American manufacturing jobs have declined sharply over the last decade. Most are unlikely to be restored as companies find ways to produce more with fewer workers at a lower price.
No one knows this better than former Michigan Gov. John Engler, who now heads the National Association of Manufacturers (NAM), though he hastens to add that, despite the doomsayers, the future of manufacturing remains bright and poised for growth.
Democrats and their allies keep saying manufacturing is in a steep decline. CNN’s Lou Dobbs tells his viewers “America doesn’t seem to make much of anything anymore.” But Mr. Engler dismisses such comments as political hyperbole. “Reports of the demise of U.S. manufacturing are a bit premature,” he told me in an interview at NAM headquarters.
Manufacturing productivity, fueled by rapid technological innovation, is way up. Exports are stronger, too. We make more, sell more and ship more then ever before. “I think 2005 is turning out to be a very big year” for manufacturers. “The second half is going to be especially strong,” Mr. Engler says.
We’ve become so accustomed to hearing about the decline in manufacturing jobs that many people are quick to conclude this pivotal sector must be in decline, too. But a look at its economic fundamentals suggests quite the opposite.
Manufacturing remains the No. 1 contributor to U.S. economic growth, making up to 13 percent or $1.5 trillion of this nation’s $11 trillion gross domestic product (GDP). Government and real estate contribute 12 percent each to GDP, business services add 11 percent. The retail sector adds half of what manufacturing kicks into our economy.
Manufacturing represents 62 percent of all U.S. exports of both goods and services, or about $1.1 trillion. It accounts for 11 percent of the entire U.S. work force, and 13 percent of all private sector employment.
But U.S. manufacturing has been undergoing dramatic and necessary structural changes to remain competitive in the global economy, Mr. Engler says. And he believes the long-term manufacturing trend will be (as mentioned above) continued production of more goods with fewer workers because of new technological innovations that will lower costs and keep made-in-America goods the most competitive in the world.
“I think you will not see us competing in areas that are heavily labor-dependent and [where] total labor costs are a significant factors in the costs of the product,” he told me.
“I believe manufacturing has a very bright future, but there is certainly some capacity that has gone out of the manufacturing base here, there’s no question about that. I still think it has a lot of upside,” he said.
“Now, it may not be that upside is 5 million new jobs, but it could continue to have new levels of output, and it could capture significant market share in our marketplace,” he added.
There are about 14.5 million people employed in manufacturing, and another 2 million or so among outside service and technical contractors whose businesses depend directly on manufacturing. But that is a far cry from the 17 million who worked in manufacturing not too many years ago.
That decline has been a major political target of the Democrats during President Bush’s tenure, particularly in the major industrial states in the Northeast and Midwest, where unemployment has been especially high.
The loss of manufacturing jobs has been particularly severe in Mr. Engler’s home state of Michigan, where the jobless rate was 7 percent, 2 points higher than the national average. Mr. Bush lost the state last year by more than 165,000 votes.
Mr. Engler is manufacturing’s chief lobbyist and a savvy politico. But when I pointedly asked him if the future of the industry is increasing productivity, sales and earnings growth, but a smaller payroll, he candidly replied: “I think so. But then the people who are working [in the factories], what are they going to have to have? They are going to have to have [skills in] math, sciences and statistics, the kind of educational background that is going to allow them to do high-level work.”
But he worries “We are in the midst of a silent Sputnik, where math and sciences are lagging other major countries we are competing with. As our work force ages, we may find ourselves short of [highly skilled] replacement workers.”
The popular three-term governor declines to assess how his Democratic successor, Jennifer Granholm, is doing in Michigan. Her poll numbers have fallen with her state’s economy.
“I’m not there anymore, so I’ll leave that to the editorialists,” he says, Still, he can’t resist at least one dig: “I do know that we had the good fortune to have five consecutive years where the unemployment rate was below the national average. It’s gone up considerably since then.”
Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.
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