Economy
11:00 am
Thu February 2, 2012

The Future Of America's Manufacturing Jobs

Transcript

NEAL CONAN, HOST:

This is TALK OF THE NATION. I'm Neal Conan in Washington. The good news, even in the recession, came from American manufacturing. Output is up one-third over the past decade. But over just about that same period of time, six million manufacturing jobs disappeared. About as many people work in manufacturing now as did at the end of the Depression, though our population has more than doubled.

In a piece for The Atlantic and reports here on NPR, Adam Davidson of Planet Money focused on the education and skills American workers need to out-perform their competitors in China and just how difficult it's going to be for people disadvantaged in some way to get any kind of manufacturing job at all.

If you work in manufacturing, or used to, what's changed? 800-989-8255. Email us, talk@npr.org. You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION. Later in the program, the stories to follow as you watch the Super Bowl. Mike Pesca will join us from Indianapolis.

But first, NPR's Adam Davidson, who wrote "Making it In America," the cover story for the current issue of The Atlantic and joins us now from our bureau in New York. Adam, nice to have you back.

ADAM DAVIDSON, BYLINE: Hey Neal, great to be here.

CONAN: And you tell the story of Matty Parlear(ph), who got the kind of unskilled factory job once common in Greenville, South Carolina, but unlike old-time factory jobs there, there is little chance for promotion and every chance that she's going to be replaced by a robot.

DAVIDSON: Yeah, I think one of the key things that I learned during this story, I chose Greenville, South Carolina, because up until - right through the '90s, there was this huge textile economy. I mean, for basically 100 years, any - well, any white person to be fair, there was a lot of segregation - but any white person who showed up at a textile mill was all but guaranteed a job.

It didn't matter if they had gone to school or if they had a third-grade education. They were going to get a job. There was that much demand. And some of those people were able on the job to acquire more and more skill. So they might start off, you know, in the '10s and '20s they might have started off at seven years old. Later they might have started off at 16 or 18 years old. But some of them would acquire skills.

And many textile workers were able to own their homes, own a car or a truck, maybe a boat, take their family on vacation, you know, have something approaching a middle-class life. And that is gone, and it's been replaced in Greenville by much more of what America has become: advanced manufacturing.

So there's the new BMW plant, Michelin plant, all sorts of high-tech plants where they do still employ some lower-skill workers, but clearly you want to be a highly skilled worker. Those are the only people who are likely to have work for many years to come.

CONAN: You asked an interesting question in the story, and that is: Why would anybody make anything in America?

DAVIDSON: Exactly. I mean, that - you know, we hear so much oh, manufacturing is dead in America, and that is not true. As you said, the statistics are pretty clear that manufacturing, as a financial concern, is doing quite well. But manufacturing, as a source of jobs, is doing very, very badly.

And basically in part because of global trade and China and in part just because of technological advances, U.S. manufacturers do best when they can reduce what they call the labor component of a price of a good. So in any old manufacturing economy in the U.S. in the '50s and '60s, in China today, labor can be a significant part of the price of a good.

But now a U.S. manufacturer is going to try to have the labor component down to four, five, six, seven percent of the price of the good, and what - the way they do that is far more advanced machinery is doing a lot of the work of making the product, and the worker is just there to either program the machines, fix them when they break, you know, make - troubleshoot them, but the bending of metal and the extruding of plastic and the shaping of products, that's - you know, that's being done more and more by advanced machines.

CONAN: You contrast Matty with another co-worker by the name of Luke Hutchins(ph), who's had college, he's had years of technical training. He had years in another job. And, well, he's got something of a, you know, innate genius for being able to visualize what the inside of these very precise machines are doing.

DAVIDSON: I mean, this, for me, you know, I have a college degree, I consider myself educated, and I realize I don't have the skills, and I probably can't acquire the skills to be an advanced manufacturing worker because of that sort of combination of both book smarts - you know, a guy like Luke Hutchins, 27-year-old, really bright guy, he understands advanced calculus, he understands the metallurgy of complex metals.

