes suppressions often found in publicly available data and includes proprietors, creating a complete picture of the workforce.
Economic Modeling Specialists Intl., a CareerBuilder company, turns labor market data into useful information that helps organizations understand the connection between economies, people, and work. Using sound economic principles and good data, we build user-friendly services that help educational institutions, workforce planners, and regional developers build a better workforce and improve the economic conditions in their regions. For more information, visit www.economicmodeling.com.
CareerBuilder is the global leader in human capital solutions, helping companies target and attract great talent. Its online career site, CareerBuilder.com®, is the largest in the United States with more than 24 million unique visitors, 1 million jobs and 50 million resumes. CareerBuilder works with the world’s top employers, providing resources for everything from employment branding and talent and compensation intelligence to recruitment solutions. More than 10,000 websites, including 140 newspapers and broadband portals such as MSN and AOL, feature CareerBuilder’s proprietary job search technology on their career sites. Owned by Gannett Co., Inc. (NYSE:GCI), Tribune Company and The McClatchy Company (NYSE:MNI), CareerBuilder and its subsidiaries operate in the United States, Europe, South America, Canada and Asia. For more information, visit www.careerbuilder.com.
By: Edward Wyatt
Via: The New York Times
CHATTANOOGA, Tenn. — For thousands of years, Native Americans used the river banks here to cross a gap in the Appalachian Mountains, and trains sped through during the Civil War to connect the eastern and western parts of the Confederacy. In the 21st century, it is the Internet that passes through Chattanooga, and at lightning speed.
“Gig City,” as Chattanooga is sometimes called, has what city officials and analysts say was the first and fastest — and now one of the least expensive — high-speed Internet services in the United States. For less than $70 a month, consumers enjoy an ultrahigh-speed fiber-optic connection that transfers data at one gigabit per second. That is 50 times the average speed for homes in the rest of the country, and just as rapid as service in Hong Kong, which has the fastest Internet in the world.
It takes 33 seconds to download a two-hour, high-definition movie in Chattanooga, compared with 25 minutes for those with an average high-speed broadband connection in the rest of the country. Movie downloading, however, may be the network’s least important benefit.
“It created a catalytic moment here,” said Sheldon Grizzle, the founder of the Company Lab, which helps start-ups refine their ideas and bring their products to market. “The Gig,” as the taxpayer-owned, fiber-optic network is known, “allowed us to attract capital and talent into this community that never would have been here otherwise.”
Since the fiber-optic network switched on four years ago, the signs of growth in Chattanooga are unmistakable. Former factory buildings on Main Street and Warehouse Row on Market Street have been converted to loft apartments, open-space offices, restaurants and shops. The city has welcomed a new population of computer programmers, entrepreneurs and investors. Lengthy sideburns and scruffy hipster beards — not the norm in eastern Tennessee — are de rigueur for the under-30 set.
“This is a small city that I had never heard of,” said Toni Gemayel, a Florida native who moved his software start-up, Banyan, from Tampa to Chattanooga because of the Internet speed. “It beat Seattle, New York, San Francisco in building the Gig. People here are thinking big.”
But so far, it is unclear statistically how much the superfast network has contributed to economic activity in Chattanooga over all. Although city officials said the Gig created about 1,000 jobs in the last three years, the Department of Labor reported that Chattanooga still had a net loss of 3,000 jobs in that period, mostly in government, construction and finance.
EPB, the city-owned utility formerly named Electric Power Board of Chattanooga, said that only about 3,640 residences, or 7.5 percent of its Internet-service subscribers, are signed up for the Gigabit service offered over the fiber-optic network. Roughly 55 businesses also subscribe. The rest of EPB’s customers subscribe to a (relatively) slower service offered on the network of 100 megabits per second, which is still faster than many other places in the country.
