The manufacturing jobs once thought to be lost to China and India are slowly making a comeback in the United States, though they’re in different specialties than originally thought. Last week, employers representing the private sector, education and government came together to talk about the future of jobs in America, and the message was hopeful, but not without caveats.
“The structural cost disadvantage isn’t about employee costs; it’s about corporate tax rates imposed by government. It is a general misconception that manufacturers are chasing cheap labor overseas, they’re just moving to market and becoming global companies,” said Emily DeRocco, senior vice president of the National Association of Manufacturers at the General Electric American Competitiveness: What Works conference in Washington, D.C. Many companies had struggled with turnover rates at foreign sites and according to Boston Consulting Group, Chinese labor costs are rising about 15% to 20% a year. That can be enough to bring jobs back.
At the same time, there is a serious skills shortage as companies bring back jobs. Within manufacturing in particular, there is evidence of a mismatch between available jobs and workforce skills. While unemployment has fallen since January 2009, the number of available job openings has risen from 98,000 to 230,000.
“The jobs coming back are requiring higher level skills,” said Dr. Gary Green, president of Forsyth Technical Community College in North Carolina. “It’s not the commodity production stuff; it’s more high-tech products, products that are focused on the American market.” He said environmental and political volatility have made U.S.-based companies more aware that there are benefits to coming back home.
Companies also are bringing home jobs in manufacturing due to a scarcity of local employees with the required technical skills in emerging markets. A study released by Mercer last week showed that just more than half (59%) of participating organizations cited this as their main challenge as well as dealing with complex labor laws (53%) and establishing appropriate salary structures (51%).
Small businesses have long found offshoring their manufacturing cheaper, but that is changing. According to a survey by MFG.com, an online sourcing marketplace, 19% of respondents said they had recently brought all or part of their manufacturing back to North America from overseas, up from 12% in the first quarter of 2010.
“U.S. manufacturing has moved away from mass commoditization to mass customization, and our small businesses are particularly challenged by finding skilled workers to do their manufacturing,” DeRocco said. She said because there are so few of these skilled workers, large companies pluck the services up because they can pay more. “There is a bidding war, which means we have to expand the field.”
The panel suggested private-public partnerships between companies and community colleges, where needs could be directly met.
“There are jobs for people who have highly-developed skills, even while we have a number of people out of work,” Green said, citing statistics that 97% of new jobs created today will require some level of post-secondary education. “The skills we need in manufacturing, integrated computing, welding and mechanical engineering are different than 10 years ago. There is an opportunity to make sure schools are teaching the skills and employers are confident that students coming out of institutions have those skills.”
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