Posts Tagged ‘Manufacturing jobs’

Economic Indicators Report Reveals a Shrinking Middle Class

Tuesday, May 23rd, 2023

A long-time acquaintance of mine, Charles Shor, contacted me recently to inform me that he had founded a new non-profit organization, Blue Collar Dollar Institute.  Charlie has been a long-time reader of my blog articles, and we share a common concern — the shrinking middle class.  We also shared the same opinion of the main reason for the cause of the shrinking middle class:  the loss of higher-paying manufacturing jobs by American manufacturers outsourcing manufacturing to foreign countries, particularly China. 

We agreed that the problem is, “By offshoring much of our manufacturing base, the United States has developed a dependency on importing consumer goods, amassing debt in the private and public sectors, and relying on critical goods from abroad in times of crisis such as pandemics and wars.”

We both feel that the middle class is in trouble.  “The Blue Collar Dollar Institute aims to understand how the United States’ decision to subsidize foreign manufacturing is decreasing the size of our middle class, increasing the amount of Americans in poverty and catapulting forward the wealth in both the top 5% and foreign competitors.”

The Institute’s Mission Statement is: “The Blue Collar Dollar Institute believes that the United States cannot offer a middle-class lifestyle to a large majority of Americans without possessing a strong and vibrant manufacturing sector.  Our non-partisan mission is to research data, inform the public, and advocate for policy in order to help strengthen US manufacturing and goods-producing sectors. 

Prior to founding Blue Collar Dollar Institute, Charlie’s original foundation, The Charles Shor Foundation, collaborated with  Dr. David Perkis, Purdue Center for Economic Education, Krannert School of Management, to prepare a 200-page Economic Indicators Report.

Charlie encouraged me to contact Dr. Perkis, and we had a long conversation when I connected with him last week.  He explained that the report’s purpose “is to provide a picture of the economic and social wellbeing of the United States in comparison to five other industrialized nations:  China, Japan, Germany, South Korea, and Singapore… Special attention is given to the manufacturing sector due to its perceived ability to offer high paying jobs and to create additional jobs in communities.”

One of the most serious facts the report reveals is: “Since 1945, the percentage of jobs in manufacturing, construction, and mining has dropped from 40% to 14%, eliminating some of the highest paying jobs for high school graduates.”

The result is: “The dreams of Americans obtaining the basics of a middle-class lifestyle, such as owning a home, sending their kids to college, and obtaining affordable housing, have become more and more out of reach for the average household.”  I’ve seen this in my own family as my two adult children have not been able to buy homes in San Diego, CA.

The results of the research revealed that “Although the United States is still the world leader in total output, it has some dubious distinctions in comparison to the other countries of this study.” The other countries are China, France, Germany, Japan, South Korea, and the United Kingdom.  In comparison to these countries, the United States has:

  • The least amount of trade as a share of GDP
  • The largest trade deficits
  • The highest level of adult wealth
  • The most significant wealth inequality
  • The highest level of health care spending (without the best outcomes).
  • The largest level of military spending
  • The lowest GDP share of manufacturing

Needless to say, I only had time to read through the first 40 pages of the lengthy report, so I will only point out some key findings related to manufacturing and trade issues.

As I have written previously in my books and blog articles, the U.S. has trade deficits since 1976, so it was no surprise to me that the report states: “From 1992 – 2019, deficits in manufactured goods have totaled $16.3 trillion (2010 USD), with the bulk of the deficit occurring since 1992 ($15.5 trillion). Since 1992, our largest deficits in manufactured goods have been with China ($4.6 trillion) and Japan ($2.5 trillion).”

Another noteworthy point is “The United States is still the world leader in output as measured by Gross

Domestic Product (Figure 1). In 2019, GDP measured $21.4 trillion USD, compared to $14.4 trillion from its next closest rival, China.”


I’ve long said and wrote that manufacturing jobs are the foundation of the middle class, and if we lose sufficient manufacturing jobs, we will lose the middle class. The loss of middle-class jobs in the U.S. is demonstrated by the fact that “the United States is no longer the leader in average income ($62 thousand USD). That distinction belongs to Singapore ($101 thousand USD).” The result has been “Income inequality in the US has increased significantly over the past 50 years (Figure 10). Income growth for the lowest 60% of income earners fell from the late 1990s through 2015.”

This may be due to the fact that the percentage of jobs in producing goods went down from 39% in 1964 to 15% in 2019, while the percentage of jobs in services increased from 62% in 1964 to 85% in 2019.  The average non-supervisory wage of goods jobs was $944/week I 2019, while the services wage was $699. However, service jobs in retail paid even lower in 2019 —$594/week.

With regard to budgets and deficits, “Except for a four-year period at the end of the Clinton administration, the United States has run a national budget deficit every year since 1970…The governments of Japan and the US carry the most debt…Japan has managed to accumulate the largest government debt as a percentage of GDP, totaling 232% (Figure 22). The United States is a distant

second carrying debt just over 100% of GDP…However, total government debt does not tell the whole story as some may be owed to a country’s own citizens while some will be due to foreign entities. For

instance, of Japan’s 232% debt, 208% is owed to domestic entities with a small portion due overseas (Figure 23). Within our comparison group, the United States government maintains the greatest holdings of debt to foreigners (37%).” 

As I have written in previous articles, there is a relationship between budget deficits and trade deficits.  When a country is buying more imports than selling exports, this produces less revenue for the government, so the country goes into debt to pay its expenses.  We lost 5.8 million manufacturing jobs between 2000 and 2010, and have only added back 1.2 million manufacturing jobs from reshoring and Foreign Direct Investment.  If these manufacturing workers had to get service jobs, they would be receiving lower wages and thus paying lower taxes.  In addition, the higher percentage of workers being paid lower wages for a service job results in their paying less taxes, again reducing the government’s revenue.

The report also mentions the benefits of manufacturing for a town, region, state, and the country as a whole.  This is because

1) “Most goods can be traded anywhere in the world, creating more exports and

generating income from overseas, whereas services are typically limited to

local markets.

2) Manufacturing positions create more additional jobs in the local community

than do service oriented positions. This is the multiplier effect of manufacturing.”

The report explains, “Job multipliers indicate how many total jobs will be created within a region due

to a new position in a particular industry.”  The job multiplier effect for manufacturing jobs ranges from 2.2 to 4.0, whereas the multiplier effect for service jobs ranges from 1.3 to 1.9.

The goals of the Blue Collar Dollar Institute to have strong manufacturing, construction, and mining sectors would help middle-class households have a prosperous life in the following ways: 

  • “By creating high-paying jobs for individuals without a college education. 
  • By selling more products overseas than we buy overseas, bringing net funds into the country. 
  • By making our nation less dependent on foreign countries for critical goods in times of crisis such as pandemics and wars, thus reducing risk for the average American.”

I look forward to continuing my discussions with Dr. Perkis to explore ways in which Industry Reimagined 2030 can collaborate to achieve the goals we have in common, such as adding 5 million middle-income manufacturing jobs and $1 trillion to the economy by 2030.

ToolingU-SME Works to Close the Skills Gap

Tuesday, August 2nd, 2022

The Deloitte and The Manufacturing Institute 2022 Manufacturing Perception Study reports that “ significantly more respondents believe that manufacturing jobs are innovative and more respondents are likely to encourage their child to pursue a career in the industry” [compared to the 2017 study]…”Further, the pandemic has led to a new awareness of the critical nature of manufacturing in the United States and beyond.”

This corroborates the eBook released last year by American Machinist and IndustryWeek titled, “Closing the Skills Gap – How manufacturers are leveraging new technologies and energizing a new generation to finally close the labor gap,” that was sponsored by Epicor Software Corporation.

