With more than 14 million people seeking work in the U. S. there is clearly a critical need for more jobs. Numerous politicians have stated that the number one concern of the U.S. government should be to focus on this initiative, particularly within the manufacturing sector. But is manufacturing really the right place to zero in? I would argue that there are a number of reasons that prove otherwise.
There is no doubt that the U.S. has lost millions of manufacturing jobs over the last several decades and the recession only continues to accelerate this increase. However, often overlooked in the discussion is the fact that many U.S. manufacturing corporations are performing quite well financially. The auto industry, for example, is doing very well in part because they have reduced labor costs dramatically over the last decade -- in fact, General Motors recently reported that its labor manufacturing costs have gone from 30 to 10 percent.
There are two reasons why General Motors, Ford and many others have significantly reduced labor costs. One, perhaps the most obvious, is the advancement of new technologies. Machinery and computers have replaced people throughout most modern facilities. Second, management innovations have reduced the need for labor and as a result require fewer employees. Employee involvement, slim organization structure and work teams have made jobs more interesting, demanding and challenging while reducing the number of individuals needed. Employees are now cross-trained; performing duties outside of their main focus including maintenance, set-up and operations management. They do not have to wait for someone to come to repair a machine or reprogram it; these services are now built into a company's strategic staffing plans.
The implication of the changes in technology and management for job growth within the field of manufacturing is clear. There are always going to be fewer jobs in most manufacturing plants. While there will be some growth, it will only extend to the degree that it is absolutely necessary in order for an organization to increase its production levels. Even when companies need to increase production levels, most are likely to add very few workers as they have learned to get along with less. Ironically, this has cost but also saved U.S. jobs. Without the management innovations and technology advancements that have been adopted by U.S. corporations even more jobs would have been lost to low wage countries.
Some might pose the question: what about the jobs that have been off shored? Will they come back? This may happen to a limited degree however, many of these are low valued added jobs that are best done in low wage economies only likely to return to the U.S. if they can be completed at an inexpensive rate that works alongside new technologies and management practices.
Overall, the combination of new practices has significantly transformed manufacturing in the U.S. Today, much of the manufacturing work that remains is high valued added and increasingly requires skilled labor. Gone to less developed, low wage economies are the labor intensive and low value added manufacturing positions that once accounted for many U.S. manufacturing jobs; they are not coming back. The U.S. has to move beyond its focus on manufacturing jobs to find the answer to our unemployment problem.
Cross-posted from Forbes.com.
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