By Sylvie Haller and Michelle Balani
The United States may have shifted to a postindustrial economy, but that does not mean the manufacturing sector is dead. Far from it.
From coast to coast, manufacturers are making more products, but with fewer people, as the sector makes an improbable rebound after a tough recession.
“I think it's a time of great opportunity in manufacturing,” said Mary Andringa, chair of the National Association of Manufacturers. “What’s really outstanding is the fact that in 2010, the U.S. had an output of $4.8 trillion of manufactured goods. That was up from $4.1 (trillion) in 2000. And we’ve been through two recessions in the last decade. The United States produces 21 percent of the world’s manufactured goods. We’re number one, followed by China at 15 and Japan at 12 percent. There’s a renaissance going on.”
In fact, the manufacturing sector is staging something of a comeback, adding a half million jobs over the past two years as the economy has slowly gained momentum, according to the Bureau of Labor Statistics. But over the long run, the manufacturing sector is fighting tough headwinds, shedding some five million jobs over the past decade against tough global competition.
That means manufacturers are doing more with less, making steady gains in productivity.
Take beverage maker Sunny Delight. In an effort to squeeze every ounce of productivity out of its juice factory in Sherman, Texas, the Sunny D Company had to make a choice – modernize and trim payroll or move its facilities to Mexico. The company decided to spend tens of millions of dollars to bring 21st century technology to the factory floor, which meant some workers had to be let go.
“It did cost some jobs,” Sunny D CEO Billy Cyr told Rock Center correspondent Harry Smith in an interview airing Thursday night. “But it's a much more viable facility. And you invest to get efficient. In doing that, unfortunately, sometimes you find that the employees that are there, you won’t need as many of them. Sometimes you need fewer of them to, in essence, deliver the costs that our customers require. We work for our customers. And they can’t afford for us to be inefficient.”
Tom Bragg worked at the Sunny D plant for 25 years. With the new automation installed, Bragg and several others were told their positions would be eliminated.
Tom Bragg working at the Sunny D plant.
“Everybody processes it differently,” Bragg said. “Some folks are very stunned. Some are very angry and some, like myself, are going to make the best out of this situation. I don't feel like a victim here. Folks need to know wherever they work, they need to constantly, consistently upgrade their skills. What got you here and prior accomplishments may not necessarily keep you here.”
A company’s survival doesn’t leave much room for sentiment. Sunny Delight CEO Cyr said that sometimes difficult choices must be made in order to ensure that a corporation remains competitive in the global market.
“We can have a lot fewer people producing a lot higher quality product at a much lower cost,” Cyr said. “That's, in essence, what it takes for us to be successful. I don't know if it's Darwinian, but unfortunately, Darwin's theory is what makes the world go round. And sometimes it's scary to think about it that way. But it is survival of the fittest. It always is.”
Andringa, chair of the National Association of Manufacturers, said that innovation is key for manufacturers to maintain a competitive edge.
“I think successful manufacturers take charge of the opportunities that are out there. They’re innovative in their approaches and they’re also pretty tenacious. They have to stay after better products, better costs and understand what their customers really want and what they’ll pay for,” said Andringa, who is also the CEO of the Vermeer Corporation in Pella, Iowa.
Vermeer Corporation builds a mind-boggling array of mining, farming, construction and landscaping machinery that is sold around the globe. Since Andringa’s father put a simple hoist on a corn wagon 70 years ago, Vermeer has been in the business of finding a better way to do all kinds of things, and business is booming. Vermeer is not alone. America, Andringa says, is manufacturing up a storm. Although manufacturing activity fell in June for the first time in nearly three years, manufacturers have reported job gains for eight straight months.
The CEO of Vermeer Corporation says that most of the products housed at their Pella, Iowa factory have already been sold.
“Almost everything we are building is sold right now,” said Andringa. “Manufacturing companies are bringing jobs that were being done outside the U.S., bringing them to the United States.”
Andringa said that Vermeer has over 70 job openings and what’s happening at her company is happening at manufacturers across the country.
“I believe that stat is that five percent of all manufacturing jobs right now are open or unfilled in many cases because of a lack of skilled workers where the manufacturing jobs are. There are a lot of programs going on right now to try to match those who are unemployed with getting the skills they need so that they can be employed. I think today in manufacturing, every employee has to keep learning,” Andringa said.
Former Sunny D employee Tom Bragg is hoping he can apply his skills to a new position in manufacturing and he’s confident that he will survive.
“I've got my resume out,” he said. “I network with people. I keep my ear to the ground. I think I'm going to find another job. I have a good skill set to continue in manufacturing. I know LEAN methodology and I'm able to apply it. And I'm able to train it, and coach it and mentor it. The local community college may even need somebody to teach. So I think I can do that. I'm going to find something. I'm not concerned about that. I'm not over yet. I'm a tough guy. I'm going to get through this.”
“The good news is it’s better,” says Andriga. “Manufacturing is better today. We are able to produce more product than we could 10 years ago, yes, with fewer people. We’ve got great opportunities in manufacturing. The United States is doing incredible things, in bringing on new products, new solutions and selling not only in the North American markets but around the world.”
Editor's Note: Harry Smith's full report airs on Thursday, Nov. 8 at 10pm/9c on NBC's Rock Center with Brian Williams.