By Sylvie Haller and Michelle Balani
Rock Center
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.
NBC News
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.
NBC News
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.
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sooooooo let's see....yay we manufacture 21% of the total manufactured items in the world....what's that....oh so robots make it less costly so I'm losing my job.....ok well....what's that.....unemployment goes up....yeah not sure I saw anything positive about this report.
Businesses dont exist to give you a job. You're a cost to businesses. Businesses that DO exist to create jobs fail. That's the definition of socialist and that's WHY it fails. You'll be better at the game if you play the right one.
Actually, the workers are the the ONLY true assets of any business. The workers are the only people who create work. The more socialist a country is, the wealthier, happier and more productive its citizens are. My guess is you have never been to Sweden, Norway, Finland, Denmark, Germany, France, Japan and all the other modern industrialized nations of the world. Stop watch Fox News, stop listening to fascists and face reality, my ignorant friend.
I don't believe that the full story is being told about manufacturing in the US. Here's an article that appears to say otherwise:
Also, my wife grew up on a farm in ND where they also milked cows. It was interesting to see them waiting at the corral gate to get milked. They moved right into their stalls as soon as you let them in the corral and opened the doors to the pole barn. And, no, they didn't have automated milkers like you saw on your report tonight.
Finally a positive spin on the economy. Manufacturing is key to our recovery. But equally important is skills training for our workers-- training that prepares our workers for the 21st century and prepares our workers for the challenge and giving them the courage to embrace the change.
I tried to add a link to my post, but it doesn't work. Here's the full article:
History lessons: Understanding the decline in manufacturing
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By Louis D. Johnston | 02/22/12
REUTERS/Adam Fenster
U.S. industrial decline is a long-run phenomenon and will not be reversed by short-term fixes.
New ideas for reviving American manufacturing seem to appear every day. Many of these notions have merit, but most are built on a flawed premise: that the decline in U.S. factory jobs is a recent occurrence, one that can be reversed through tax cuts or trade policy.
Unfortunately, U.S. industrial decline is a long-run phenomenon and will not be reversed by short-term fixes. Let’s take a look at the trends and their implications.
The really long run
Economists traditionally classify economic activity into three sectors: agriculture (including forestry and fishing), industry (including mining, construction, and manufacturing) and services (all activities not included in either agriculture or industry.)
You probably have a story in mind about what these data will tell us. The United States was primarily an agricultural economy through the 19th century; then, industry swept the landscape in the late-19th and early 20th century — with America standing as the industrial powerhouse of the world by the 1950s. Things stayed this way until the late-1970s and 1980s, when we first lost our edge to the Japanese, then to the Chinese, and have now become a service economy that doesn’t produce stuff.
This story isn’t quite right. Let’s start with where people worked. The graph below shows the distribution of the labor force in agriculture, industry and services from 1840 to the present. The part of the story about agriculture is clearly true: Beginning in 1840 at roughly 70 percent of the labor force, agricultural employment fell to about 40 percent in 1900, 10 percent in 1950, and remains at about 2 percent today.
Source
Next, let’s examine the service sector. Here’s where the surprises begin. In terms of employment, the second largest sector was services, not industry. In fact, service employment exceeded industrial employment throughout American history. Looking at industry, the closest that sector got to services was in 1880!
A similar story emerges when we look at output produced in agriculture, industry and services. Again, the agricultural sector originally accounted for the largest share of output, but services caught up and exceeded agriculture by the 1880s.
Source
Industrial production kept pace until 1910, but after that services pulled ahead and never looked back. Since 1950, the share of output produced in industry has steadily declined, falling from about 40 percent of output to about 25 percent today.
The story since World War II
Let’s zero in on the period since World War II. To keep things focused, I’ll make three changes to our perspective. First, some might argue that the rise in service employment and output shown above is caused by the growth of government. I’ll focus on private-sector employment and output to see if increasing service employment and output is a product of expanded government or is the result of private-sector changes. Second, I’ll combine agriculture and industry into one goods-producing sector, and then compare that with services.
Here’s what we get in terms of employment:
Source: Bureau of Economic Analysis, National Income and Product Accounts
Since World War II, the share of private employment in goods production (including manufacturing) has steadily declined from just short of 50 percent to just fewer than 20 percent.
