If you want Americans to reenter the manufacturing workforce, you need to convince everyone that manufacturing is a decent path to a good wage and lifestyle. And then you need to make it actually happen.
Unfortunately, over the last 25 years the US has decimated vocational education in the high schools while simultaneously convincing families that a 4-year college degree is the only way to a viable lifestyle. So we cram college-prep and AP classes down everyone's throats while we auction off the drafting tables and auto shop tools.
It's for the best, since there's nowhere for a voc-ed student to go after graduation other than community college. Meanwhile we've moved on to dismantling unions and apprenticeships and all the other things that tracked workers into the factories and guaranteed them living wages.
I'll let our European friends explain how they don't have this same problem.
Actually, voc tech careers do pay a pretty healthy wage, for certain things. Welders, electricians, plumbers, HVAC, mechanics, those are all still decent paying jobs. Hard, more dangerous than white-collar work, but you can make respectable money doing them. It's getting so the certifications are getting a little onerous, but it's still better than dumping tens or hundreds of thousands of dollars into a college education.
Especially for those that don't have the wherewithal or temperament to do school
I can verify that's not true for electricians, at least in WI -- father is an electrician. For his generation, it was true. For the current generation, it's no longer the case.
It's certainly possible for unions to prevent manufacturing that pays less than a living wage. It's not clear to me how they could ever cause it to happen. The big problem that hasn't been mentioned so far in this thread is the other side of the equation: it's not enough to make the job pay a living wage for the workers. It must also produce a product that consumers want to buy, which means producing it at a price those consumers are willing to pay.
There is a very direct relationship to consider here, because the consumers and the workers are often the same people. If one worker takes one week to manufacture an item which that worker is not willing to buy at a price of one week's wages, then they should not expect to be able to make a living from this.
What unions can do - and frequently have done - is raise the minimum price of goods and transfer some fraction of this to the manufacturing workers. If this makes the goods too expensive, then the factory closes down because people aren't buying them.
The cost of labour is substantially lower in various Asian countries. That isn't going to change, and you've effectively stated that you're unwilling to accept paying local labour similar rates. The conclusion you should be drawing from this is that the only way to make manufacturing work in this environment is to massively improve the productivity per unit of labour. You need to be getting away from people assembling things with their hands, and towards workers who build and maintain manufacturing automation.
Sadly, when this opportunity arose in the recent past, it was those same unions who tried very hard to block it, and were successful in that goal - manufacturing is still a laborious manual process.
Want to change this? Stop learning how to weld. Learn how to build a welding robot.
There's a little more to it than that, especially if you're looking at the historical example of the auto companies.
Back in the 70s-90s, the Japanese were beating the pants off the American automakers. But this wasn't because of price, at least not by the 80s. It was because the American companies weren't producing products that people wanted to buy. In the 70s, American cars were huge gas guzzlers, and with the '74 gas crisis, people wanted smaller, more efficient cars, and the Japanese sold them. By the 80s, Americans had finally figured out how to make small cars again, but they were crap, so people happily paid more for Japanese cars than for competing American cars. The Japanese cars were far more reliable, lasted longer, used less gas, looked better, were nicer in pretty much every way, so their higher cost was seen as worth it; only people buying solely based on price bought American cars. Labor rates were a factor, but not that much: by the 90s, Japanese labor rates were significantly higher than American labor rates, so to decrease costs the Japanese had opened many assembly plants in the US (but in places where they could avoid unionized labor, like Ohio and the South). The cars made here in the US still had great quality unlike cars made by the American automakers, and sold very well.
Today, we still see a lot of this: various Japanese and European automakers have assembly plants here in the US to take advantage of our cheaper labor rates, but their vehicles are still generally seen as superior to American-brand cars.
Basically, you can chalk it all up to management. The American cars have been undesirable because of poor decisions by upper management at these companies. You can't blame crap quality on line workers; they didn't design the car, they're just doing what they're told by managers and engineers. And engineers are constrained by the decisions made by management.