Some specialists say the low subscriber and employment numbers are not surprising or significant, at least in the short term. “The search for statistical validation of these projects is not going to turn up anything meaningful,” said Blair Levin, executive director of Gig.U, a high-speed Internet project that includes more than three dozen American research universities. Mr. Levin cited “Solow’s paradox,” the 1987 observation by Robert M. Solow, a recipient of the Nobel in economic science who wrote that “you can see the computer age everywhere but in the productivity statistics.”
Such is the case with many new technologies, Mr. Levin said. No one is going to design products that can run only on a one-gigabit-per-second network if no such networks exist, he said. But put a few in place, he added, and soon the supply of applications will drive a growing demand for the faster connections.
Chattanooga’s path to Gig City is part of a transformation that began long before most Americans knew the Internet existed. Named America’s most-polluted city in 1969 because of largely unregulated base of heavy manufacturing, Chattanooga has in the last two decades cleaned its air, rebuilt its waterfront, added an aquarium and become a hub for the arts in eastern Tennessee. In more recent years, an aggressive high-tech economic development plan and an upgrade of the power grid by EPB moved Chattanooga toward the one-gigabit connection.
In 2009, a $111 million federal stimulus grant offered the opportunity to expedite construction of a long-planned fiber-optic network, said David Wade, chief operating officer for the power company. (EPB also had to borrow $219 million of the network’s $330 million cost.) Mr. Wade said it quickly became apparent that customers would be willing to pay for the one-gigabit connection offered over the network.
Chattanooga has been joined in recent years by a handful of other American cities that have experimented with municipally owned fiber-optic networks that offer the fastest Internet connections. Lafayette, La., and Bristol, Va., have also built gigabit networks. Google is building privately owned fiber systems in Kansas City, Kan.; Kansas City, Mo.; and Austin, Tex., and it recently bought a dormant fiber network in Provo, Utah.
The systems are the leading edge of a push for ever-faster Internet and telecommunications infrastructure in a country that badly lags much of the world in the speed and costs of Web connections. Telecommunications specialists say that if the United States does not keep its networks advancing with those in the rest of the world, innovation, business, education and a host of other pursuits could suffer.
Even so, few people, including many who support the systems, argue that everyone in the country now needs a one-gigabit home connection. Much of the public seems to agree. According to Federal Communications Commission statistics, of the households where service of at least 100 megabits per second was available (one-tenth as fast as a gigabit), only 0.12 percent subscribed at the end of 2012. In Chattanooga, one-third of the households and businesses that get electric power from EPB also subscribe to Internet service of at least 100 megabits.
But just as few people a decade ago thought there would be any need for one terabyte of data storage on a desktop computer (more than 200 million pages of text, or more than 200 movies), even the most prescient technology gurus have often underestimated the hunger for computer speed and memory.
Fiber-optic networks carry another benefit, which is the unlikelihood that a potentially faster network will come along soon. Fiber optics can transmit data at close to the speed of light, and EPB officials say the technology exists for their network to carry up to 80 connections of 10 gigabits per second at once.
Those who use Chattanooga’s one-gigabit connection are enthusiastic. Mr. Gemayel, the Florida native who moved Banyan here from Tampa, first passed through Chattanooga in 2012, when he heard about an entrepreneurial contest sponsored by The Company Lab with a $100,000 prize. Banyan, which was working on a way to share real-time editing in huge data files quickly among far-flung researchers, won the contest. Mr. Gemayel returned to Tampa with his check.
But once there he discovered that his low-bandwidth Internet connection was hampering the development of his business. By the beginning of 2013, he had moved to Chattanooga.
Other companies have become Gig-related successes. Quickcue, a company that developed a tablet-based guest-management system for restaurants, began here in 2011 and over the next two years attracted about $3 million in investments. In December, OpenTable, the online restaurant reservations pioneer, bought Quickcue for $11.5 million.
Big technology dreams do not always pan out, of course, and Chattanooga is familiar with failed experiments. The city spent millions of dollars in the last five years to build a citywide Wi-Fi network, known as the “wireless mesh,” intended for use by residents and city agencies. It sits largely unused, and its utility has largely been usurped by 4G wireless service.