The Executive Summary stated: “We are on the cusp of a full-scale digital revolution in the manufacturing industry…[and] on the cusp of an enormous wave of retirements as Baby Boomers exit the job market…we have a perfect storm.”  The result could be that the “500,000 unfilled manufacturing jobs today…[could] balloon to 2.5 million over the next decade.”

The eBook outlined the application of the new tactics that manufacturers are applying across industries: “Over the last few years, manufacturers across the industry have begun systematically attacking the skills gap head-on…”

However, now is the time to be prepared to take advantage of the increased interest in returning manufacturing to America and strengthen our manufacturing base as a result of the weaknesses in the domestic supply chain revealed by the COVID-19 pandemic.

Since 1979, the SME Education Foundation has been inspiring, preparing and supporting the next generation of manufacturing and engineering talent through their Student Summit event series, the SME PRIME® (Partnership Response In Manufacturing Education) initiative, and Student Scholarship program. The Foundation “works directly with the manufacturing community to educate the next-generation workforce through SME PRIME. The partnership provides industry-driven and learner-centered curriculum to high school students at SME PRIME schools across the country. Online learning is a significant component to the tailored curriculum developed for each SME PRIME school.”

I had the pleasure of being connected to Chad Schron, who is the senior director for Tooling U-SME and the Co-founder of Tooling U. I learned that Chad grew up in manufacturing. He started his career working in his grandfather’s machine shop and attended his first IMTS show before he graduated from high school. Chad developed the idea for an online manufacturing training school while working at the shop to combat the manufacturing skills shortage.

I told Chad that I started working as an engineering secretary at age 18 for a small defense contractor that was essentially a machine shop making components such as accelerometers, rate gyros, potentiometers before going to college later.

Chad told me that ToolingU-SME has developed curricula that “one in five community colleges and over half of the Fortune 500 manufacturing companies use to train their workforce and their students.” He added, “During COVID we saw significant growth in our education business as schools needed online programs because students were participating online for virtual classes at home.”

From the SME website, I saw that some of the industry-leading companies that work with Tooling-U are: Aerojet General Corporation, B/E Aerospace, BMW Manufacturing Co, Caterpillar, Chrysler Group, Deere & Company, General Dynamics, General Electric Company, Harley-Davidson, Mazak Corporation, Medtronic, Meggitt Aircraft, Raytheon, Senior Aerospace, Siemens, and United Technologies Corporation.

The website states, “Tooling U-SME’s industry-leading online classes and assessments are developed with input from manufacturers and employ the latest methods in instructional design.  “Turnkey Training is a series of predefined online curriculum packages for core manufacturing job roles” that combines classes for targeted learning with on-the -job training (OJT).  “Turnkey Training quickly creates a learning road map and career path for everyone from new hires to tenured employees. Most job roles can be completed in one year with less than four hours a month spent online.”

In addition, “Turnkey Training is ready for immediate use and delivers instruction in the areas needed most by today’s manufacturers. Unlike many other training programs, Turnkey Training requires minimal preparation. It is efficient, effective training that will deliver ROI quickly.”

I asked Chad about the impact of the COVID pandemic, and he said, “COVID impacted a lot of our onsite Instructor led training programs as companies did not allow for in person/onsite training. Most customers have significantly reduced or removed all of their COVID restrictions, and we are back to pre-COVID training programs.”

Chad told me that the COVID pandemic had no real effect on their Apprenticeship and Certification programs. The SME website describes Tooling U-SME’s Apprenticeship Frameworks as “a series of predefined curriculum for common apprenticeship job functions, that provide related training instruction (RTI) using Tooling U-SME online classes…that support common apprenticeship job functions, and provide a flexible model allowing organizations and educators to offer easily accessible solutions in alignment with business needs.”

He explained, “By pairing Tooling U-SME online classes with on-the-job training, trainees can complete their apprenticeships at their own pace from anywhere. Our online classes also provide trainees with the education and theory to help them increase their success. Our Apprenticeship Frameworks are aligned with nationally recognized Department of Labor apprenticeship programs and easily incorporated into a company’s existing programs or used as a foundation for a new apprenticeship program.”

Chad sad that ToolingU-SME also offers Certification programs that “are built by professionals within the manufacturing industry who guide the development and continuous improvement of the bodies of knowledge and competency models upon which the certifications are based.” Current Certification programs listed on the website are:

  • Certified Manufacturing Associate
  • Certified Manufacturing Technologist
  • Certified Manufacturing Engineer
  • Lean Certification (Bronze, Silver and Gold)
  • Additive Manufacturing
  • Electrical Electronics Technology

Chad said, “We are seeing significant grown in our Industry 4.0 curricula as more companies are adopting SMART/Industry 4.0 technologies. This is particularly important as more companies are reshoring and changing their supply chains. They are leveraging these new technologies.”

Chad added, “We have a new Virtual Reality product that we just launched, and there is a video overview to view at https://www.youtube.com/watch?v=g-2MhC3beBY&t=10s and press release to read at https://www.toolingu.com/About/Press-News/Tooling-U-SME-Debuts-Immersive-Virtual-Labs.

He concluded saying, “ToolingU is constantly adding new and updated classes to our online catalog and our upcoming class release schedule can be viewed here.

I told Chad that the training ToolingU-SME provides is crucial to achieving one of the goals of Industry Reimagined 2030; that is, adding 5 million to the manufacturing-related, middle-income workforce by 2030 (a 40% increase.) I told him that I hoped that the ToolingU-SME curricula will expand to being used by four out of five community colleges instead of one out of five to accelerate that rate of training for manufacturing jobs in the U.S. to fill the over 500,000 manufacturing jobs currently open and prevent us from having an unfilled gap of over two million by 2030.

Manufacturing Renaissance: Recommendations to Bolster National Security & Economic Prosperity 

Tuesday, April 5th, 2022

In November 2021, the Ronald Reagan Institute released a Report of the Task Force on National Security and U.S. Manufacturing Competitiveness titled “A Manufacturing Renaissance: Bolstering U.S. Production for National Security and Economic Prosperity.”

I came across this article last week, having missed it when it was released because many reports similar to this are ignored by the mainstream news outlets focused on the daily news and don’t reach the large national audience they deserve.

The Task Force was co-chaired by Ms. Marillyn Hewson, Former Chairman, President, & CEO, Lockheed Martin Corporation and Dr. David McCormick, CEO, Bridgewater Associates, and former Undersecretary for International Affairs, U.S. Department of Treasury. The Task Force members represented a cross section of business, government, and elected representatives.

I recently joined the board of the non-profit Industry Reimagined 2030, which is transforming the myriad of well-intentioned efforts to revitalize U.S. manufacturing into coherent, aligned action. Our strategic aim is to shift the implicit national narrative from manufacturing in ‘inevitable decline’ to one of ‘vibrant opportunity.’

What the Manufacturing Renaissance report has to say about ‘inevitable decline.’

In the Introduction, the Task Force “considered the causes and implications of the continued erosion of American industrial and manufacturing capabilities in sectors critical to national security, such as defense equipment, semiconductors, telecom supplies, and pharmaceuticals.”  They acknowledge that the U. S. is at a “dangerous status quo” and as a result, “at the highest ranks of the U.S. federal government, consensus is emerging that the continued degradation of America’s industrial base is creating domestic vulnerabilities and weakening our ability to compete.” 

As I have pointed out in previous articles, the Task Force admitted that “As America moves slowly, China is accelerating ahead. In 2019, China led the world in global manufacturing output at a level 12 percent higher than the United States.” In addition, “China’s push for self-reliance starkly contrasts with America’s increasing dependence on imports…”

To usher in a new era, it is essential that we wake up to the consequences of this prevailing worldview. I participate on the Buy American committee for the Coalition for a Prosperous America, and the members of Congress who have spoken at our virtual committee meetings recently have emphasized the realization that we have become too dependent on imports from China and other nations and urgently need to rebuild the supply chain of American manufacturing to produce critical products in the U.S.

