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Local Manufacturing: Not Too Much to Ask

A new report that focuses on high-tech employment and wages in the US offers us an important reminder that as we reshape the economy, in part by increasing our manufacturing capabilities, the high-tech sector will be pivotal in the creation of an economic infrastructure that can better guard against future financial disruptions.

The report, entitled “Technology Works: High-Tech Employment and Wages in the United States,” examined the last eight years of technology job growth and concluded that:

    Since the dot-com bust reached bottom in early 2004, employment growth in the high-tech sector has outpaced growth in the private sector as a whole by a ratio of three-to-one. High-tech sector employment has also been more resilient in the recent recession-and-recovery period and in the last year. The unemployment rate for the high-tech sector workforce has consistently been far below the rate for the nation as a whole, and recent wage growth has been stronger.

If this is the case, can you imagine how much stronger the US economy would be if companies like Apple, Dell, Hewlett-Packard, and others had during the last decade manufactured their computers, mobile devices, and notebooks in the US, instead of outsourcing this task to China and other Asian locations, as well as Europe and Latin America?

I know that the first priority of every company is to make as much money as possible. In doing so, though, shouldn't loyalty to the country that gave that company a head start also be a priority? Many high-tech companies began as small startup firms that were able to flourish by tapping into existing financial resources such as small business low interest rate loans. Companies also benefited, for example, from local universities where their engineers, accountants, marketing and sales representatives, and other skilled workers were educated.

As we reflect on why our nation slid into the last economic recession, and as we contemplate the slow pace of economic recovery that we are now experiencing, we should take the time to analyze and identify policies and programs that can have a long-term impact on economic development. This might serve us better than implementing quick-fix policies such as cutting workers to help the balance sheet, which might allay investors' concerns for a few quarters, but may not provide long-term solutions that are desperately needed.

One very specific policy that can provide a foundation for long-term economic growth is to invest in educating young people in the areas of science, technology, engineering, and math (STEM). The latest scores that compare US students to that of their international counterparts in STEM subjects reveals that American students are making progress, but as Arne Duncan, US Secretary of Education, noted in a Huffington Post column, “we still have a long journey to go before all of America's children get an excellent education.”

Interestingly, the high-tech employment and wages report, which was published by the community advocacy group Engine Advocacy, in collaboration with the Bay Area Economic Council, defines the high-tech sector as “the group of industries with very high shares of workers in the STEM fields of science, technology, engineering and math.”

The report goes on to note that the high-tech sector provides an economic ripple effect that supports secondary job creation and local economic development. Three additional key points raised in the report are that:

  1. Employment growth
  2. in STEM occupations has consistently been robust throughout the last decade, outpacing job gains across all occupations by a ratio of 27 to 1 between 2002 and 2011. When combined with very low unemployment and strong wage growth, this reflects the high demand for workers in these fields.

  3. Employment projections
  4. indicate that demand for high-tech workers will be stronger than for workers outside of high-tech at least through 2020. Employment in high-tech industries is projected to grow 16.2 percent between 2011 and 2020, and employment in STEM occupations is expected to increase by 13.9 percent. Employment growth for the nation as a whole is expected to be 13.3 percent during the same period.

  5. The creation of one job
  6. in the high-tech sector of a region is associated with the creation of 4.3 additional jobs in the local goods and services economy of the same region in the long run.

Reading these statistics brought me back to the recent presidential election and the rhetoric over jobs. We heard that drilling for oil is an answer to our economic woes. Carefully drilling for oil can solve some problems, but do you remember the BP oil spill off the coast of Louisiana? High-tech jobs don't come with that level of danger. Also, we heard that increasing taxes rates on individuals whose income exceeds $200,000 and families with income over $250,000 will raise $1.6 trillion in revenues over a 10-year period. Still, wouldn't it be better to add hundreds of thousands of high-paying high-tech job as a way to grow the tax pool, making people more self-sufficient and enriching the communities in which they live?