Few people here would say that the Gig has even begun to be used to its fullest. “The potential will only be capped by our selfishness,” said Miller Welborn, a partner at the Lamp Post Group, the business incubator where Banyan shares office space with a dozen other start-ups. “The Gig is not fully useful to Chattanooga unless a hundred other cities are doing the same thing. To date, the best thing it’s done for us is it put us on the map.”
For all the optimism, many boosters are aware there are limits to how far the Gig can take the city, particularly as it waits for the rest of the country to catch up.
“We don’t need to be the next Silicon Valley,” Mayor Andy Berke said. “That’s not who we’re going to be, and we shouldn’t try to be that. But we are making our own place in the innovation economy.”
Correction: February 7, 2014
An article on Tuesday about the high-speed broadband Internet service available in Chattanooga, Tenn., misspelled, in some editions, the surname of the co-founder of Banyan, a software start-up that moved there to take advantage of the fast connection. He is Toni Gemayel, not Gemeyal.
Over the past 6 months, TIP Strategies has helped the Greater Houston Partnership (GHP) facilitate their Regional Workforce Development Task Force and develop a strategic action plan.
The Greater Houston region is on the brink of unprecedented growth. With almost $20 billion in investment in new plants and facilities announced, the next 5 years are slated for rapid expansion. Employers, however, are concerned that the region does not have the talent it needs to fuel this expansion. Further complicating the labor market is the aging of the workforce and the pending wave of retirements.
In response to these concerns, the Greater Houston Partnership convened the Regional Workforce Development Task Force (RWDTF). The task force is composed of 104 members representing 79 organizations, including large employers, workforce and economic development, education, and social services. The task force met six times over the course of last half of 2013 with the intention of formulating an action plan to address the challenges over the next five years. The initiative focused in on the middle skills segment of the job market.
The RWDTF identified 4 gaps in the workforce development system that must be addressed in order to create the pipeline of talent required to meet the needs of the region’s employers. The gaps are:
Potential workers are not aware of the opportunities in the middle skills segment or hold inaccurate perceptions of the jobs.
BASIC SKILLS & EMPLOYABILITY
Many potential workers lack some of the most basic hard and soft skills needed for any middle skills job.
The landscape of programs and organizations with a focus on workforce is broad and varied, but also fragmented.
The lack of accurate, reliable data creates a disconnect between demand and supply.
The strategic action plan takes a sector-based approach to create a more demand-driven workforce system. The strategies are structured around addressing the identified gaps. The plan will be finalized at the end of February and GHP is already on the road to implementation. Stay tuned for more news as GHP hires a director of workforce development and launches its first sector council.
For its recent Leadership Summit, IEDC organizers invited “thought leaders and practitioners at the cutting edge of the economic development profession” to share innovative ideas and case studies in five-minute “Ignite” presentations.
Under a title slide forewarning “DISRUPTION,” TIP Principal Jon Roberts took the stage and led audience members on a rapid-fire review of the disruptive forces altering economic development.
Citing disruptive technologies in the fields of consumer electronics, autonomous vehicles, 3D printing and device connectivity, Jon declared three disruptors changing the face of economic development: the future labor pool, evolving supply chains, and changing social norms.
According to the US Bureau of Labor Statistics, roughly a million people will enter the labor force annually for the next 10 years. Accustomed to digital music, driverless vehicles, and smart appliances, the next generation of American workers will bring to and require of the labor market a unique set of skills. Traditional expectations of this workforce will have to be set aside in favor of new models.
As disruptive technologies transform how we live and work, they also introduce massive shifts in the supply chain. The historical focus on manufacturing and assembly of durable goods will give way to software development and “intelligent systems,” while producer, broker, and distribution roles in creative fields are already being bypassed and may soon be obsolete.
The resulting shift in social norms, while a threat for those not prepared, creates a wealth of new product and value creation opportunities. In his closing, Jon asserts that we must redefine public-private partnerships to capitalize on the disruptive changes, and divorce ourselves of the notion that the next wave of economic development will be based solely on job creation.