The Executive Summary emphasized the following key points:

  • “The COVID-19 pandemic underscored manufacturing’s essential role in ensuring our national health, safety, security, and economic vitality. It also revealed how vulnerable the global supply chains are to shocks and disruptions.”
  • “Chinese leadership is leveraging state industrial and technological planning to achieve global economic and military power. In doing so, it has made substantial progress in achieving its stated goals of supplanting America as the world’s foremost economy and recasting the rules-based international system.”

What the Manufacturing Renaissance report has to say about ‘vibrant opportunity.’

The Task Force commented that “The daunting challenge before America also brings with it an opportunity to usher in a new era of productivity and economic growth through new technologies, human capital, managerial innovation, and updated business models.” 

  1. Build unprecedented collaboration at the local level to scale the skilling and placement of workers in high demand, high skill jobs. Let’s encourage U.S.-headquartered manufacturers to fund 500,000 apprenticeships over the next decade.  Let’s write policy allowing employers and high school graduates to use federal education grants for credential programs, apprenticeships, and internships.
  • Modernize the Defense Production Act (DPA) for the 21st Century. There are specific “industries that require the establishment of new, enhanced policy measures to support supplier ecosystems and strengthen government coordination.” They recommend updating the DPA to “enable holistic solutions for critical manufacturing facilities.”
  • Stand up a public-private capability to finance investments in domestic manufacturing sectors critical to national security. It could be done by “a new government-sponsored investment entity like the proposed Industrial Finance Corporation, changes to existing institutions such as the U.S. International Development Finance Corporation, direct bond buying programs, a sovereign fund, or private capital funds focused on the on-shore manufacturing ecosystem.”

The Task Force recommends setting the following goals to use as metrics to measure progress over the coming decade:

  • “Bring 2 million new or retrained workers into strategic manufacturing sectors by 2030”
  • “Improve American productivity growth in critical industries to 3.9 percent, which would represent a return to the historic average for manufacturing growth.”
  • Widely deploy and couple modern technology and management practices
  • “Add 35,000 new small- and medium-sized enterprise (SME) manufacturers in critical subsectors by 2030 to strengthen the core of the American supplier base and replace half of the small business capacity lost since the late 1990s.”

It’s amazing how close three of the above five goals are to the goals our board has established for the new non-profit, Industry Reimagined 2030, that I wrote about in my last blog article. It’s also coincidental that the Task Force also chose 2030 as the date for achieving their goals.

We have two distinct futures … It is up to each of us to make a choice and take a stand

The report states that “America stands at a fork in the road, facing a choice between two distinct futures” — “Mounting National Security Risk and Economic Vulnerability” or a “A Better Way Forward: Strength, Renewal, and Prosperity.” The Task Force “is confident that a renaissance of American manufacturing is possible if policy makers and business leaders make the necessary choices for our economy and our long-term security.”

As I wrote last time, we have a choice of continuing “inevitable decline” or choosing “vibrant opportunity” for American manufacturing. As a country, we have the choice of becoming subservient to China or remaining a free, independent nation. The future of our country rests on which choice we make.

Manufacturing Jobs Pay Higher Wages than Retail or Service Jobs

Tuesday, June 9th, 2020

Continuing my series on why manufacturing is important to America, the second reason is that wages and benefits for manufacturing jobs are approximately 21 percent higher than for non-manufacturing jobs.

As manufacturing jobs have declined over the past 40 years, the difference between the lowest personal income and highest personal income has steadily grown wider.

This difference was projected to get even worse according to data from the U.S. Department of Labor Occupational Outlook for 2018-2028. Employment growth was projected to continue to be concentrated in the service-providing sector of the economy.

  • “The service-providing sector as a whole will grow at a projected rate of 0.6 percent annually, slightly faster than the annual rate of 0.5 percent for industry employment overall. This growth is projected to add more than 7.6 million jobs, resulting in 136.8 million jobs in the service-providing sector by 2028. After declining slightly from 2008 to 2018 (-0.3 percent annually), the goods-producing sector is expected to change little from 2018–28, with an annual growth rate of 0.1 percent.
  • The sectors projected to experience the fastest annual employment growth are health care and social assistance (1.6 percent), private educational services (1.2 percent), and construction (1.1 percent). These three sectors alone are projected to add more than 4.6 million jobs by 2028—including 3.4 million new jobs projected in healthcare and social assistance.”

In an opinion article in IndustryWeek magazine, John Madigan, a consultant with Madigan Associate, wrote:

“Jobs paying $20 per hour that historically enabled wage earners to support a middle-class standard of living are leaving the U.S. Public sector aside, only 16% of today’s workers earn the $20-per-hour baseline wage, down 60% since 1979.  Service and transportation jobs, per se, cease to exist in the absence of wealth. Rather, they exist and thrive as by-products of middle-class incomes buying products and services.” (source)

According to Facts about Manufacturing by The Center for Manufacturing Research of The Manufacturing Institute, “In 2018, the average manufacturing worker in the United States earned $87,185 annually, including pay and benefits. The average worker in all nonfarm

industries earned $68,782.  Looking specifically at wages, the average manufacturing worker earned more than $27 per hour, according to the latest figures, not including benefits.”

According to the IndustryWeek 2018 Salary Survey, the average salary for manufacturing management is $110,200. By industry sector, the salary ranged from a low of $88,500 in the textiles/apparel sector to a high of $142,500 in the medical device/lab equipment sector.

The 2018 Manufacturing Compensation Report, sponsored by the SME Education Foundation and the Arconic Foundation, “found an average compensation of $64,014 for hourly workers and $111,731 for salary workers, including base pay, bonus/commission and dividends/stock options/profit sharing, and such perks as a company car and mobile phone. Following the trend in the rest of the country, 68 percent of hourly workers and 73 percent of salary workers reported a wage increase in the last year.”

In this report, Christopher Barger, senior director of communications at SME, said, “There are multiple paths to success and good-paying careers at all levels of manufacturing, and the good news is these jobs are in high demand. Individuals who pursue a career in manufacturing have several options to gain solid training education, be it entering the workforce from high school through apprenticeships or internships, attending a vocational school and getting certifications, or attending community colleges, and obtaining associates or four-year degrees.”

Most people have no idea of the variety of jobs that are available at manufacturing companies. Besides the usual corporate/executive management jobs, some of the other management jobs available at medium to large manufacturers are in these areas: operations, plant/facilities, manufacturing/production, purchasing/procurement, sales/marketing, quality, supply chain, lean/continuous improvement, human resources, R&D/product development, and safety/ regulatory compliance.

If you have the opportunity to visit the modern manufacturing facilities in the U. S., you would see the most productive, highly skilled labor force in the world applying the latest in information, innovation, and technology. Contrary to popular opinion, the industrial age is not over. We are in the midst of incredible advances in manufacturing – from nanotechnology, Industrial Internet of Things, robotics, artificial intelligence, and biotechnology.

The innovation found in the manufacturing industry has helped to increase economic productivity too. Since the Industrial Revolution, the way we produce and consume goods has drastically changed, and it is continual innovation that allowed and continues to allow our country to become increasingly more productive in the services offered.

Automation and robotics have helped keep American manufacturers not only competitive but the most productive in the world. Manufacturing has long led U.S. industries in productivity growth. Gains in productivity raise a country’s standard of living. In the past 20 years, productivity – output per hour – has more than doubled – actually 2.5 times – that of other economic sectors.

There is also a multiplier effect of manufacturing jobs that reflects linkages that run deep into the economy. For example, every 100 steel or automotive jobs create between 400 and 500 new jobs in the rest of the economy. This contrasts with the retail sector, where every 100 jobs generate 94 new jobs elsewhere, and the personal and service sectors, where 100 jobs create 147 new jobs. In addition, for every $1.00 spent in manufacturing, another $2.74 is added to the economy. Thus, this economic data indicates that each manufacturing job creates three to four other jobs, while service jobs only create one to two other jobs.  