Sure, it's certainly possible for affordable manufacturing at wages everybody is willing to accept to still manufacture products that nobody wants to buy. Getting the manufacturing right does not excuse making a bad product.
>If one worker takes one week to manufacture an item which that worker is not willing to buy at a price of one week's wages, then they should not expect to be able to make a living from this.
The manufacturing industry is not the tech industry. You can't produce physical goods with just your brain. Raw materials and machines play also part in the manufacturing cost, not just wages.
Indeed, but the statement remains true. If it takes one week of labour to produce something that one week's wages won't buy, the price is clearly too high to sell. The correct price will have to be somewhat lower than this, for the reasons you state (among others).
I think this is correct. I am not sure if unions would help at this point, unless they can lobby for laws to prevent moving manufacturing out of the country. Paying lower wages for manufacturing (as well as other lower costs) being the reason for why those jobs went somewhere else in the first place. Where "went somewhere else" means companies actively decided they wanted to stop manufacturing here and do it somewhere cheaper, and not hassle with unions.
Europe actually has a massive unemployment problem, particularly youth unemployment. Much worse than the US. European manufacturing has been just as decimated as US manufacturing has.
It's (ironically enough) a problem of unequal distributions. There are lots of not-college-educated lineworkers at auto plants that rake in lavish benefits while equally qualified (modulo experience) younger people who would love the work can't get in.
But then, that's only to be expected from above-market-rate wages...
Yes, combined with the facts that workers in China, Mexico, and many other places will do the same work for a tiny fraction of EU wages, and can also be fired at will rather than enjoy extensive worker protection laws such as in Europe.
like which part of Europe? Greece, Italy and Spain? I think the location has nothing to do whether the vocational model is working or not. It is because of the country's problem, not the curriculum itself. The Dutch, Germany and Scandinavian has strong vocational program in their education system and they're doing fine with it.
Europe is not a monolithic uniform state. Spain has very high unemployment in the 20-30 year old population, Norway has very little, and most countries are somewhere in between.
Just as unemployment in the US is not evenly spread over all states and industries.
One major difference between the Scandinavian countries, especially Norway, and the rest is that not only is vocational education alive and well but a person with a qualification in, say, plumbing or electrical installation work is not looked down on.
Norweigan youth unemployment was 10% in December 2015[1], which is pretty high, though not as bad as Spain or Greece. It's higher than the US.
Of course Europe is not monolithic nor uniform. Nonetheless one can discern valid generalities. It is true that youth unemployment is generally quite high, and indeed constitutes a major social problem throughout the EU.
It's better or worse than average in some particular countries, but it's definitely a much bigger problem throughout Europe than in the US. Only Germany has a lower youth unemployment rate than the US in the entire EU.
I can agree with most of what you said but your implication that dismantling unions is part of the problem is completely wrong.
Unions are part and parcel of the problem. They created an environment with such unreasonable costs and rules that businesses had no choice but to go offshore in order to remain viable.
For example, unions forced General Motors to continue paying full salaries to about 10,000 people who were no-longer needed due to automation and other improvements in manufacturing. GM, quite literally, had people going to "work" every day, go into this building and spend the day reading the newspaper and having coffee while being paid full wages with benefits.
And that's just one example.
Right now, in California, they are going to raise the cost of water, energy and gasoline in order to fix the infrastructure. Water pipes are in bad disrepair. Roads are a mess. So, we ask: What the hell have they been doing with the money we've been paying in taxes for decades? Well, they've been giving themselves huge raises, great benefits and ridiculous pensions. And, of course, not doing a fucking think towards maintaining the infrastructure. Taxpayers are suckers and unions are sinking us.
The usual meme is to blame offshoring on "corporate greed". The only people who say that do so because they have no clue whatsoever how business runs. Do you know who triggered offshoring? You. Me. Everyone. Consumers. The minute the first few companies started to offer lower cost goods and we started to buy them the fate of our industries was sealed.