By: Steven Rattner
Via: The New York Times
WITH metronomic regularity, gauzy accounts extol the return of manufacturing jobs to the United States.
One day, it’s Master Lock bringing combination lock fabrication back to Milwaukee from China. Another, it’s Element Electronics commencing assembly of television sets — a function long gone from the United States — in a factory near Detroit.
Breathless headlines in recent months about a “new industrial revolution” and “the promise of a ‘Made in America’ era” suggest it’s a renaissance. This week, when President Obama gives his State of the Union address, he will most likely yet again stress his plans to strengthen our manufacturing base.
But we need to get real about the so-called renaissance, which has in reality been a trickle of jobs, often dependent on huge public subsidies. Most important, in order to compete with China and other low-wage countries, these new jobs offer less in health care, pension and benefits than industrial workers historically received.
In an article in The Atlantic in 2012 about General Electric’s decision to open its first new assembly line in 55 years in Louisville, Ky., it was not until deep in the story that readers learned that the jobs were starting at just over $13.50 an hour. That’s less than $30,000 a year, hardly the middle-class life usually ascribed to manufacturing employment.
This disturbing trend is particularly pronounced in the automobile industry. When Volkswagen opened a plant in Chattanooga, Tenn., in 2011, the company was hailed for bringing around 2,000 fresh auto jobs to America. Little attention was paid to the fact that the beginning wage for assembly line workers was $14.50 per hour, about half of what traditional, unionized workers employed by General Motors or Ford received.
With benefits added in, those workers cost Volkswagen $27 per hour. Consider, though, that in Germany, the average autoworker earns $67 per hour. In effect, even factoring in future pay increases for the Chattanooga employees, Volkswagen has moved production from a high-wage country (Germany) to a low-wage country (the United States).
All told, wages for blue-collar automotive industry workers have dropped by 10 percent, after adjusting for inflation, since the recession ended in June 2009. By comparison, wages across manufacturing dropped by 2.4 percent during the same period, while earnings for Americans in equivalent private-sector jobs fell by “only” 0.5 percent. (To be fair, including benefits, compensation for manufacturing workers remains above that of service employees.)
These dispiriting wage trends are a central reason for the slow economic recovery; without sustained income growth, consumers can’t spend.
Low wages are not the only price that America pays for its manufacturing “renaissance.” Hefty subsidies from federal, state and local government agencies often are required. Tennessee provided an estimated $577 million for Volkswagen — $288,500 per position! To get 1,000 Airbus jobs, Alabama assembled a benefits package of $158 million.
Now Boeing has just used the threat of moving to a nonunion, low-wage state to win both a record subsidy package — $8.7 billion from Washington State — and labor concessions.
Over objections from their local leadership, union workers approved a new contract that would freeze pensions in favor of less generous 401(k) plans, reduce health care benefits and provide for raises totaling just 4 percent over the eight-year term. (Boeing’s stock price rose by over 80 percent last year.)
FOR all the hoopla, the United States has gained just 568,000 manufacturing positions since January 2010 — a small fraction of the nearly six million lost between 2000 and 2009. That’s a slower rate of recovery than for nonmanufacturing employment. “We find very little real evidence of a renaissance in U.S. manufacturing activity,” a recent Morgan Stanley report stated, echoing similar findings from Goldman Sachs.
If anything, the challenges to American manufacturing have grown, as less developed countries have become more adept. In Mexico, where each autoworker earned $7.80 per hour in 2012, auto industry officials say productivity is as high as in the United States, where total compensation costs were $45.34 per hour. No surprise then that in 2013, Mexican automobile production was 50 percent higher than seven years earlier, while output in the United States was at the same 2006 levels.
For the United States to remain competitive against countries like Mexico, productivity must continue to rise. But unlike past gains in productivity, these improvements in efficiency are not being passed along to workers.
And these necessary productivity gains often take the place of hiring more workers; the United States remains the world leader in agriculture while employing less than 2 percent of Americans.