Thus, manufacturing is an important vehicle to grow and sustain a higher standard of living for our nation, our states, cities, communities and individual families. The higher wages of manufacturing jobs contribute to a better quality of life while ensuring that we have a strong domestic manufacturing sector to protect the health and welfare of all Americans as well as protect our national security. 

U.S. Private Sector Jobs Have Declined since 1990

Tuesday, December 10th, 2019

On November 14, 2019, Cornel Law School “announced the launch of a new tool for evaluating the U.S. employment situation and predicting related variables: the U.S. Private Sector Job Quality Index (JQI).” The Index described in the White Paper represents 18 months of research by Daniel Alpert, adjunct professor at Cornell Law School and founding managing partner of the investment bank, Westwood Capital, LLC, Jeffrey Ferry, chief economist at the Coalition for a Prosperous America (CPA), Dr, Robert C. Hockett, Professor of Law at Cornell Law School, and Amir Khaleghi, a Research Fellow at the Global Institute for Sustainable Prosperity (GISP) and a PhD student at the University of Missouri–Kansas City.

At the many economic summits I’ve attended over the past 25 years, I’ve heard economists state that the U. S. is creating more low paying jobs than high paying jobs but there hasn’t been any data available to track this trend on a regular basis.  For the first time, the Job Quality Index provides a tool to measure “desirable higher-wage/higher-hour jobs versus lower-wage/lower-hour jobs.”

The authors define job quality as “the weekly dollar-income a job generates for an employee” They explain that “The JQI is an analysis of weekly incomes earned by the holders of each of the private sector P&NS jobs in U.S. It derives its data from the hourly wages paid, and hours worked by, holders of jobs in 180 separate sectors of the American economy.”

Since the end of WWII, the “percentage of private U.S. jobs in the service-providing sectors increased steadily from approximately 55%” to “around 83.5%” at the end of the Great Recession in 2009.  It has remained flat since that point. However, the paper states that “While service-sector growth as a percentage of all jobs has leveled off, job quality continues to worsen.”

The authors commented, “As weekly earnings of services sector jobs have, to an increasing degree, materially lagged those of jobs in the goods- producing sector (Figure 6), an increase of the percentage of service sector jobs would naturally result in an increase in the number of jobs below the mean, as reflected in the JQI.”

In addition, the authors note that the gap between higher-wage/higher-hour jobs versus lower-wage/lower-hour jobs” has widened almost four-fold to $402 in 2018 from $104 in 1990”  

The paper states, “jobs as tracked by the JQI are defined by reference to data on private sector (nongovernmental) employment provided by third party employers—it does not include self-employed workers. In the first iteration of the JQI being presented in this paper, the index covers only production and nonsupervisory (P&NS) positions, which account for approximately 82.3% of the total number of private sector job positions in the country.”

By the end of 2020, a second index (JQL-2) “will run and be maintained side-by-side with the original JQI-1 index. This will track all private sector jobs, with data commencing in 2000.”

Monthly revisions to the JQI-1 will be published “contemporaneously with the monthly release of U.S. employment data by the BLS (generally on the first Friday of each calendar month. In the future, the JQI will be “presented as a three-month rolling average of monthly readings. This is done to address month over month variability which is too volatile to be a reliable directional trend measure.”

The November JQI stated:  “the U.S. Private Sector Job Quality Index (JQI)® has been revised to a level of 80.39, representing a minor decline of 0.04% from its level one month ago and reflecting a somewhat lower proportion of U.S. production and non-supervisory (P&NS) jobs paying less than the mean weekly income of all P&NS jobs, relative to those jobs paying more than such mean. The mean weekly income of all P&NS jobs as of the current reading (reflecting the level as of October 2019) was $794, a change of 0.9% from its level the month prior.”  The chart released is shown below:

The paper is divided into five parts:

Part I — Need for the JQI: The Unmeasured Problem with American Jobs

Part II — Construction of the JQI: Capturing and Tracking the Data (explains the development technical detail, setting forth the assumptions and algorithms inherent in its generation)

Part III — Applying the JQI: Illuminating Areas of Confusion in Economic Transmission (discusses the relationship and potential forecasting usefulness of the index in connection with other economic data)

Part IV — Further Developing the JQI: What the Future Holds for the Index (discusses future maintenance and expansion of the index)

Part V — Conclusion: An Index for our Time

Among other things, Part III discusses “The relevance of the resulting “Phillips Curve,” relating lower unemployment to higher levels of inflation…[which] remains—in various modified forms—part of central bank policy consideration to this day.”

It also discussed the impact of the JQI on household incomes and consumption with regard to the U.S. Balance of Trade in Goods. The authors comment, “…as American consumption has continued to rise, the goods consumed had to be produced by someone—even as U.S. goods production jobs plummeted. As evidenced by the U.S. balance of trade over the past several decades, goods consumed by Americans at the margin came increasingly to be manufactured abroad”

They later comment, “The decline in U.S. job quality over the past three decades is linked substantially to a decline in goods-producing jobs.”

 Some of the findings of the research that were of particular interest to me in Part III were:

  • “The JQI’s definition of high-quality jobs (those above mean weekly earnings) provided an average of 38.26 hours of weekly work at year-end 2018, compared with low quality (those below the mean) which provided 29.98 hours.”
  • The percentage of goods producing jobs as a percentage of total private sector jobs dropped from 25.6% in 1990 (down from a high of 43% in 1960) to 16.4% in 2018.

The researches commented, “Surprisingly, the data as analyzed with the JQI also tend to predict the performances of many other salient metrics of the national economy and—in the end—financial markets too…The JQI can significantly improve decision making of policymakers as well as better-inform participants in the financial markets.”

In their Conclusion, the authors remind us of the fact “that the US manufacturing workforce has declined dramatically in the past three decades.” Between 1970 and 1990, the decline was gradual, going down from “17.8 million manufacturing workers” to “17.7 million.” By the year 2000, “it was down 2.4 percent to 17.3 million manufacturing workers.” In the next decade, “manufacturing employment fell off a cliff. By 2010, manufacturing employment was down a shocking 33.2 percent at 11.5 million. Since 2010, the figure has crept up only somewhat, to reach 12.8 million in May 2019.”

 “Meanwhile, the total US working population has grown dramatically over those years. In 1970, manufacturing workers accounted for 22.6 percent of total US civilian employment. As of May 2019, they accounted for just 8.2 percent of the total.”

They comment, “An important question surrounding the decline of manufacturing is whether those leaving manufacturing are transitioning into better or worse jobs.  After building the new Job Quality Index, “the answer is that lost manufacturing jobs were chiefly replaced by lower-wage/lower hours service jobs.”

The White Paper confirms my research in writing three books and hundreds of articles in the past ten years — losing millions of manufacturing jobs between 2000 – 2010 resulted in a decline in the middle class because manufacturing jobs are the foundation of the middle class. Without a strong middle class, we risk becoming a nation of “haves” and “have nots.” I hope the Job quality Index will wake up more economists, Congressional representatives, and employees of government agencies to the dangers of this trend before it’s too late. 

The High Cost of Trade Deficits

Tuesday, April 9th, 2019
 
 

Free trade has resulted in enormous trade deficits in goods for the United States for over 40 years. Our last year of a positive trade balance was 1975. At best, free trade has benefited large, multinational global corporations that have manufacturing facilities located in other countries. At its worst, it is the primary source of our trade deficit and loss of good paying manufacturing jobs.

Even with the tremendous resources we have, what was once the world’s largest manufacturer of products has accumulated $14.379 trillion worth of deficits in goods for all countries since 1991.

