The manufacturing renaissance and the middle class

Is the United States in the midst of, or on the brink of, a manufacturing renaissance? Will the rebirth of the manufacturing sector help rebuild our country’s middle class? It may be too early to accurately answer these questions, but one thing is clear. A thriving manufacturing sector and a growing middle class are critical to our innovation and economic success.  

Our ability to manufacture goods is inextricably linked to our country’s culture of innovation. Just consider these stats: U.S. manufacturers perform 70 percent of all private-sector R&D, they account for 60 percent of U.S. exports and they hold the majority of U.S. industry patents.

We’ve all seen the recent stories about companies investing in manufacturing facilities in the United States. Apple is investing $100 million to build Mac computers. Motorola Mobility is opening a 500,000 square-foot plant in Fort Worth, Texas and hiring about 2,000 people as part of its plan to produce the Moto X phone. These companies join the likes of Caterpillar,  Lenovo, and General Electric who have all announced investments in U.S.-based manufacturing over the past few years.

Increased labor costs in China and other emerging economies coupled with lower energy prices in the U.S. are among many factors contributing to the shift in manufacturing. What I find most interesting is that a number of companies have spoken about the importance of bringing manufacturing closer to the rest of the organization, particularly the design or engineering teams. Motorola Mobility’s CEO talked about the benefit of a “leaner supply chain” and the ability to respond more quickly to purchase trends and demand, while GE’s CEO highlighted the benefit of better collaboration when the team is closer together.

A Strong Middle Class

There is no doubt that bringing more manufacturing back to the U.S. is good for our nation. A recent report by Boston Consulting Group predicts that by 2020, higher U.S. exports, combined with production work that will likely be “reshored” from China, could create 2.5 million to 5 million American factory and services jobs. A growing manufacturing sector can also have a positive impact on job creation across multiple industries. Today, the manufacturing sector is supported by an equally broad ecosystem of service providers, including telecom, IT vendors and logistics providers. According to a 2012 report “Manufacturing the future: The next era of global growth and innovation” by McKinsey & Company, an estimated 4.7 million U.S. service sector jobs depend on business from manufacturers.

What kinds of skills do workers need to step into one of these roles? While a number of these jobs are similar to those our parents or grandparents had, such as assemblers, others require more specialized technical skills. Today, some jobs require workers who have strong computer and math skills, the ability to operate computerized machinery and interpret computer-aided design drawings.

Training Programs are Essential

It is more important than ever for the public and private sectors to sharpen their focus on training individuals so they can move into these jobs today. We need vocational training programs to teach future workers the specialized skills necessary to work in today’s factories and in services roles that support manufacturing. Companies also need to do their part by establishing more in-house training programs that give workers an opportunity for advancement. At a national level, it is good to see the Administration’s commitment to manufacturing and I applaud the plan to invest $1 billion in a national network of innovation institutes. We also need to start laying the foundation for tomorrow’s workers today. We need the right training programs to start in high school to get the next-generation of workers trained to do production work.

This trend of “insourcing” jobs back to the United States is exactly what we need to stop the shrinking of our middle class. We need to make sure the right incentives, including tax credits, are in place for companies to move facilities back to the U.S. and expand current facilities. While the role of manufacturing has changed as we’ve evolved to a service-based economy, I believe it is critical that our nation have a strong manufacturing sector. And it is the key to rebuilding the middle class.

As I’ve written about before, the investments we make in education and training individuals – both for jobs today and tomorrow – is one of the most important responsibilities we hold as a society. The resurgence of manufacturing in the U.S. offers hope that the future of innovation, from inception to design to production, can take our country into the next century.

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