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Can we repatriate manufacturing?

People are beginning to discuss bringing back to the US some of the manufacturing operations that were previously taken off-shore.

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This is an exciting prospect, potentially good for our economic well-being, quality of life and national security.  But it is not without its challenges.  I was privileged to participate in a meeting of the Manufacturing Leadership Council, held in conjunction with Automation Fair, where experts in manufacturing, government policy, and education discussed the need for a national manufacturing strategy.

The consulting firm of Delloite and Touche and the Council on Manufacturing Competitiveness (formerly the President's Council on Industrial Competitiveness) have been studying the issues related to advancing manufacturing.  Delloite recently released a report that claimed there are 600,000 unfilled manufacturing jobs in the US because of a skills shortage.  The Council on Manufacturing Competitiveness plans to issue a major report on December 8th that will identify six major challenges to US manufacturing growth and offer solutions to meeting these challenges.  The Manufacturing Leadership Council plans to issue a statement for the President and Governors of all 50 states reflecting the importance of focusing on manufacturing.  

A dollar invested in manufacturing produces a return to the economy of $1.40 whereas a dollar invested in the service sector produces a return of only 50 cents.  As someone aptly pointed out, we can't grow the economy by cutting one another's hair. Producing products is a fundamental requirement for a healthy, growing economy.

Among the many items on the table at the meeting were: detractors to capital investment affected by fiscal and tax policy, over-regulation of financial markets, the cost of complying with regulatory mandates, the increasing complexity of going to market with longer and more complex supply chains, our aging and obsolete manufacturing infrastructure, lack of useful immigration policy, lack of energy policy, challenges of industrial espionage and cyber security, and general uncertainty about the overall business climate that has been created by government.  Despite the scope and magnitude of these issues, the topic that far and away resulted in the most discussion was the topic of lack of a skilled workforce.

In surveys with business, university and national laboratory leaders, the number one key driver of manufacturing competitiveness was identified as talent for innovation.  In the upcoming report by the Council on Manufacturing Competitiveness, the shortage of advanced technical skills is one of the six challenges to be highlighted.  

As the discussion moved around the room, manufacturer after manufacturer cited lack of skills as holding their businesses back.  The group was very clear that this problem is not just one of too few engineers and scientists with bachelors and advanced degrees.  It is a problem of too few welders, machinists, machine operators, industrial maintenance technicians and others who could expect to qualify for well paying jobs in safe clean surroundings with educational credentials much less than a four year degree.  

One owner of a 70 person business cited the example of having to screen 1000 applicants to find 10 qualified shop-floor personnel. We need to change the national dialog about college education!  And as some suggested, we need to completely rework our process of talent development. Another quipped, "We have a department of education.  Let's straighten them out".

Clearly, if we are going to repatriate manufacturing, we have a suite of problems to solve.  Some of these involve changing the business and political environment to be more friendly to manufacturing.  But, if by some miracle, we could solve the environmental problems over night, we would then be faced with infrastructure issues such as aging and obsolete manufacturing facilities and a severe shortage of qualified employees.  

Working piecemeal on such a wide ranging set of problems is unlikely to bring effective results.  Coordinated efforts, guided by a national manufacturing strategy, would certainly expedite the process.  Do manufacturers large and small have the will to work together to develop, market and implement such a strategy?  Will they set aside their competitive concerns for the national good?  I hope so.

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