The news that Apple intends to manufacture Mac computers in the US is a step in the right direction and adds to the growing list of companies, such as Intel and General Electric, that have decided in recent years to expand their manufacturing production in the US.

More jobs create greater disposable income, which translates to more cash to buy laptops, notebooks, tablets, and smartphones. As the high-tech industry reflects on the part it intends to play in reshaping US manufacturing, let us hope that company executives will think not only about their balance sheets, but also about the lives of the people they employ, the communities where their plants are located, and the country that helped to make their company possible. Is that too much to ask?

8 comments on “Local Manufacturing: Not Too Much to Ask

  1. _hm
    December 18, 2012

    It is also responsibility of workers in manufacturing sector to sustain these new jobs. They should not insists on unions and very high hourly rate. They must create culture of ultra high productivity and after that ask for bonus proportaional to profit. I wish more local manufacturing returns and provides high quality products.

     

  2. FLYINGSCOT
    December 19, 2012

    There is an obvious backlash against offshoring as we all are in difficult financial straits at the moment.  When the markets pick up again and people have more disposable income the large corps will continue to chase offshoring as a means of reducing costs and maximizing shareholder returms.  Take the shareholders out of the equation and the outlook could be a lot different.

  3. hash.era
    December 19, 2012

    This opens the market for local industries and I see this as a plus point. It has both the sides like other businesses but can get the balance loaded in to the side which favors you by adding more value towards it. For that you do need government support and funding mostly.

  4. Harry Moser
    January 1, 2013

    Nicole, good article!  

    Two points:

    1.  On the subject of corparate responsibility to country, I will be taking the “in favor” side on that subject in a debate in The Economist. Please email suggestions and article llinks to harry.moser@reshorenow.org by Jan. 10.

    2. Try our website http://www.reshorenow.org for the tools to use to convince companies to reshore.

    Best!

  5. The Source
    January 2, 2013

    _hm,

    First, Happy New Year.  Now let me say one thing regarding your comments.  As the U.S. prepares for more high-tech manufacturing jobs, you said the workers “should not insist on unions and very high hourly [wage rates].”  Always remember that unions brought us the eight-hour work day, fought to end child labor of the kind that has recently been reported at Foxconn.  Unions have also consistently worked to establish higher wages, fought for paid benefits such as health care coverage, workers compensation and holiday pay, and helped to establish better working conditions overall for workers worldwide. With the number of manufacturing jobs expected to increase in the U.S. this year, I'm hoping that workers will be provided with the wages, benefits and working conditions that they deserve.

    Thanks for your comments.

    Nicole

     

  6. The Source
    January 2, 2013

    Dear Harry,

    Let's hope that this year the high-tech industry will further demonstrate that they see the U.S. as an even more attractive place to invest their money.  Hopefully, the high-tech industry will establish manufacturing facilities in locations that they believe will benefit their overall business strategy.

    Also, thanks for the link to the Reshoring Initiative website.

    Happy New Year!

    Nicole  

  7. bolaji ojo
    January 2, 2013

    I agree employees shouldn't insist on “high hourly wages,”etc. Executives should also decline any efforts to pay them millions in compensation. They'll also be applauded if they reject golden parachutes, sign-on bonus and the like.

  8. The Source
    January 4, 2013

    Bolaji,

    As high-tech companies expand their U.S. manufacturing facilities the focus should be on developing products that can compete in the marketplace. If companies are successful in generating more revenues then the workers are in a stronger position to request higher hourly wages. With regard to executives, we've seen many of them receive exorbitant pay and sign-on bonuses, stay for a period of time and leave with severance pay  that makes them far wealthier than when they began the job. In the meantime, these executive leave the company in a much worse financial position. Leo Apotheker, former CEO at HP comes to mind.  It's not fair, and it's not right.

    Here's an article that looks at the Apotheker story.

    http://money.cnn.com/2011/09/22/technology/hp_leo_apotheker_severance/index.htm

    Thanks for your comments. 

    Nicole

     

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