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Dec 07, 2012

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Andrew Brod

If foreign companies want to manufacture stuff here rather than import it, I'm all for it. Foreign car companies account for nearly half of all U.S. automobile manufacturing jobs, and I don't think anyone has a problem with that any more. One of North Carolina's biggest technology employers is Lenovo, with a couple thousand workers at its Morrisville HQ and another hundred or so coming to Whitsett. It's employing a lot more of us as a Chinese company than it did when it was languishing as IBM's PC division.

Marshall

I think it would be great if the profit and taxes stayed here.

Andrew Brod

A quibble, but what the heck...

A consultant quoted in the BizJ gets the take-away wrong but nails the underlying issues. The problem is not that manufacturing is "uncool" to young workers. It isn't a lack of supply of workers interested in manufacturing. Announce the opening of a new manufacturing plant tomorrow and you'll see how many people think those jobs are cool enough to apply for.

True, the skill level of manufacturing workers in the Triad is a problem, and yes, that's an issue of labor supply. But Triad workers already know that the skills needed for modern manufacturing jobs are very different than those required a generation ago, and yet we still don't have a sufficiently skilled workforce to attract the best manufacturing jobs. Making manufacturing more attractive isn't the solution.

But introducing the programs and curricula the consultant recommends could be a big part of the solution, and this is the part I think he gets right. Put those programs in place and you'll see how many high-school students and graduates already think manufacturing is "cool."

Ed Cone

Skills need to pay the bills. "The secret behind this skills gap is that it’s not a skills gap at all. I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs."

Andrew Brod

Fair enough, but the labor economist's observation -- that it's not a skills gap because a shortage of skilled workers should drive wages up and yet the relevant wages haven't risen -- applies equally to the "make it cool" hypothesis. Even if making manufacturing seem cooler to young workers was a solution, the industry's lack of coolness in the past would have driven wages up.

Moreover, let's consider this: "Many skilled workers have simply chosen to apply their skills elsewhere." That doesn't imply that we have enough skilled workers, just that those we do have can find better jobs.

Here's the conundrum. From time to time, you find industries complaining about a lack of suitable workers but at the same time refusing to raise wages. Examples in the recent past (and maybe currently as well) include the long-haul trucking industry (drivers) and the healthcare sector (nurses). The labor economist quoted here can talk about "basic economics" all he wants, but these episodes are puzzles that require a bit more to explain them.

In the case of manufacturing workers, offshoring is still the constraining competitive factor. The "China Price" appears to be rising, and yet it's not gone. So manufacturers complain about not finding skilled workers domestically but don't raise wages because domestic wages are on a kind of cusp. Manufacturing wages aren't so high as to keep some previously offshored activity from returning, but they're not so low as to keep the overseas option from being an option. As the China Price continues to rise, however, manufacturers will increasingly respond to shortages here by raising wages. But probably not this year.

Good piece. Davidson usually does a very good job.

Andrew Brod

Slight correction: Nurse's wages were rising, but there were still nurse shortages. So in that industry the refusal wasn't to raise wages at all, but to raise them by enough.

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