A fact sheet generated by the Coalition for a Prosperous America for 2018 show ten countries account for 97% of our trade deficit: China, Mexico, Japan, Germany, Ireland, Vietnam, Italy, India, South Korea, and Malaysia. Our trade deficit with China alone was $419 billion, representing 47.9% of our trade deficit.  Since 1991, we have accumulated over $9.144 trillion worth of trade deficits with just the top four countries. If we had fair trade, we would not have these constant trade deficits.  The drastic effect China has had on our trade deficit is demonstrated by the fact that in 2001 when China joined the World Trade Organization, we had a total $412 billion deficit in goods, but in 2018, we had a $879 billion deficit in goods.

 

For every $1 billion of trade deficits in goods, it’s been estimated that 6,000 – 7,000 jobs are lost, at about $80,000/job. This means that 8 – 10 million more Americans willing to work could have a comfortable middle-class job in America. Instead, we lost 5.8 million manufacturing jobs from the year 2000 to 2010.

 

In terms of purchasing power, workers’ wages in the U.S. have been stagnant since the 1970s. The significant collapse in the income of average Americans can be attributed to the vast decline of jobs in the U.S. manufacturing sector. This is the reason average U.S. wages have fallen over time, especially since 2001. From 2001 – 2013, the average U.S. wages fell by 3.5%. In contrast, as Chinese workers flocked to cities for manufacturing jobs, wages have grown substantially, averaging an 11 percent increase per year from 2001 to 2015.

 

According to the Pew Research Center, 61% of American households were part of the middle class in 1971, but by 2015, only 50% of Americans were part of the middle class. “In 2002, China’s middle class was only four percent of its population. A decade later, this number had climbed to 31 percent, constituting over 420 million people. In contrast, in 1999, only 2% of the Chinese population was a part of the middle class, but by 2013, 39% of the Chinese population was in the middle class.

 

Since China joined the World Trade Organization, the bi-partisan, 12 member U. S.-China Economic and Security Review Commission (USCC) has been required to submit annual reports to Congress. These reports document China’s non-compliance with the WTO and the effect it has on the U. S. economy.

For example, the 2007 report included a case study of the local impact of trade with China on North Carolina. The USCC report stated “the accelerating decline in North Carolina’s manufacturing employment is due in large measure to increasing competition from imports mostly from China . . . The combination of China’s 2001 admission to the World Trade Organization (WTO), which gave it quota-free access to U.S. markets for its textile and clothing exports, and the subsequent U.S. grant of Most-Favored (Trading) Nation status that lowered most tariffs on Chinese imports, battered North Carolina’s textile and apparel industries, and they never recovered.”

Because a greater proportion of North Carolina’s workforce had manufacturing jobs than any other state, North Carolina’s workforce was more vulnerable to competition from imports than the workforces of other states. North Carolina’s manufacturing economy was made even more vulnerable by its concentration in the import-sensitive sectors of textiles, apparel, and furniture. North Carolina is one of the southeast states that had a large number of textile companies, and as a result, North Carolina has been the most impacted state in the nation by layoffs due to trade. Between 2004 and 2006, almost 39,000 North Carolina workers were certified by the Trade Adjustment Assistance program as having lost jobs to trade, more than 10 percent of the U.S. total of 387,755. 

According to the Social Science Research Institute (SSRI) of Duke University in North Carolina, there were 2,153 textile and apparel plants in North Carolina employing 233,715 people in 1996. By 2006, the apparel industry had experienced a 70% decline in jobs and 55% loss of plants. The textile industry by comparison had only lost 63% of jobs and 32% of plants from 1996 to 2006. 

The loss of these well-paid manufacturing jobs in North Carolina’s textile industry may have resulted in families losing their homes and/or being forced to relocate to other areas of the country to find jobs. Taking lower paying jobs in their own communities may have resulted in families no longer being in the middle-class income range. And, those who have not been able to find any work or only part-time work may have even dropped down to the poverty level.  It is not just people losing jobs and not being able to find other employment that pays as well as their former jobs, “hundreds of small towns throughout North Carolina impacted by plant closures are dying.”

Remember that it takes taxes paid by three to four working Americans to pay for the unemployment benefits of a non-working American. The cheaper China price of goods that we import instead of producing here in the U. S. results in a cost to society as a whole. We need to ask ourselves:  Is the China price worth the cost to society?  I say a resounding NO! We need to stop shooting ourselves in the feet. We need to stop benefitting the one percent of large multinational corporations to the detriment of the 99% percent of smaller American companies.

China, Germany, Japan, and many other countries have built their currency value around making certain all of their countrymen have a good job, even if that destroys America’s work force. As a result, these countries have maintained constant trade surpluses with the U. S. for many years, which would not have happened if we had fair trade.

 

It is impossible for the U.S.to remain competitive if our currency is not fairly valued. In order to move manufacturing jobs back to the U.S., we need to move our currency value down by at least 27% because the currency of Germany and Japan are undervalued by about that same amount.  China has rigged its currency between 15%-40% below its fair value since joining the WTO, and this gives a subsidy to their imports to the U.S. and imposes a direct cost on U.S. exports to China.

Devaluing our currency would allow many more products that we import from overseas to be made here. Unfair trade practices of currency manipulation, government subsidies, product dumping, and state-owned enterprises have allowed China to buy our raw materials and our low-cost energy to become the largest producer in the world of paper, aluminum, and steel even though labor costs are small compared to the cost of raw materials, energy, and transportation.

We need to focus on eliminating our trade deficits and achieving balanced, reciprocal trade in all future trade agreements. The last thing we need is to increase our trade deficit more than it already is.

 

In addition, we need to continue on the path of returning more manufacturing to America by reforming our tax policies and making regulations less onerous to manufacturers, without compromising our commitment to protect our environment. This is the only way that we will be able to simultaneously reduce our trade deficit and the national debt.

Tariffs Benefit the American Manufacturing Industry

Wednesday, February 13th, 2019

Most people are unaware that for over 150 years, the American government protected the development and growth of its manufacturing industry with high tariffs, ranging from a low of 5% to as high as 50% in some cases. The first tariffs were imposed by the Tariff Act of 1789, whose purpose was to raise money for the new federal government, slash Revolutionary War debt and protect early-stage American industries from foreign imports.

Prior to achieving its independence, Americans were dependent on goods imported from England, France, and Holland, so it was critical to develop their own manufacturing base to maintain independence as a country in the event of future wars.

These protectionist policies enabled its fledgling manufacturing industries to grow until the United States became the preeminent industrial nation in the 20th century.  American manufacturing dominated the globe for over 70 years.

After World War II, the U.S. switched from protectionism to free trade in order to rebuild the economies of Europe and Japan through the Marshall Plan and bind the economies of the non-Communist world to the United States for geopolitical reasons.

To accomplish these objectives, the General Agreement on Tariffs and Trade (GATT) was negotiated during the UN Conference on Trade and Employment, reflecting the failure of negotiating governments to create a proposed International Trade Organization. Originally signed by 23 countries at Geneva in 1947, GATT became the most effective instrument in the massive expansion of world trade in the second half of the 20th Century.

GATT’s most important principle was trade without discrimination, in which member nations opened their markets equally to one another. Once a country and one of its trading partners agreed to reduce a tariff, that tariff cut was automatically extended to all GATT members. GATT also established uniform customs regulations and sought to eliminate import quotas.

By the 1970s, Japan’s economy was flourishing to the point that Japan became a major exporter to the U. S. for consumer electronic goods such as cameras, stereos, radios, and TVs. During the 1980s, Japan further expanded its U. S. market share with automobiles and machine tools for the manufacturing industry, such as mills, lathes, and turret presses.

Germany focused on high-end products in all of the same markets as the Japanese, so that American products faced stiff competition at the low end and high end.

