Why should we care? For one reason manufacturing jobs tend to be good paying middle class jobs, with good benefits and job security. Another reason is that most jobs, including service jobs, depend on manufacturing, whether directly or indirectly. According to the National Association of Manufacturing (NAM), each job in manufacturing creates an additional 3 private sector jobs. Manufacturers are responsible for over ¾ of private sector R&D, further contributing to economic growth and job creation.
According to the World Bank manufacturing accounts for 13% of US GDP, compared to 20% in Japan and 23% in Germany. If our percentage was equal to Japan the US would have approximately 7 million more jobs, and if equal to Germany we would have 10 million more good paying, middle class jobs.
So when we read about the decline of the American middle class, stagnant wages, and a lack of confidence that our economic future will be better than our past, is there a direct connection to the decline in US manufacturing? I believe it is a major contributing factor, but there are basic steps we can start taking now to reverse this trend.
Take Germany for example, a highly regulated manufacturing driven economy with high wages. They’ve expanded their global manufacturing market share in spite of fierce competition from low cost Asian countries. Germany sees strategic long term value in manufacturing, and their education system reflects this with a greater emphasis on engineering and vocational training.
They dominate niche markets, producing sophisticated products of superior quality that other lower cost markets cannot replicate, therefore commanding a higher price. Germany is proof that with the right strategy high wage manufacturing countries can successfully compete with lower wage countries.
Another key to success is a focus on exports, which has contributed to 2/3’s of Germany’s recent economic growth. By comparison the US ranked 47th out of 50 countries in the percentage of GDP attributed to exports. While German exports contributed 51% to GDP, US exports contributed only 13%, ranking us right behind Armenia and Tajikistan. Since every billion dollars of exports creates over 5,000 jobs, a several percentage point increase in exports in our $18 trillion economy results in millions more jobs. Because 95% of the world’s population lives outside of the US, it’s simply good economic policy to focus on these vast and growing world markets.
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| Exhibiting my US products at trade show booth in Abu Dhabi, UAE (on far left) |
I believe sustained US middle class job growth requires a comprehensive national industrial policy that makes the United States a more manufacturing and export based economy. Manufacturing still remains the most important cause of economic growth, and additional growth potential through reaching new global markets is enormous.
Achieving this will require changes in our perception of manufacturing, how we train our workforce, how we manage our currency, how we negotiate trade deals, and how we create tax and other incentives that encourage manufacturers to keep production here. It requires closer cooperation between government and industry, and vision and leadership from our elected officials in Washington. Despite the recent “Made in the USA” rhetoric, we continue to be outplayed on the world stage, and this has direct, negative, and long term consequences for middle class job creation.
Today I help US companies export their products worldwide. But during that summer of 1977, which was the high water mark for manufacturing employment in America, I was a member of the US Steelworkers union working my way through college at a refrigeration factory in Trenton, NJ. That manufacturer long ago relocated to the South, but I still have family and friends who work there almost 40 years later. I hope our elected officials can provide the leadership necessary to ensure the success of more manufacturers like this one, and the millions of good middle class jobs they can create for decades to come.
Brian Thomas is an international business consultant and Chairman of the Bucks County
International Trade Council (BCITC)
Thomas4Congress@gmail.com
photo credit: <a href="http://www.flickr.com/photos/96644353@N02/8880731807">Stars and stripes</a> via <a href="http://photopin.com">photopin</a> <a href="https://creativecommons.org/licenses/by/2.0/">(license)</a>
Thomas4Congress@gmail.com
photo credit: <a href="http://www.flickr.com/photos/96644353@N02/8880731807">Stars and stripes</a> via <a href="http://photopin.com">photopin</a> <a href="https://creativecommons.org/licenses/by/2.0/">(license)</a>