The output data look much like the employment data. Just like employment, the share of goods production (including manufacturing) in GDP has steadily declined while the share of services in GDP has steadily risen.
Source: Bureau of Economic Analysis, National Income and Product Accounts
A tale of two causes
To understand the long-run decline in industry, we need to look at the periods before and after World War II separately.
Before World War II, the service sector grew because we got richer. Think about it: From domestic servants to waiters, blacksmiths to cobblers, and barbers to bankers, Americans have always been engaged in a variety of service activities. And, as the American economy grew and average incomes increase, Americans increased their demand for meals, repairs, grooming and financial services. Thus, more and more workers were pulled into the service sector by this increasing demand.
When we look at the post-World War II data, a different story emerges. First, productivity grew rapidly in industry, faster than the demand for industrial products, while productivity grew relatively slowly in the service sector. This meant that we needed fewer industrial workers and thus many workers were pushed out of industry. At the same time, we were still getting wealthier and demanding more services, and slow productivity growth in this sector meant that to provide these services it had to pull in the workers shed by industry.
Both push and pull forces were present in both periods. But, pull factors (i.e., the increased demand for services) was the predominant cause of decreasing industrial output and employment before World War II while push factors (i.e., rapid productivity growth in industry and slow productivity growth in services) dominated after the war.
Implications for policy
The decline in manufacturing output and employment is a long-run phenomenon, not just a short-run problem. This means that policies designed to boost manufacturing need to be designed with this long-run trend in mind, and not just react to problems of the last 10 to 20 years.
Neither tax cuts nor tougher trade policy address the demand for more and varied services, nor will they address the relatively slow productivity growth in the service sector.
Sources for 1840–2010 charts:
1840–1900: Robert E. Gallman and Thomas J. Weiss. "The Service Industries in the Nineteenth Century." In Production and Productivity in the Service Industries, ed. Victor R. Fuchs, 287-352. New York: Columbia University Press (for NBER), 1969.
1900–1940: John W. Kendrick, Productivity Trends in the United States. Princeton: Princeton University Press (for NBER), 1961.
1950–2010: Bureau of Economic Analysis, National Income and Product Accounts.
Graphics don't post here, so you can search the web for the article and see the charts.
I like Harry Smith, but why does everything I see have a tag that says Made in China or Mexico or Japan or Viet Nam? Are there clothes, shoes, luggage, etc., made in the USA anymore?
Google "Made in USA" followed by any product you want. I buy almost exclusively US goods, and if I cannot find what I want, I buy from countries that do not undercut our workers. Western European countries, Canada and Fair Trade are all good (and Google will take you to them). I also shop at Thrift stores that are affiliated with local nonprofits. That way I'm solving problems and saving money. Sometimes, when I'm in local stores, I'll ask to see their Made in USA clothes. Many know right where to take me. If they're close-minded, they'll say false things like "Well, you can't get quality if you insist on US goods." I say, "Hmmm. Look at my shirt (or whatever I'm wearing that's US made). Do you think this is inferior?" They are stopped short, because US goods are better than most of the made-in-China stuff. Also, they're competitively priced (that's another myth).
More spin about trade deficit. I am sick of the word SPIN. Every
commercial & political interest and spokesman is bending the truth
or just lying bald faced!
The Rock Center saying that America is producing 21 Percent of the
worlds industrial equipment means little, when the US had a trade
deficit of 500 Billion in 2010 and 558 Billion in 2011, ¾ of all that
from trading with china.
The Chicago school’s (late) Milton Friedman forgot to emphasize that
global trade (he promoted) needs controls and dumping duty to equalize conditions
from importing countries, or else America will drown in the deficit and will loose the good
life. This way you will have to send your children to work in sweat-shops to produce
goods at the prices some of the worlds exporters are flooding the US and Canada.