Manufacturing employment in the U. S. reached a peak of 19.5 million in 1979, and slid down to 17.3 million by 1993 from the effects of job losses from increased imports from Japan, Germany, and other countries because of free trade policies and lower tariffs.

By 1995, when the World Trade Organization replaced GATT, 125 nations had signed its agreements, governing 90 percent of world trade.

Another major blow to the American manufacturing industry took place when the North American Free Trade Agreement (NAFTA) was negotiated under President Bill Clinton and went into effect in January 1994. The agreement was supposed to reduce market barriers to trade between the United States, Canada, and Mexico to reduce the cost of goods, increase our surplus trade balance with Mexico, reduce our trade deficit with Canada, and create 170,000 jobs a year. Twenty years later, the fallacy of these supposed benefits is well documented.

According to the report “NAFTA at 20” released in 2014 by Public Citizen’s Global Trade Watch, “More than 845,000 specific U.S. workers have been certified for Trade Adjustment Assistance (TAA) as having lost their jobs due to imports from Canada and Mexico or the relocation of factories to those countries.”

In 1994, GATT was updated to include new obligations upon its signatories. One of the most significant changes was the creation of the World Trade Organization (WTO.) The 75 existing GATT members and the European Community became the founding members of the WTO on January 1, 1995. The other 52 GATT members rejoined the WTO in the following two years, the last being Congo in 1997. Since the founding of the WTO, a number of non-GATT members have joined, and there are now 157 members.

The loss of jobs accelerated after President Clinton granted Most Favored Nation status to China in the year 2000, and China was able to join the WTO. As a result, the U. S. lost 5.9 million manufacturing jobs from 2000 to 2010, and manufacturing employment dropped from 17.3 million down to 11.4 million in depth of recession in February 2010. In addition, an estimated 57,000 manufacturing firms closed.

On January 31, 2017, the Economic Policy Institute released a report, “Growth in U.S.–China trade deficit between 2001 and 2015 cost 3.4 million jobs,” written by Robert Scott.

Scott stated, “Due to the trade deficit with China, 3.4 million jobs were lost between 2001 and 2015, including 1.3 million jobs lost since the first year of the Great Recession in 2008. Nearly three-fourths (74.3 percent) of the jobs lost between 2001 and 2015 were in manufacturing (2.6 million manufacturing jobs displaced).”

Why were so many jobs lost? A large percentage of the people who lost jobs were in industries decimated by Chinese product dumping and below market pricing; i.e., textiles, furniture, tires, sporting goods, and garments. In addition, American manufacturers chose to outsource manufacturing offshore as the U.S. Department of Commerce data shows that “U.S. multinational corporations… cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million.”

Thankfully, manufacturing employment increased to 12.8 million by December 2018 as shown by the chart below. This was the result of a very slowly improving economy, reshoring (returning manufacturing to America), and increased Foreign Direct Investment (foreign manufacturers setting up plants in the U.S.) Notice that it took six years to increase by 904,000 under the Obama Administration, and it’s only taken two years to increase by another 441,000 jobs under the Trump Administration. While an increase of 1.4 million jobs is good news, at this rate, it would take about 30 years to recoup the 5.8 million jobs we lost from 2000 to 2010.

 

We need to accelerate the growth of manufacturing jobs, and that is what the tariffs imposed by President Trump are designed to do.  In the only few short months since the tariffs went into effect, I’ve seen the following headlines about job growth in the past week:

“U.S. Steel Corp. Restarts Texas Plant That Closed in 2016,”  IndustryWeek, February 5, 2019

“Tariffs Helping US Manufacturers Add Jobs, Says Group,” IndustryWeek, February 7, 2019

“US Steel Resumes Construction on Idled Facility,” IEN, February 11, 2019

On December 04, 2018, the article “Contrary to popular belief, Trump’s tariffs are working” by Jeff Ferry, Research Director for the Coalition for a Prosperous America (CPA), stated,  “The tariffs have contributed to this growth directly and indirectly. Directly, we’ve catalogued some 11,000 US jobs that are being created by companies in the four tariffed industries, and that’s not including any of the Section 301 industries. Since that 11,000 tally in August, more investments and jobs have been announced, like the massive $1.5 billion steel plant to be built by Steel Dynamics, which will create some 600 new jobs in the southwest. Solar Power World lists a dozen solar companies now investing in US production of solar modules.”

“At CPA, we built an economic model looking at the effects of the tariffs on the US economy from 2018 through 2021. We found that the tariffs boosted US economic growth, adding $9 billion to GDP this year. Further, our growing economy leads to growing US imports each year. In other words, by boosting our own economic growth, we buy more goods from our trading partners, not less.”

If we want to protect our national security and maintain our national leadership in the 21st Century, we cannot continue down the path of increasing trade deficits and increasing national debt by allowing countries with predatory trade policies to destroy the American manufacturing industry.  I support the new path the Trump Administration is forging by developing and implementing a national strategy to win the international competition for good jobs, sustained economic growth, and strong domestic supply chains.

 

Steel and Aluminum Tariffs Will Help Rebuild American Manufacturing

Tuesday, May 22nd, 2018

There has been quite a furor in financial and political circles since President Trump announced the that he would impose tariffs on steel and aluminum imports from all countries.  There has been an outcry that it would raise consumer prices, end “free trade”, and start a trade war.  The fact is that we have been in a trade war with China for nearly 20 years — from when China was granted Most Favored Nation status (PNTR) in the year 2000 under President Bill Clinton. We have been losing this trade war, and it’s about time that we stood up and fought back.

China has been cheating on what they agreed to do to attain their PNTR status within the World Trade Organization.  They have dumped products in the U. S. at below market prices to destroy American competition. The Chinese government has subsidized their steel, aluminum, and other industries. They have manipulated their currency to make it undervalued compared to the U. S. dollar.  They have stolen the Intellectual Property of American companies.  They have forced American companies to transfer technology to Chinese companies in order to establish manufacturing facilities in China.  This hasn’t been free trade or fair trade.

The U. S. trade deficit with China has increased from a small deficit of $6 million in 1985 to $375.2 billion in 2017.  China represented 40% of our total trade deficit in goods of $810 billion in 2017, and our trade deficit has already increased at a record pace for January 2018.

As I pointed out in my December 7, 2017 IndustryWeek column, “How Trade Policies Led to the Decline of American Manufacturing, “As a result of the escalated trade deficits from 2001 to 2010, the U.S. lost 5.8 million manufacturing jobs and 57,000 manufacturing firms closed… our domestic supply chain has weakened…We even lost whole industries…” This number of jobs lost represents about 30% of the manufacturing workforce we once had.  Actually, “the number of jobs in manufacturing has declined by 7,231,000–or 37 percent–since employment in manufacturing peaked in the United States in 1979, according to data published by the Bureau of Labor Statistics.

In the past three days, I’ve listened to conservative radio talk show hosts lambast President Trump’s National Trade Director, Peter Navarro.  I’m personally acquainted with him because of residing in San Diego where he resided for many years. I even remember when he ran for mayor of San Diego in 1992.  What these talk show hosts and their guests fail to mention is that he was a professor of Economics at the University of California, San Diego for many years, and was professor of Economics at the University of California, Irvine prior to becoming part of the Trump administration.  He knows what he is talking about.

Navarro was one of the first authors to point out the threat that China is to the U.S. I’ve read two of his three books:  The Coming China Wars, published in 2008, which I read when I was writing my own book, Can American Manufacturing be Saved?  Why we should and how we can.” Then I read the second book that he co-authored with Greg Autry, Death by China, in 2011. Greg Autry has spoken at several of the manufacturing summits I participated in producing in southern California on behalf of the Coalition for a Prosperous America.  Greg Autry and I also served together on the board of directors for the American Jobs Alliance from 2011 – 2016.

