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Buzz over manufacturing raises question: When will it peak?

By Pamela M. Prah

There is a buzz about U.S. manufacturing’s comeback, including in the high-tech sector.

Motorola Mobility, owned by Google, is hiring 2,000 workers to produce its new Moto X phone in Fort Worth, Texas. It will be the first smartphone assembled in the United States.

Apple Inc. has promised to invest $100 million to build a Mac product line to be assembled in Texas, using components made in Illinois and Florida and equipment built in Kentucky and Michigan. And the Lenovo Group, a Chinese company, opened its first plant in Whitsett, N.C., making ThinkPads with some 115 workers.

These represent a small fraction of the half-million manufacturing jobs created since the recession ended in 2009, with the biggest gains in Michigan, Texas, Indiana and Ohio. While the new high-tech interests are encouraging, the reality is that the number of U.S. manufacturing jobs overall stopped climbing in July 2012. Since then, the number of U.S. manufacturing jobs, while fluctuating slightly, has been stalled at the 11.9 million range, federal data show.

This raises important questions:

• Are expectations that U.S. manufacturing is poised for a “renaissance” unfounded?

• Has the U.S. manufacturing comeback already peaked?

The raw numbers show that the manufacturing sector has yet to recover the 2 million jobs lost during the 2007-2009 recession. Today, just under 12 million Americans work in manufacturing, down from a peak of nearly 20 million in the late 1970s.

Stephen Gold, president of the Manufacturers Alliance for Productivity and Innovation, said manufacturing is “75 percent recovered from the recession,” and that it will take until the fourth quarter of 2014 for the sector to return to pre-recession levels.

One of the reasons manufacturing is unlikely to return to the high numbers of jobs of past years is that the sector and its role in the U.S. economy have changed. Today’s U.S. manufacturing wields a greater impact on innovation, productivity and trade and less on job growth, James Manyika, director of the McKinsey Global Institute, an economics think tank, said at a recent manufacturing conference at the Brookings Institution.

That’s not to say innovation won’t create new manufacturing jobs, Manyika said, but probably not at the numbers erased by automation and technology in recent years. In steelmaking, for example, the 94,000 people working in the industry in 2012 produced 14 percent more steel than nearly 400,000 workers did in 1980, a government report shows.

Less than 40 percent of manufacturing employees are directly involved in actually making things, a report from the Congressional Research Service shows. Some 31 percent of all manufacturing workers now hold management and professional jobs, CRS said.


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