Thank you for the positive story. As a Vermeer employee, I’ve seen that this story is telling the truth. We have 7 production factories here in Pella and all of them are turning a profit this year. I’ve watched the production floor in my plant work anywhere from 45-60 hours for at least the past year. Longer for our machine shop people. I've seen every machine going out the door with a sold tag on it. I've seen a new facotry get built for Lely and more people get hired. Across town, there's another manufactoring company some of you may have heard of, Pella Windows. My son's father works there...and he's been working at least 40 hours a week for the past few months. Not bad for small town Iowa.
I think the people with the negative comments above didn't really listen to the story. Yes, Sunny D is upgrading to robotic equipement and yes it will have to lay some people off. But of the three choices it was faced with, don't you think that's the best option. In case you missed it, the options: 1. raise the price of thier product, lose customers, close thier doors and leave everyone without a job. 2. move operations to Mexico, lay everyone off. 3. upgrade to robotic equipment, lay off some workers, still employee the majority of the people working there. To me, option 3 is the best for them, thier employee's and us the consumer.
If all you see are products made in another country...you aren't looking in the right places. If we are upset with the lack of American made products, whose fault is that? In a free market, the consumer sets the demand. So when you are in a store, and reach for the cheaper product...look at where its made. It probably won't be in USA, but the one next to it thats a little more expensive might be. Usually the "Made in the USA" products are more expensive...because we believe in sending out quality products. We believe in getting paid what we're worth, and that's more then the other countries pay thier workers. So our products come with a higher sale price. Think about that when you grab the cheapest item off the shelf. You have no right to complain about nothing made in the USA anymore, because you are helping to kill manufactoring in your own country.
Thank you NBC for seeing that there are still homegrown workers and celebrating us.
Bottom line, they make the same product with few people with higher skills, therefore higher pay and more job security cuz higher skilled workers are harder to replace.
I was disappointed by Brian Williams' introduction in which he said that they could finally report this because we were beyond the political season and this is a political issue. If it is news it's news and should be reported regardless of the political happenings of the day. It is wrong to suppress speech because it might offend or not support a political party or individual. If politicians want to comment on the news, that is their perogative. The answer to objectionable speech is more speech.
The media have become cowed by the far right that accuses them of liberal bias. Content analysis and other empirical research doesn't supports this, even when analyzing NPR. When our news media is manipulated by a vocal minority, we are in danger. Historically, oppressive regimes have come into power by first intimidating and silencing the media, then controlling the message.
Same history in this country. Ever hear of Yellow Journalism? The whole "unbiased" crap is an early 1900's morale touchstone they had to kiss to get people to accept govt auctioning off radio/tv channels.
This was a good news story. Something needs to be done to reengage the manufactures who have departed for distant shores. Right sizing is key. Many of us have to update our thinking. Technology always creates a new dynamic. We will never see the numbers of employees employed at a particular facility in any given industry. Efficiencies are as important to the bottom line as anything else. We can't do anything the way we did when we considered ourselves highly industrialized. We can committ to being a people who believes in an honest days work for an honest days pay. I was delighted with this segment of the program.
I teach machine shop to high school students near Chicago. I train students in manual machines, CNC, and even foundry. Every year I have several local tool and die and production shops who ask if I have graduating students interested in that kind of work. The problem is that only 2-3 students are interested. In this area, business is growing. I show them reports like this. We read articles fron The Fabricator. We even went to IMTS this year.
What can I do to get more students interested in manufacturing? These companies will take anyone with a willing to work and kearn new skills.
The $700 billion trade deficit causes a reverse tariff of about one trillion in reduced federal revenue and over $200 billion in reduced state revenue. Reduced Federal revenue, and not increased Federal spending, is the main problem. Our wage base and corporate income base is simply too small due to the trade deficits. 46% of the trade deficit is oil and 41% is China. The accumulated trade deficit tracts exactly with the accumulated national debt over the last fourteen years. We have about eight months to arrange a soft landing by putting in place a plan to reduce the trade deficit before several European countries default and cause trillions of Euros to evaporate. Otherwise we will be in a world wide economic free fall as trillions of dollars in assets evaporate. The hard lesson is that free trade is only free when it is balanced. While capital and goods pass through national borders, national debt due to reverse tariffs is always stuck within national borders. All necessary documentation is at
Orcosportsmans.com. Click the "Something everyone should be aware of" on the home page.