He has, at least a decent grounding in pneumatics and electronics, and computer programming. But then he has this magic skill, which I certainly don't have. You know, inside an advanced machine - the machine he works on operates on between seven and nine axes. I mean, you almost feel like you're talking about string theory.

(SOUNDBITE OF LAUGHTER)

DAVIDSON: Like, you're in a nine-dimensional universe where you have to picture one part rotating one way, where a cutting tool is coming in at some oblique angle and spinning in a different way, and you have to sort of have a sense of how these two, how the cutting tool and the particular alloy of metal are going to interact.

It's - it takes - it's a real intellectual pursuit. And this guy Luke and one of his colleagues Ralph(ph), young, they - much like you and I, I have to say, in the jobs we've chosen - they are on a lifelong intellectual journey. They're learning more and more about metallurgy, the cutting properties of different instruments, physics, and that's how they see their jobs, as a constant learning and investigation of how to make physical things more cheaply, more efficiently, more accurately.

And that's what it takes. You need to have that kind of intellectual agility, that excitement about acquiring new knowledge, I think, to be a truly successful factory worker today.

CONAN: We should note Groundhog Day, 2012, Adam Davidson describes a career as a midday radio yodeler as a lifelong intellectual challenge.

(SOUNDBITE OF LAUGHTER)

CONAN: In the meantime, we want to hear from those of you who work, or used to, in manufacturing and how that has changed. Give us a call, 800-989-8255. Email us, talk@npr.org. We'll start with Aaron(ph), Aaron's with us from Detroit.

AARON: Good afternoon, and thank you so much for having me on the phone.

CONAN: Sure, go ahead, please.

AARON: Yeah, I just wanted to call up and make the comment, I've been working - I'm from Detroit, I've been working in advanced manufacturing for about 11 years now. It's a small company, modular aluminum technology. We make conveyors and guarding and end-of-arm tools for robots and everything else.

And I just wanted to point out that, through my eyes, I've seen two things happen over the past decade. The first would be that we don't necessarily make things in America, anymore, especially in Michigan - such as toasters or cars or refrigerators - but we make the things that make those things, and we make them better than anybody else in North America.

And I would also add that there's been a giant shift in the last 10 years with the downfall of the domestic auto industry. Whereas, you know, the tool that we used to build to put in a windshield, you know, is now picking up solar panels or pieces of drywall or forest products. And really, today's advanced manufacturing, with robotics and all these other machines, really transcend any one product.

And now it's almost like if you're going to make an assembly line, you kind of play the cup game with some established machinery, and they you just connect them all with some robots or ancillary equipment. And yeah, you can make anything, it's incredible. That's it.

CONAN: Well, thanks very much for the call, Aaron. Let's bring another voice into the conversation, Tim Aeppel, Wall Street Journal bureau chief for economics, who writes on a range of economic issues, including manufacturing. He's also with us from our bureau in New York. Nice to have you with us.

TIM AEPPEL: Thank you.

CONAN: And I wonder what you make of Aaron's analogy, that we no longer make so many things but rather things that make things.

AEPPEL: Well, there's an element of truth to that, but I think there's also a wide range of things that are produced that simply don't make sense to produce anywhere else, and they maybe aren't as visible. I mean, the auto industry, we talk about the demise of the U.S. auto industry, but frankly the auto industry has just changed and become - there are quite a few foreign manufacturers that have set up shop here.

And we produce cars on a scale, and after the problems in Detroit, that has been quite a snap-back in that industry, and that's been one of the strengths of manufacturing in the Midwest: auto parts, transporting auto parts, goods that are used to transport, things related to transportation.

So I think that there is a bigger picture, definitely true that we - we're excellent at manufacturing machinery, and that's one of our global strengths, one of our largest manufacturing exports is machinery.

CONAN: And as you've read, I'm sure, Adam's piece in Atlantic, and Aaron, thanks very much for the phone call, but Tim Aeppel, as you read that piece, I mean, he was describing the precision of the fuel injector that was being assembled and constructed at that plant in South Carolina. I think that's one of the things you're talking about.

But those kinds of precise jobs, the value added by not just the machinery but the education of the workers involved in manufacturing that, that's what makes those jobs still viable in America and the reason they're not in Mexico or Malaysia or China.