Navarro and Autry outline the eight ways China cheats in trade in cleverly worded phrases:

  1. The Export Subsidies’ Dagger to the Heart.
  2. The New “Great Game”: Chinese Currency Manipulation
  3. They Think It’s Not Stealing if They Don’t Get Caught.
  4. Trashing China’s Environment for a Few Pieces of Silver
  5. Maiming and Killing Chinese Laborers for No Fun but Lots of Profits
  6. The Neutron Bomb of Export Restrictions
  7. Predatory Pricing, Dumping and the Dragon’s Rare Earth Cartel
  8. Goodness Gracious, Great Walls of Protectionism

If you haven’t read either of these books, I can highly recommend them, and they are still available on Amazon.

The tariffs on steel and aluminum are long overdue and constitute only a single step in balancing our trade deficit.  I’m delighted that President Trump is keeping his campaign promise of imposing tariffs on steel and aluminum.  I was happy when he withdrew the U. S. from the Trans Pacific Partnership Agreement as I had written more than a dozen articles about the dangers of that agreement to the U. S.  It would have been the “nail” in the coffin of American manufacturing.

There are many more policies we need to put in place to eliminate the trade deficit and restore manufacturing jobs to create prosperity.  I have made recommendations in the last chapter of my new book, Rebuild Manufacturing – the Key to American Prosperity, based on the research I have done for the articles I have written in the past six years as a columnist for IndustryWeek, along with many recommendations that have been made by the board of directors of the Coalition for a Prosperous America, of which I have been a member since 2011. Check out these issue papers on their website.

We can win this trade war if we have the same kind of courage and insight we had when we won World War II and the Cold War with the Soviet Union with the help of our allies. Remember, China has a written plan to become the Super Power of the 21st Century. If we lose this war, we may lose our country.

 

Los Angeles NTMA Training Centers to Celebrate 50 Year Anniversary in early 2018

Wednesday, January 24th, 2018

Last month, I had the opportunity to take a tour of the NTMA Training Centers in Santa Fe Springs, which was founded “to address the ever-increasing need for machinists to replace their retiring workforce.”

I met with J.R. Ragaisis, Exec. Director of Education and Training, and Carey Knutson, Exec. Director of Accounting and H.R. Carey emailed me info on the historical background of the Training Centers.  From the written history, I learned that Seymour Lehrer and Del Molinari led the charge to develop the Center in 1968 with the backing of the National Association organization. Members of the Southern California Tool & Die Association (later known as the Los Angeles NTMA) generously donated machining equipment and made a donation of $4,800 to get the Training Center started. This means that on February 1, 2018, the Center will celebrate its 50th anniversary!

I really liked that the goal of the Training Centers was “to transition tax-takers into tax-payers, by training them for a career in machining.”  J.R. Ragaisis, said, “The Training Centers was a step toward creating something unheard of at the time: to develop specialized training by industry for industry.”

It was amazing to me that the training program and school survived several recessions in the last 50 years and that no other centers were ever established in other parts of the country. J.R. said, “We have been contacted by others to set up other training centers in their areas, but nothing ever materialized.”

As he gave our group the tour, JR said, “In 1999, we set up a second training center in Ontario, (also in Southern California.); currently, the NTMA Training Centers have two state-of- the-art campuses with fully equipped machine shops, modern computer labs, and all the supplies and materials needed to train for machining. Both campuses are designed to emulate actual machine shops; we have machine tools and equipment leading industry employers use while accommodating students with spacious work stations and ample break areas indoors and outdoors.”

The Santa Fe Springs facility is a two-story building with classrooms, offices, and a large meeting room upstairs, and all of the machining equipment downstairs.  J. R. said that both training centers have many training programs available to service individuals and the manufacturing community ranging from entry level training to advanced programs for existing employees. Some of the training can be funded by what manufacturers have already paid into the Employment Training Fund through their employment taxes.  The NTMA Centers are currently on their 35th contract from the Employment Training Panel of California. For a nominal $250 in-kind contribution from employers for books, and tapping into their paid tax assessments, we will train your workforce to enhance and enrich your productivity.”

He explained that in the basic Machinist Training program, students learn the set up and operation of conventional machining equipment such as grinders, mills, lathes, drill presses, and saws. Instruction time is divided between classroom, computer lab, and shop, providing a unique blend of practical theory and hands-on experience. Instruction includes; quality control and inspection procedures, shop theory, precision measuring instruments, mathematics, blueprint reading, and basic CNC operations. Upon graduation, students may find entry-level machinist employment as an operator of a lathe, mill, grinder, drill press, etc. in the machining and tooling industry. In addition, our machinist classes are usually about 15 students per session, of which we run 3 sessions per day.”

I told him that for more than 70 years, the only place to get machinist training was in San Diego at San Diego City College, where most of the students were grabbed up as fast as they graduated by companies like Solar Turbines. Now, we also have the MiraCosta Technical Career Center in Carlsbad.  Since I have always represented machine shops as a manufacturer’s sales rep., I know there has been a shortage of CNC lathe operators for more than 20 years in the San Diego area.

I asked if the classes incorporate any training in Lean Manufacturing, and he said, “We emphasize 5S + 1 of Lean, in which the +1 stands for “Safety.” We teach safety first, and all the students are trained on the safety protocol for each piece of equipment from a hack saw to a CNC machine. Meaning, students have to sign off on what they learned before they can use any of the equipment.”

J.R. provided me information on what kinds of advanced training they provide for existing manufacturing employees:

Coordinate Measuring Machine (CMM) – This course is designed to provide students with the principles and practices in the operation of a CMM.

Computer Aided Manufacturing (CAM) software package called MastercamThis course bundles theoretical knowledge that the students bring into the course applying a computer-generated graphic of manufactured components for machining. The course is designed for machinists who have no computer aided manufacturing background.

Computerized Numerical Control (CNC)This course develops the skills to perform fundamental operations of CNC Mills/CNC Lathes, emphasizing on the basic operation of the machinery, process, and shop safety. The course is designed for machinists who have no CNC machining background.

Inspection This course develops the skills to perform fundamental inspection techniques, emphasizing on third angle projection of blueprints and applying basic concepts of inspection techniques through the use of indicators, micrometers, optical comparator, and the CMM. The course is designed for individuals who have no inspection experience

I asked J.R. if they provide any training for veterans, and he said, “We provide training in the machining, tooling and manufacturing industry for all veterans, who have or are serving in any branch of the U.S Military.  We recognize the unique situation that veterans may face transitioning and readjusting into their life out of the military. We do everything possible to assist them in the transition while enrolled in our programs.” The website states: “There are Veteran Education Benefits available to you if:

  • You have served in the military
  •  Currently serving in the military
  •  You are an eligible dependent of a veteran
  •  You are a spouse of a veteran receiving benefits”

J.R. said, “We start new classes every few weeks, and a class just started on December 6th, and another class will start January 29th.  We have a modular program of five modules, and each module is six weeks in length. It takes students seven months to complete all of the modules, and they graduate with certification as an entry level machinist with an 86% job placement rate for graduates. We are currently in a transition mode; for the first time in years, we need more students to keep up with the demand.  Manufacturers are calling us to find out when we will have new graduates, instead of us calling them to fill job openings.

After visiting this training center, I recommend that other NTMA chapters around the country reconsider establishing a training center in their region.  They could partner with their local community college on training programs as well as apprenticeship programs. They could also partner with their local SME chapter (formerly the Society of Manufacturing Engineers) because SME is heavily involved in partnering with high schools for training in manufacturing skills.  NTMA wouldn’t have to start from scratch because SME’s ToolingU has modular curriculum available for use in the training programs.

We need more collaboration between industry associations and educational institutions at the high school and college level if we are going to solve the skills gap and attract the next generation of manufacturing workers.