Few would buy US-made blender for $300 when you could buy a Japanese, and later Chinese, made blender for $30 to $50.
So, if you owned a company making blenders in the US the choices were clear: Go out of business or offshore. Greed has absolutely, positively nothing to do with it. It's as simple as survival.
No, unions are a disaster. They served a purpose when they were needed. And, at that time they were a wonderful thing. Very important to understand that they were very good for our country. However, they devolved into beasts that each their very source of income. Today we can point at whole cities where this flawed interaction between unions and employers left a wide patch of devastation. Union bosses made out while unions members and industries got destroyed.
Manufacturing cannot return to the US or Europe except where a highly automated process can be implemented. And, even then, China has an absolutely massive advantage in that their supply chain is short and highly optimized. Our supply pipes are long, expensive and very inefficient.
Nothing is as eye opening as taking your own money, starting a business and instantly becoming exposed to the realities of taxation, government, labor, international commerce, supply and distribution chains, competition, sales and marketing. Most people love to talk about this stuff as if they actually had a clue.
Start a business. Run it for ten years. Then come back and read what you wrote and you'll find yourself answering back exactly as I have.
There's a lot more subtlety to this than meets they eye. In order to see it you have to have had years, decades of skin in the game and a solid understanding of business, which most people do not have. Yet everyone has an opinion.
"Trade unions in Germany have a history reaching back to the German revolution in 1848, and still play an important role in the German economy and society."
Yes?
Welding properly is difficult and takes hundreds of hours of practice (at least). I encourage everyone here to take an intro to welding at your local community college to round out your skillset.
The problem is, when you're a corporation who cuts corners by using cheaper, less capable workers, you must be penalized harshly for it. Otherwise, there is no incentive to do the work properly (at a slightly higher cost).
I'd argue that the other way around. Once you have a 'guaranteed liveable wage' you have reshaped the 'employment landscape' to permanently exclude anyone who's labour is worth less than that wage. You now need a welfare state to prevent those people starving to death.
Actually, in Europe we do have similar problems. A massive tertiary sector while the manufacturing jobs are getting sent to "best-cost" countries (you cannot say "low cost" because that would be offensive). Of course, we lose know-how this way and the quality of the products is not even close to back when it was made here.
Not an economist, but I suspect that if you could convince the mainstream to only buy very high quality, durable goods that this would naturally drive them to buy locally (at least in the long-industrialized first world).
However it would also naturally drive them to buy fewer things less frequently, which is anathema to capitalism in general. And indeed it would tend to slow innovation since a faster cycle gives new businesses more opportunity to replace an incumbent!
Note that this argument applies to software as well, although the "cost" to us is cognitive rather than economic.
> Not an economist, but I suspect that if you could convince the mainstream to only buy very high quality, durable goods that this would naturally drive them to buy locally (at least in the long-industrialized first world).
Not necessarily. Such an effort would also have to go hand-in-hand with convincing local producers to make the very high quality goods you want people to buy.
I'm an American, but if I want high-quality, I tend to get Japanese stuff, since their culture seems to value quality more. American business culture seems to be more about cutting corners and settling for barely good enough in the name of short term profit.
For US products, it depends on where it's made and what it is. Most American-branded stuff is made elsewhere (China usually), so that's not really "American". For stuff actually made in the USA, a lot of times it is high quality; if the company were going for lowest cost, they wouldn't make it in the US to begin with. However, this isn't so true of cars still. American cars have gotten better, but they're still not as good as Japanese cars for the most part (Ford is probably the best of the bunch though, Chrysler is probably the worst). But then you have to consider what they're competing against: Japanese and European cars, which are both places with high labor rates and excellent engineering. If your choice was between an American car from GM or Ford, or a Chinese car from Cherry or an Indian car from Tata, obviously the American car is the best choice. So it's all relative.
As for "Japanese" stuff, that's true: there's a bunch of Japanese-branded stuff that's made in China, and it's definitely not of the quality of Japanese-made stuff of yesteryear.