AEPPEL: Yes, and I think what that piece captured very well is the barbell that's emerged in manufacturing jobs. You have really these high-end jobs that are - that require a lot of skill and training, and the other jobs increasingly are ones that it doesn't make sense or doesn't make economic sense, certainly, to automate. These are people moving goods at the end of the line.

One of the things that's been very slow to automate, for instance, is quality control. I was in a glass factory once, and people looking at very specialized glass products are much better at perceiving faults in glass, at least at that time, and I actually asked the factory floor managers about that.

And they said they had tested all kinds of, you know, quality control systems to check glass, and it simply wasn't possible to get the kind of quality you can get from somebody who just knows how to look for flaws.

CONAN: On the other hand, you wrote recently about, I think, a Sunny Delight factory where the people who drive the forklifts that move the stuff around the warehouse are quickly going to be replaced by automated machines, and as the manager of that plant said, and those forklift drivers are going to have to get jobs elsewhere in the plant, of course many of them will not.

AEPPEL: Exactly. I mean, I think the goal of a lot of manufacturers today, as I understand it, is to develop the kind of production system that keeps them competitive for the day when demand does grow. And one of the problems right now in the larger economy is slow growth. And I think manufacturers feel that very acutely.

When they automate and become more productive, they produce more with less. If the demand isn't there, they're producing the same with less, and that just results, in some cases, in job losses. But the goal for those companies is obviously to eventually be able to produce more and hire more.

CONAN: Eventually, we've been waiting for eventually a long time. We'll find out maybe when it'll come along. We're talking about modern manufacturing in the U.S. with NPR's Adam Davidson, and you just heard Tim Aeppel from the Wall Street Journal. If you work in a factory or used to, what's changed? 800-989-8255. Email talk@npr.org. Stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.

(SOUNDBITE OF MUSIC)

CONAN: This is TALK OF THE NATION from NPR News. I'm Neal Conan. Companies starting a new product line must consider what NPR's Adam Davidson calls the continual off-shoring calculus. To do that, they must decide what should be made in the U.S. and what might be better made overseas, somewhere where labor's cheaper, like Mexico or China.

It might seem like the answer is obvious: Do it overseas, save money. But money is not always the only factor. Sometimes doing things here in the U.S. makes the most sense, in terms of quality control and delivery speed. Davidson's report on manufacturing, "Making it In America," appears in the current issue of The Atlantic. You can find a link to that and to related stories he did for NPR at our website, npr.org. Just click on TALK OF THE NATION.

He's with us from our bureau in New York, as is Tim Aeppel, the Wall Street Journal's bureau chief for economics. We want to hear from you. If you work in a factory or used to, give us a call, 800-989-8255. Email talk@npr.org. What has changed on the floor and upstairs? You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION.

And let's go next to Carl(ph), and Carl joins us from Wichita.

CARL: Hi, Neal, thanks for taking my call. I work for an aircraft manufacturer here in Wichita, Kansas, and what we've seen, oh, over the past at least 10 years if not longer, is continual relentless drive towards leaner manufacturing, as well as more cost-effective manufacturing.

Aircraft manufacture, by its nature, does not lend itself well to automation. So there's a definite need for the human component. And what we're seeing more and more is the actual assembly of the air frames, larger and larger pieces are going offshore to China, to Mexico, places like that because the labor is cheaper.

And as a result, there have been quality control issues. So I definitely agree with that. I've been very fortunate. I didn't come up through the manufacturing ranks but more on the service end of things, and I've been able to work my way up from turning a wrench to actually now being a technical support representative.

CONAN: I wonder: Do you still see that avenue that was open to you, is it open to somebody who's starting out today?

CARL: To a much lesser degree, Neal. What we're really seeing, it used to be here in Wichita, a person could get out of high school, with a high school diploma, and get into an assembly job at my company with a very, very good wage. And those jobs are disappearing rapidly. There's still a significant workforce at my company that does the final assembly here. But to a greater degree, and we've seen our company almost halved in the last five years, as more and more of this stuff goes offshore and of course with the economy and aircraft sales, things like that.

But yeah, more and more of it's just going offshore.