Advanced manufacturing — a sector that many advocate as a path for the United States to remain relevant at making things — also involves a high degree of efficiency, meaning not as many hires and particularly, not as many of those old-fashioned, middle-class, assemble-a-thousand-pieces jobs.
Moreover, the lead that the United States has in some advanced manufacturing areas — notably aerospace — is being compromised by growing capabilities of workers elsewhere. Bombardier is now assembling Learjets in Mexico, and later this year Cessna will start delivering Citation XLS+ business jets that were put together in China.
Similarly, while America’s energy boom will provide an incentive for manufacturers to locate here, don’t count on cheap natural gas to fuel an employment boom. According to a 2009 study, only one-tenth of American manufacturing involved significant energy costs.
While we shouldn’t expect manufacturing to save our economy, we needn’t despair. Among other things, we need to get over the notion that service jobs are invariably inferior. The United States remains a world leader in service industries like education and medicine. Not only do these fields generate well-paying jobs, but they also help with our balance of trade: when foreigners come to America to be educated or treated, those services are tallied as exports.
Manufacturing has been an emotional American touchstone since George Washington wore a wool suit that had been woven in Hartford, Conn., to his first inauguration to illustrate the importance of making stuff at home. We do need to maintain an industrial presence, but perhaps not for the obvious reasons.
For one thing, companies often locate research and development facilities — stuffed with high-paying jobs — near their manufacturing facilities. In addition to jobs, R&D yields high-value intellectual property that spills over into still more innovation and employment. And not surprisingly, every manufacturing position requires an additional 4.6 service and supplier positions to support it.
The challenge for the United States is particularly acute because manufacturing now accounts for just 12 percent of our economy, down from a peak of 28 percent in 1953 and on a par with France and Britain as the least industrialized of major economies.
While keeping that share from dipping further should be a priority, we should be careful to avoid raising false hopes (like Mr. Obama’s unrealistic second-term goal of creating a million manufacturing jobs) and pursuing ill-conceived policies (such as special subsidies for manufacturing).
The president’s proposals — unveiled over the last several years — include the two most important elements of a sensible manufacturing strategy: more training focused on the skills needed by employers and increased spending on research and development.
The United States work force is simultaneously overqualified (15 percent of taxi drivers are college graduates) and underqualified (we rank in the bottom half of many comparisons of developed countries).
When Volkswagen arrived in Chattanooga, it found that not enough eager applicants had the requisite technical skills, so it established a German-style training system (including three-year apprenticeships) at the factory.
As for research and development, the fiscal tightening by the federal government has prevented more investment in this critical area, the exact opposite of what is required. At the same time, while subsidies to draw jobs have become a necessary evil, we should be rigorous about analyzing the value of these costs. And we must stop short of excessive meddling in the private sector, and particularly the notion of picking winners. (Think Solyndra or Fisker.)
Mr. Obama skirted this problem by proposing to create 45 “manufacturing innovation institutes,” which bring together companies, universities and government experts in a kind of laboratory setting to help develop advanced manufacturing strategies.
While these institutes are not going to turn the tide, they might help at the margin. But like the president’s other proposals, they have been largely ignored by Congress. (The White House managed to establish a pilot center in Youngstown, Ohio, and another is coming in Charlotte, N.C.)
Manufacturing would benefit from the same reforms that would help the broader economy: restructuring of our loophole-ridden corporate tax code, new policies to bring in skilled immigrants, added spending on infrastructure and, yes, more trade agreements to encourage foreign direct investment and help get closer to Mr. Obama’s seemingly unattainable goal of doubling our exports.
Those who see a brighter manufacturing picture for the United States argue that wages are rising more rapidly elsewhere, not just in China and Brazil but also in Japan, Germany and France. But just like the “feel good” stories, celebrating this fact ignores the reality that the flip side of wages’ rising faster elsewhere means they are rising more slowly here.
And that is the essence of our challenge: In a flattened world, there will always be another China.