> As for "Japanese" stuff, that's true: there's a bunch of Japanese-branded stuff that's made in China, and it's definitely not of the quality of Japanese-made stuff of yesteryear.
There are also problems with literal counterfeit Japanese products. One example I'm familiar with is Hakko soldering stations; it's apparently not to hard to find Chinese kock-offs who duplicated the case, packaging, and branding but otherwise use a substandard design with substandard components.
Interestingly, I just got a Hakko FX-888D last year, so I did a little googling to see what you were talking about, and sure enough, there's apparently a bunch of fakes being sold.
However, the people who posted about fakes all seemed to be saying the same thing: they bought it (usually on Ebay) from a seller in China.
Well, what do you expect?
Yes, if you buy something name-brand from a seller in China, who sends it directly to you from China, you can expect it to be a counterfeit.
I can get behind the philosophy of buying more expensive high quality goods, the only problem is that its very hard to find them. Many brands have decided to sell cheap goods for a large pricetag as status symbols, or have caved to pressure and reduced quality while not lowering prices in an grab for short term profit. Sometimes it takes much less cognitive effort to buy the cheapest thing even if it is of poor quality, at least your not getting ripped off.
> if you could convince the mainstream to only buy very high quality, durable goods...
Hmm, most of the mainstream are barely scraping along as it is, asking them to multiply their spend by a factor of 10 won't work unless their own fortunes also improve by a similar factor.
By training people, of course. If you want good welders, you need to set up a welding training course, hire people who can't weld, and teach them to weld properly. There's a corporate mindset that companies should have a "flexible workforce" available to them. This means expecting people to show up with the desired skills at some arbitrary location for a job with no job security and pays slightly above the minimum wage.
It usually only makes sense to invest in a good you own. An employer might train a worker, only to have the worker jump ship to a competitor immediately after receiving training.
Historical labor force norms made it more difficult to change jobs which mitigated this problem. In a sense the employer owned the worker and training made sense. Workers now own themselves, so it's up to the worker to invest in their own training.
No we don't want to go back, but there is a middle ground. The employer can loan workers the money to pay for training, and then forgive the loan after the worker completes a year or two on the job. That's how my former employer funded part of my graduate school tuition and it seemed completely fair to me.
It's fairly common. Employers are often more explicit - they'll pay for the training, but if you leave the organisation with 6 months-1 year of completion of training then you have to pay them back for it.
I have no particular objection to schemes like this, though I'd certainly be wary of offering such a scheme as an employer. I'd be worried about some rabble rouser spinning it to the media as indentured servitude.
Implying the past is worse and the future better is a misstep[0].
As others have been saying the problem goes away when you have viable careers in X. At some point it will better value to train someone, though I imagine that point is further away then training yourself.
Corollary: this only works if that corporate mindset becomes recognised as an economic and political liability, and not as a relentless driver of increased productivity and GDP.
Because customers will ultimately pay a higher price for the goods in question, which is fairly terrible for a consumption-based economy.
Manufacturing will always happen where labor costs are lower (assuming the other requirements are in place), or lowest: automated. And American companies are already well into the process of moving production from Asia to Mexico.
Why does it always seem that the only solution to higher wages is to increase the cost of the good? How about this solution: pay the workers higher wages, keep prices flat, and take a lower profit.
As others have said, the answer to the question is simply training. But the better question which is hinted at in the article is "How should America rethink skills that disappeared?"
One of the things that "drove out" manufacturers in the Bay Area were a slew of environmental regulations which added cost to the process with no customer visible benefit. That pushed manufacturers to use the same process where they didn't have those costs. And surprisingly places that witnesses the environmental impact of these practices didn't preemptively implement those controls themselves. So we have identical environmental damage elsewhere which was regulated out in the US.
So a more interesting question for me is how do we rethink this stuff in a way that understands the external costs of the activity and works in a way that makes those costs containable?