CONAN: And there's competition from within the country, as well. Wichita got some bad news recently.

CARL: Yeah, yeah, we've been taking some hits here in this town.

CONAN: Well, thanks very much for the call, Carl, appreciate it.

CARL: Thanks for having me, Neal.

CONAN: And Adam Davidson, again starting out with the wrench, it reminds the story of Matty Parlear. And I think one of the things that really points - that really took from your piece was that somebody who starts out with a disadvantage, like she did as a young, single mother, somebody who's got other disadvantages, who didn't get the chance to go to school for whatever reason or another, those people are going to be on the outside, I think forever, you say.

DAVIDSON: Well, so I think this is the thing to worry about. I mean, there's - I mean, sometimes I think manufacturing is talked about almost in mystical terms, as if it's the only thing that truly adds value to an economy, and everything else is just nonsense and middlemen, and I don't think that's true.

I think that, you know, manufacturing is a crude term. It just means a business whose primary job is to physically make something and/or transform one material into another material, whereas services is not just, you know, Wal-Mart jobs. I mean, we're doing a service right now, doctors provide services.

The service sector is much more than just, you know, really lousy fast-food jobs or something like that, and there's no inherent reason why an economy couldn't be almost entirely services and much less manufacturing.

So I think we can over-romanticize manufacturing jobs, but I think the key issue right now, at this moment, is that for all of American history, you know, we started as an agrarian nation, and then we industrialized, and then we, you know, radically urbanized and then suburbanized. And with every one of these major transformations, there were - there was a lot of creative destruction, there was a lot of old ways of making a living disappearing - we don't have blacksmiths and buggy repairmen anymore.

But there was something that came along that provided even more opportunity to the - to everybody, including the low-skilled. And that part is not happening now. So, you know, we'd hear so much about the 99 percent versus the one percent, but this is much more of a 50-50, 60-40, 40-60 cut type of situation. That we have - the service sector is very good for people like you and me, the ever intellectually curious...

(SOUNDBITE OF LAUGHTER)

CONAN: Midday yodelers, yes.

DAVIDSON: The midday yodelers, who are able to - you know, we generally make more money when, you know, when you have a college degree, leaving manufacturing, you have a good shot at making more money. But for the Matty Parlears, for people who just have a high school degree, you generally make less money and have less opportunity when you leave manufacturing.

And it's not - you know, people say oh, well, that's fine because we used to have blacksmiths, and now we don't, and we have better jobs. But it's just at this moment, it is - nobody knows, I've yet to find anybody who can tell me what is coming next for the low-skilled manufacturing worker that really can provide upward mobility, a long-term, you know, career-long economic opportunity?

And it's not to say it's impossible that that way one day come, that we'll figure that one out, but it's pretty hard to see where that would come from. So I don't fear for the overall health of the U.S. economy as much as other people do. I think GDP will go back to healthy growth at some point. I think there will be wealth creation - substantial wealth creation. But I don't know that it'll be as broadly shared, and that is new, and that's I think very alarming.

CONAN: And Tim Aeppel, we got some I think decent economic news today on employment and other things and probably expect some decent unemployment numbers for the month of January, when they come out I think on Friday. But this is still I think fair to characterize as a jobless recovery.

AEPPEL: I mean, job growth has been the real disappointment in this recovery, and I mean, manufacturing has stood out, but it's good to keep it in perspective. As Adam says, the - I mean, since the early 2010, we've added about 300,000 manufacturing jobs, and that's excellent relative to manufacturing. But relative to the number of jobs that were wiped out in the recession and that have yet to come back, it's still very small.

And I think manufacturing, some of the sort of mystical nature of manufacturing that we have to also keep in mind here is that the sort of divergence between the kinds of skills on the factory floor also have kind of changed the value of those jobs. So there's a lot of manufacturing jobs, kind of the like the woman that Adam wrote about, that the upward limits of pay are pretty - are pretty limited.

And in the past, you had people who would go into a manufacturing plant out of high school, start driving a forklift, start doing basic things and pick up more and more and basically move up...

CONAN: Yeah, like our caller from Wichita started as a wrench-turner and now seems to be making a pretty good living, yeah.