North Carolina Prepares for the Future through Training and Redevelopment

Tuesday, November 14th, 2017

At the TEDx San Diego event on Saturday, October 14th, Dr. Mary Walshok, Associate Vice Chancellor for Public Programs and Dean of Extension at the University of California, San Diego, gave a short talk in which she said we need to add HEART to STEM.  She coined the acronym HEART meaning Hands-on, Engaged, Applied, Relevant Training whereas STEM means Science, Technology, Engineering & Math.

She said too many educators don’t realize the need for the hands-on workers, such as machinists, welders, plumbers, electricians, etc. Too many parents are focused on their children getting a college education, which is why we have millions of unfilled jobs requiring hands-on training. She recommended combining HEART and STEM to be more competitive as a country in the global economy.

Fortunately, there are more and more cities, regions, and states that have awakened to this problem and are doing something about it.  Charleston, South Carolina and the Piedmont Triad region of North Carolina are among the problem-solving regions.

After visiting the Guilford Technical Community College aviation training center that I wrote about in my last article, my hosts took me to visit one of the companies involved in the apprenticeship program, Machine Specialties Inc., where we met with Rob and Tammy Simmons, President and Executive Vice President of the company.

Rob said, “The company was founded by Carlos Black in 1969 after he moved to the U.S. from Argentina where he had apprenticed as a machinist. I started in 1980, and we were primarily a small machine shop supporting the textile industry. In 1990, we expanded into screw machine parts. We got our first government contract in 1995. I became part owner in 1998, and we moved into a new building in 2003. We expanded into doing large parts like aircraft landing gear and added in-house anodizing and chem film. We bought this building in 2009 with all of office equipment. We added a large laser cutting machine in 2009, and now have two lasers. Then, we bought two large multi axis WFL machines to be able to machine Titanium. We are open 24/7, but our weekend shift works three days. We are AS9100 Certified for aerospace, ISO 9001 for commercial, and ISO 13485 for medical parts.

I bought the company in 2005, and today, we are a leading contract machining and metal finishing specialist that designs and manufactures parts for many different industries including the aerospace, military, and medical industry. We plan to grow to be a $50 million-dollar company by 2020.”

He added, “We realized that we had a problem because about 15% of our employees will be old enough to retire within the next five years. So, we need to train new workers to take their place.”

Tammy said, “We were one of the first six companies to work with Guilford County Schools in starting a new apprenticeship program in the fall of 2016 for those interested in the advanced manufacturing field. Students will undergo a three to four-year program where they can receive an associate’s degree in Manufacturing Technology, a journeymen certificate as a machinist or welder, have their school paid for, and then end up with a manufacturing job.

About 50 students, juniors and seniors, applied for the program, and 27 students were selected to start the program initially.  This year we are up to 20 companies participating in the apprenticeship program.  During the summer, the students took classes for six weeks and then worked full-time for six weeks.

The students who are seniors when they start the program, spend half the day at school and then the other half working at our company. The students who applied as seniors and then graduate, go to school one day a week at GTCC to pursue their associate’s degree in manufacturing technology and then spend four days working.  GAP pays students hourly wage while on the job and when they sit in class at community college. I think it’s important to note that apprentices are paid while they are in class earning their degree because I don’t know of any other programs that do this. We also pay the students for their tuition and books while at GTCC.”

Afterward, Vice President Bob Schumacher gave us a tour of the plant, where we met three of their apprentices, two young men and one young woman.  One of the young men had graduated from high school before starting the program in the summer, and two are seniors this year. The young woman knew she wanted to be a welder when she started the program because her family have been employed in the manufacturing industry.

Then, we drove to Browns Summit, near Greensboro, to visit ABCO Automation, where we met with Brad Kemmerer, President   and CEO, and Jack Walsh, EVP Sales and Marketing.  Mr. Kemmerer said, “We build custom automation equipment and are a FANUC and KUKA robot integrator. Our company was started in 1977 by Graham Ricks, but we converted to an ESOP (Employee Stock Ownership Plan) in 1998. We started working with Coca Cola in the beginning to build electrical control systems and custom packaging equipment.  We designed the system that McDonalds uses to pump the syrup into their restaurants.

He explained, “In the late 1980s, we began to diversify our customer base by building custom equipment for a broader range of manufacturers. We began to go beyond packaging projects into manufacturing assembly, material handling, and inspection equipment. Now, our customer base is very diversified — all of the typical industries represented in North Carolina — Aerospace, Automotive, Chemical, Food & Beverage, Electronics, Healthcare, Pharmaceutical, Tobacco. Most of our customers have 25-30 plants around the world, and the average price of a system is $1 million.”

He added, “We have 150 employees, but added 23 employees in the last six months and 40 in the last 18 months.  We need to build a supply of future workers if we want to continue to grow. We have supported the robotics competition, For Inspiration & Recognition of Science & Technology (FIRST). For two weekends in January, we host more than 60 students from six local high school robotics teams to help them kick-start their FIRST Robotics Competition. After learning the theme of the competition, each team has just six weeks to design, build, and ship the robot to the FIRST national competition. We provide guidance from our mechanical engineers, electrical engineers, and project managers to assist students, their mentors, and coaches.

When we heard about the Guilford Apprenticeship Partners (GAP) program, we hosted the meetings and helped with the high schools. We currently have four apprentice students learning the skills of an electrician, mechanic, fabricator, and machinist. Two are first year apprentices and two are second year apprentices. We believe this a win-win for all—we supplement our current manufacturing team, and the students gain paid on the job experience while earning a college education.”

By this time, it was late afternoon, so we headed back to Greensboro to enjoy dinner at Natty Green’s Kitchen + Market, which is a combination micro-brewery, farm-to-market restaurant, and store located in a redeveloped textile mill.  Natty Green’s is in one of the buildings of Revolution Mill, a 45-acre historic textile campus that brings apartments, restaurants, events, history, and innovation together as the “Place of Choice to Live, Work and Create in Greensboro.”

Nick Piornack, Business Development Manager, gave us a tour of two of the former textile mill buildings — one that has been re-purposed for offices and studio space, and the other as an apartment building.  Between two of the apartment building is an outside event space where one of the finalists of The Voice was performing.  There is one classic building yet to be redeveloped on the property.

From the website, I learned that Revolution Mill is “a historic textile mill campus encompassing the Revolution Mill and Olympic Mill sites, with adjacent land connected by North Buffalo Creek. Located just north of downtown Greensboro, Revolution began operations as the South’s first large flannel mill in 1899 and for decades anchored a thriving community of workers and craftspeople. The facility included over 640,000 feet of working space before the textile industry decline led to its closure in 1982. For the next few decades, limited sections of Revolution were renovated into office space, while other parts of the property fell into disuse and disrepair. In 2012 Self-Help assumed ownership of Revolution Mill and is completing the property’s transformation into a mixed-use development…Self-Help is a development credit union and lender headquartered in Durham, NC.”

After the tour, we met with co-founder, Kayne Fisher, of Natty Green’s Kitchen + Market, who gave us a behind the scene tour of the restaurant. Mr. Fisher told us that he had dreamed of owning his own chop house and neighborhood market since childhood. So, when the opportunity to open a restaurant in the Carpenter’s Shop at Revolution Mill came around, his brain-child came to life. The market included a butcher’s counter where you could buy cuts of meat the restaurant used in its menu. As a non-beer drinker, I actually enjoyed tasting a beer that had chocolate in it. Besides the usual steak, chicken, hamburgers, and salads, the menu offered pork chops, lamb chops, and braised brisket, the latter being my choice. All of our diners were delicious.

At the end of a very fully day, it felt good to have seen the results of the redevelopment of an important industrial region with new industries, the re-purposing of old textile plants, and the creation of an apprenticeship program to foster the development of the next generation of manufacturing workers.