{"id":183730,"date":"2012-12-07T19:54:00","date_gmt":"2012-12-08T00:54:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2012\/12\/07\/why-the-return-of-manufacturing-to-the-us-is-a-mirage\/"},"modified":"2012-12-07T19:54:00","modified_gmt":"2012-12-08T00:54:00","slug":"why-the-return-of-manufacturing-to-the-us-is-a-mirage","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2012\/12\/07\/why-the-return-of-manufacturing-to-the-us-is-a-mirage\/","title":{"rendered":"Why the Return of Manufacturing to the US is a Mirage"},"content":{"rendered":"

You may have heard it hyped as the, “Insourcing Boom<\/a>:<\/p>\n

For much of the past decade, General Electric\u2019s storied Appliance Park, in Louisville, Kentucky, appeared less like a monument to American manufacturing prowess than a memorial to it.<\/span>

<\/span> The very scale of the place seemed to underscore its irrelevance. Six factory buildings, each one the size of a large suburban shopping mall, line up neatly in a row. The parking lot in front of them measures a mile long and has its own traffic lights, built to control the chaos that once accompanied shift change. But in 2011, Appliance Park employed not even a tenth of the people it did in its heyday. The vast majority of the lot\u2019s spaces were empty; the traffic lights looked forlorn.<\/span>

<\/span> \u2026\u2026\u2026<\/span>

<\/span> Yet this year, something curious and hopeful has begun to happen, something that cannot be explained merely by the ebbing of the Great Recession, and with it the cyclical return of recently laid-off workers. On February 10, Appliance Park opened an all-new assembly line in Building 2\u2014largely dormant for 14 years\u2014to make cutting-edge, low-energy water heaters. It was the first new assembly line at Appliance Park in 55 years\u2014and the water heaters it began making had previously been made for GE in a Chinese contract factory.<\/span>

<\/span> On March 20, just 39 days later, Appliance Park opened a second new assembly line, this one in Building 5, to make new high-tech French-door refrigerators. The top-end model can sense the size of the container you place beneath its purified-water spigot, and shuts the spigot off automatically when the container is full. These refrigerators are the latest versions of a style that for years has been made in Mexico.<\/span>

<\/span> Another assembly line is under construction in Building 3, to make a new stainless-steel dishwasher starting in early 2013. Building 1 is getting an assembly line to make the trendy front-loading washers and matching dryers Americans are enamored of; GE has never before made those in the United States. And Appliance Park already has new plastics-manufacturing facilities to make parts for these appliances, including simple items like the plastic-coated wire racks that go in the dishwashers.<\/span><\/p><\/blockquote>\n

Rejoice! Rejoice! America is back.<\/p>\n

Well, not so much:<\/p>\n

American unions are changing their priorities. Appliance Park\u2019s union was so fractious in the \u201970s and \u201980s that the place was known as \u201cStrike City.\u201d That same union agreed to a two-tier wage scale in 2005\u2014and today, 70 percent of the jobs there are on the lower tier, which starts at just over $13.50 an hour<\/b><\/span>, almost $8 less than what the starting wage used to be.<\/span>

<\/span> U.S. labor productivity has continued its long march upward, meaning that labor costs have become a smaller and smaller proportion of the total cost of finished goods. You simply can\u2019t save much money chasing wages anymore.<\/span><\/p><\/blockquote>\n

So, these guys, guys who are doing skilled manufacturing work where they interact with the engineers designers refining the design (read the whole article), are making about 20% over the 1969 minimum wage, adjusted for inflation, or about 40% less than the minimum wage adjusted for current wage levels<\/a>.<\/p>\n

This is not the return of the middle class manufacturing job, it’s about America becoming a low wage country. We are kind of the anti-Germany.<\/p>\n

Even the hactacular Adam Davidson, who generally find ways to shill for the 1%, recognizes the fact that the employers are demanding higher and higher skill levels for less and less pay<\/a>:<\/p>\n

Eric Isbister, the C.E.O. of GenMet, a metal-fabricating manufacturer outside Milwaukee, told me that he would hire as many skilled workers as show up at his door. Last year, he received 1,051 applications and found only 25 people who were qualified. He hired all of them, but soon had to fire 15. Part of Isbister\u2019s pickiness, he says, comes from an avoidance of workers with experience in a \u201cunion-type job.\u201d Isbister, after all, doesn\u2019t abide by strict work rules and $30-an-hour salaries. At GenMet, the starting pay is $10 an hour. Those with an associate degree can make $15, which can rise to $18 an hour after several years of good performance. From what I understand, a new shift manager at a nearby McDonald\u2019s can earn around $14 an hour<\/span><\/b>.<\/span>

<\/span> The secret behind this skills gap is that it\u2019s 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. \u201cIt\u2019s hard not to break out laughing,\u201d says Mark Price, a labor economist at the Keystone Research Center, referring to manufacturers complaining about the shortage of skilled workers. \u201cIf there\u2019s a skill shortage, there has to be rises in wages,\u201d he says. \u201cIt\u2019s basic economics.\u201d After all, according to supply and demand, a shortage of workers with valuable skills should push wages up. Yet according to the Bureau of Labor Statistics, the number of skilled jobs has fallen and so have their wages.<\/span>

<\/span> In a recent study, the Boston Consulting Group noted that, outside a few small cities that rely on the oil industry, there weren\u2019t many places where manufacturing wages were going up and employers still couldn\u2019t find enough workers. \u201cTrying to hire high-skilled workers at rock-bottom rates,\u201d the Boston Group study asserted, \u201cis not a skills gap.\u201d The study\u2019s conclusion, however, was scarier. Many skilled workers have simply chosen to apply their skills elsewhere rather than work for less, and few young people choose to invest in training for jobs that pay fast-food wages. As a result, the United States may soon have a hard time competing in the global economy. The average age of a highly skilled factory worker in the U.S. is now 56. \u201cThat\u2019s average,\u201d says Hal Sirkin, the lead author of the study. \u201cThat means there\u2019s a lot who are in their 60s. They\u2019re going to retire soon.\u201d And there are not enough trainees in the pipeline, he said, to replace them. <\/span><\/p><\/blockquote>\n

(emphasis mine<\/i>)<\/p>\n

Modern employers are not willing to train, not willing to pay, and underpay relative to lower management at McDonald’s, and they are surprised that they cannot find people willing to bend over and say, “Thank you sir, may I have another.”<\/p>\n

Shocker that.<\/p>\n

BTW, the decidedly non-hactacular Felix Salmon riffs on this matter as well<\/a>. <\/p>\n

Holy Crap Adam Davidson doesn’t pimp for the employers for once.<\/p>\n","protected":false},"excerpt":{"rendered":"

You may have heard it hyped as the, “Insourcing Boom: For much of the past decade, General Electric\u2019s storied Appliance Park, in Louisville, Kentucky, appeared less like a monument to American manufacturing prowess than a memorial to it. The very scale of the place seemed to underscore its irrelevance. Six factory buildings, each one the …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-183730","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/183730"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=183730"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/183730\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=183730"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=183730"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=183730"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}