AEPPEL: Exactly.

CONAN: Yeah.

DAVIDSON: And that is - I mean, you can still meet people in their 40s who have that story to tell. I meet very few people in their 30s and almost no people in their 20s who can say yeah, I started here as a low-skilled worker, and on the job I acquired those skills. That's very rare.

Can I mention one other thing is the caller talked about lean manufacturing. That's not just a generic term. That's, you know, sort of a precise term referring generally to the application of what the Toyota production system. And this is really the revolution of the last 20 years or so, or 15 years or whatever it is, in American manufacturing.

Some people say it was - anyway, the dating is controversial, but you really do see factories making higher quality products with half the workforce. That's a typical narrative is lean allows them to, without - even without investing in huge new machines, just by really studying the systems you have in place, figuring out how stuff moves from one person to another, how much inventory you keep on hand, you can find, using this Japanese approach, you can find massive savings on labor.

And that has, I think, the statistics are fairly clear, that has cost a lot more jobs that outsourcing manufacturing to China. That is really hallowing out this work.

CONAN: Email exactly to this point from Paul(ph) in Peoria: I've worked at a large Midwest manufacturer of yellow bulldozers for 35 years. In that 35 years, our factory workforce has shrunk by about two-thirds. We now produce three to four times as much product, so productivity has gone through the roof.

Also, when I started in the factory - I've long since moved to management - I worked with people who were functionally illiterate. Today we start with something like nine to 10 high school grads to fill one factory job. Many of the people in the factory have at least some college. And I think we can all guess what that yellow tractor company is.

In any case, let's get Alan(ph) on the line. Alan's with us from Pittsburgh.

ALAN: Hello.

CONAN: Hi, you're on the air, go ahead, please.

ALAN: Hi there, yeah. Actually, I'm trying to - I have a product, a new product. I'm an entrepreneur, product developer, and I desperately want to be able to make my product here in the USA. I've gotten figures from China, and I'm - I've also gotten figures from the USA. And a few things that I'm noticing are I'm 50 to 60 thousand apart. In the U.S. it's more expensive for the tooling. I also know that for my product in particular, which is relatively small, handheld, it's going to cost me about a dollar per unit just to get it here from China to - and that's just to the East Coast or the West Coast.

Then I've got to do some shipping to get it to, you know, a fulfillment house. Also, it's going to cost me more money for insurance if I make it in China rather than the USA. And the time, it takes about six weeks minimum to get something shipped from China to the U.S. So for many reasons, I desperately want to make this in the USA, and I'm trying to figure out how to do that. You know, I've got good numbers. You know, I'm getting closer, but I'm still maybe $70,000 difference by making it in the USA. So questions are: Are the American people willing and other people willing to pay more for something that's made in the USA?

DAVIDSON: That's an easy one.

ALAN: If it costs me $4 - if it costs me $1 per unit just to ship it here, that translates to $4 per unit retail.

CONAN: Adam, a simple one, I think the answer is no.

DAVIDSON: Yeah. The answer is absolutely not. I mean, this is something that economists...

ALAN: Absolutely not what?

CONAN: Will Americans...

DAVIDSON: Yeah. People will not pay more for made in America. They say they will. Surveys, you know, you can do surveys where people will say I'd pay twice as much for made in America. I always buy made in America. But all you have to do is compare any product that's made in America and costs more to a product that costs less. People, you know, the market, you know, the market, which economists talk about, you know, that's the real poll. That's what - where the rubber hits the road.

You can't charge a penny more. I mean, it's just not - it's not a true value that the American consumer has in any vast way. I'm sure there are, you know, small discreet little areas where, you know, and some people might choose to buy a lot. This thing I buy because it's made in America. But probably they're buying most of their clothes that wasn't made in America, et cetera, which, by the way, is not a problem. In fact, increased productivity should not be seen as a horrible disaster.

I mean, we - if you phrase it as factories employ far fewer people, you know, it sounds like, oh my God, those terrible factories. Why would they do such an evil thing? But productivity growth is the only way for a society to get richer, because of productivity growth we're not all hunter-gatherers or subsistence farmers. And this world, you know, this world is filled with subsistence farmers still in very poor countries. We need much more productivity growth all over the world.