Heh, always important to remember Mencken though :-)
Looking at the historical effectiveness of tariffs suggests they are not effective at solving this particular problem, although if you were proposing something different, such as a national sales tax which would be applied to different products based on their country of origin then I would agree that hasn't been explored. But more specifically, using the power of the state to impose taxes as a means of repricing the effectiveness of capital can only work when capital is itself priced on the same basis. Arbitrarily adjusting the exchange rage for Reminbi to account for price differentials can (and does) happen.
What is worse, applying the tax allows practices such as child labor to be "priced under the tax" which does nothing for the children at all. Effectively rethinking the system such that a good can be manufactured in the US or nearby at a cost that both allows the humans involved to have a living wage, and one which makes sweatshops impractical, solves both problems, both increasing the standard of living for workers here and removing the market forces that enslave children far away.
I recognize however the essential truth in your suggestion which is the limit on anyone's ability to make systemic changes in a market can only reach so far. Altering the economics through taxation or tariffs is achievable through fiat and one has to weigh that against the negative incentives it creates.
I haven't the faintest idea why you're being downvoted when you're the only one who actually hit the real issue directly.
Free trade isn't free. We can not possibly compete fairly with countries who employ indentured servants or slaves compared to our working condition expectations and wages. Nor should we.
We need fair trade if we want to keep manufacturing in the country. Further, I'd say it needs to be sustainable if we're going to ever correctly price in the true cost of a product into the retail price. That by definition includes the cradle-to-grave life cycle of a product and all of its constituent parts and raw ingredients.
> how does America compete with $1.50/hr wages for skilled workers?
Simple, figure out a way to approximate how much more it would cost if they paid the overseas workers US level wages, then tax it to make it actually cost that much more to US consumers.
I rent out rooms in my house to two peers that are both college dropouts. Both work jobs that net less than $12/hour. I keep telling them to go to trade school but they never follow through.
I got a 4 year degree, realized it was worthless (BFA in Digital Art), and proceeded to go to trade school for a certificate in manufacturing.
Manufacturing sucks. For a hacker it is easy. I could quit today and be employed again by next week. The pay is good but not great.
For someone votech was meant for, I don't think they have the same mobility as I do.
Personally I keep looking to jump into development but I just haven't found the opportunity yet.
While classical manufacturing jobs may be on the decline in the western world, there's actually a programme in Germany to counteract this (https://en.wikipedia.org/wiki/Industry_4.0) whose premise is production of customisable products at scale, whereby the focus is on automation engineering instead of manual labor (that programme is very much a WIP right now; I know the article mentioned it briefly, but I feel it could be a viable way to retain/regain competitiveness in manufacturing).
I think the answer is to incentivize people to get back into those skills. Likewise, the corporations need incentive to keep those jobs here. We, as a nation, can't do this if everything like those jobs gets sent over seas.
One option is for a group of large manufacturers to come together and sponsor a paid apprenticeship program. The program would have performance standards just like a real job would.
Besides the PR benefits, it could be a cost effective way to determine which workers to hire in a way that is less risky than just hiring them outright.
A robust economy needs a proper amount of manufacturing. While Wall Street might post revenue numbers a manufacturer can only dream of, the financial crisis of the past should show clearly enough that finance and services alone cannot sustain a national economy. The good news is though, that globalization is a two-way road. In our day and age, manual labor becomes a constantly smaller part of the industrial production costs. This means, that even at higher wages, production can be competitive, if it is balanced by quality, less transport cost and being closer to your customer.
Unfortunately, over the last 25 years the US has decimated vocational education in the high schools while simultaneously convincing families that a 4-year college degree is the only way to a viable lifestyle. So we cram college-prep and AP classes down everyone's throats while we auction off the drafting tables and auto shop tools.
It's for the best, since there's nowhere for a voc-ed student to go after graduation other than community college. Meanwhile we've moved on to dismantling unions and apprenticeships and all the other things that tracked workers into the factories and guaranteed them living wages.
I'll let our European friends explain how they don't have this same problem.