For years—decades, even—we have heard nothing but bad news for U.S. manufacturing. With this in mind, who would have thought that manufacturing has one of the most favorable long-term outlooks among American economic sectors? That might sound optimistic to some, but some positive long-term trends are starting to emerge.
According to a 2012 PricewaterhouseCoopers report, “A Homecoming for U.S. Manufacturing?”, the sector has gradually rebounded since 2009. The rebound might be a traditional cyclical recovery or the start of a second golden age.
Several factors are making “reshoring” attractive to U.S. manufacturers:
- Taking into account labor, transportation and inventory costs for steel products for sale to the U.S. market, for example, reshoring could yield a net cost advantage compared to manufacturing in China.
- A weakening U.S. dollar is making production in China less attractive.
- Increasing transportation fuel prices add costs to global supply chains.
- Rising wages means that manufacturers cannot count on low Chinese labor costs forever.
- A roughly 200% increase in the number of doctorates in engineering awarded in the United States over the past 30-plus years might fuel a resurgence in domestic manufacturing.
Another positive sign is the fact that the federal government is investing in domestic manufacturing. In September 2012, the U.S. Department of Labor announced $500 million in community college grants to expand job training through local employer partnerships. The grants were the second installment of a four-year, $2 billion Trade Adjustment Assistance Community College and Career Training initiative.
The initiative, undertaken in coordination with the U.S. Department of Education, promotes skills development and employment opportunities in fields such as advanced manufacturing, science, technology, engineering and math through partnerships between training providers and local employers.
Each state plus the District of Columbia and Puerto Rico will receive at least $2.5 million in dedicated funding for community college career training programs. In total, 297 schools will receive grants. Aside from expanding the colleges’ training resources, the funding will also better connect community colleges, universities and employers.
In the nation’s industrial Midwest, Minnesota received $16 million in federal grants to expand manufacturing job-training programs at its community colleges, according to the Sept. 20, 2012 edition of the Minneapolis Star Tribune.
In Minnesota and throughout the United States, the grants will help provide factory workers with high-tech skills necessary to remain competitive. A key element in the training focuses on automation, which is becoming prevalent in U.S. factories. In order to do their jobs, many assembly workers have been forced to learn software and engineering skills that were not essential in an earlier manufacturing age.
One of the Minnesota schools, Hennepin Technical College, received nearly $3 million to expand its manufacturing assessment and advancement centers. The school, which had eight virtual welding training computers at its Brooklyn Park campus, planned to use the grant to expand the number of computers at multiple campuses. The computers will allow more students practice software code writing and control panel functions in addition to working on the school’s welding machines.
The Obama administration is committed to revitalization of manufacturing jobs by promoting manufacturing innovation institutes. These would promote collaboration between Universities and business. The $7 billion package consists of $6 billion in federal tax credits for factory towns and $1 billion to create a network of innovation hubs.