That's not the issue. The issue is, what comes next? I mean, I don't think the solution to America is to somehow make manufacturing less productive or force manufacturers to hire more people than they need. It's not even to force manufacturers to make stuff in the U.S. even if they can make it cheaper overseas. It's figuring out: How do you get the low-skilled worker to have in-demand skills that the market really demands?

CONAN: So education. So some of the – solving a lot of the social problems that leave them disadvantaged in the first place and make it difficult for a (unintelligible) to get the education she needs, to get that to second-tier job?

DAVIDSON: Exactly.

CONAN: All right.

DAVIDSON: You know, in the post-war period, we had such broad-based growth that it masked some of those issues because you could have a dysfunctional home, a really lousy education, and you could still go to Detroit or go to Chicago or, you know, go to Greenville, South Carolina, and get a job. That's much less the case now.

ALAN: So does this mean that that someone who would like to produce something in America should not?

CONAN: Well, it was fascinating...

DAVIDSON: Product by product.

CONAN: Product by product. Alan, Alan, Alan, Alan, listen, Adam, I thought one of the most interesting parts of your piece was you went to this company that manufactures these car parts, and their decision-making as to whether to manufacture something in this country or in Mexico or in China was fascinating.

DAVIDSON: Yeah. Exactly. And I mean there's this view that, oh, every company is just getting to China as fast as they possibly can. But what I discovered, standard motor products makes something like - or sells something like 25,000 different auto parts. And they are constantly reviewing which products should we make here in the U.S., which products should we buy from China, which products shall we make at our Mexico plant, which shall we make at our Polish plant.

And the calculus constantly changes. There's - it happens that some new innovation or some new market dynamic makes it make a lot of sense to move something from China back to the U.S. Of course on balance more things are moving to China than moving back from China.

CONAN: Or to Poland. In any case...

AEPPEL: And one of the things that...

CONAN: I have to interrupt. Please excuse me. We're talking with Adam Davidson and Tim Aeppel. You're listening to TALK OF THE NATION from NPR News. And I'm sorry, Tim. Go ahead.

AEPPEL: Oh, I would - one of the things that the caller should keep in mind is that these things are shifting constantly, as Adam said. And the calculus also includes a lot of things that aren't obvious. And I think more companies, you know, maybe not smaller companies that are trying to source the production of a single product but large companies look at all of the things that go into the actual cost of delivering the good. I mean just something as simple as having your product produced somewhere where you can bring a customer and show them being - show them it being made - that actually has a value in certain industries where you win a contract because you can take the customer to your factory, and they can see how it's being made.

And those things are increasingly being brought into the calculation and it's one of the things that's keeping certain things here, and it goes into that sort of more complex calculation of, you know, transportation costs, insurance, what will happen in the future with currencies, all of these factors.

CONAN: Let's see if we get one more caller in. Fred, we've got just a minute left, but you've got it.

FRED: All right. All right. Great. Thanks. Well, I've been involved in this kind of makings of things, and I'm more like the old buggy repairman and the blacksmith. And if anyone says that those are unskilled jobs, it's not true. I've seen just - people don't know how to make things in this country anymore. I go to auctions, and people are just throwing the machines away - antique machines. You all think that everything has to be made by a computer. I'll never forget - well, I've got this issue of American machinist, the picture of Jay Leno holding this little brass governor body.

And without our GibbsCAM and our five-axis CNC machine, we couldn't have made this reproduction part from an 1840 engine. Well, how did they make the original one in 1840? Nobody knows how to use basic machines. It's unbelievable. There's so much work. I have tons of work, personally. I'm self-employed. I've got my own shop that I've - I've got machines that were destined for the scrap yard, let me tell you. If I didn't rescue them, they would have all been junk.

CONAN: Well, Fred, thanks very much for the call. Congratulations. And we'll heartily endorse your viewpoint. Adam Davidson, Tim Aeppel, thanks. You're listening to TALK OF THE NATION from NPR News. Transcript provided by NPR, Copyright National Public Radio.

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