Opinion: Carolina Beat

No. 930: IS MANUFACTURING STILL ALIVE AND KICKING?

The numbers are scary: 150,000 jobs lost since 1970, two-thirds of these since just 2000. From a sector that employed one-third of all workers a generation ago, it now is the workplace for only one in seven workers. The end isn’t in sight. Forecasters expect the sector to continue to shed jobs for the foreseeable future.

What am I talking about? I’m talking about manufacturing. The above job numbers are for North Carolina. A similar pattern has occurred for manufacturing in the nation. Fewer people get up in the morning and go to work at the factory. Many observers conclude that manufacturing in North Carolina and the nation is barely alive today—its pulse is faint.

Or is it? Whereas years ago we could perhaps make a one to one correspondence between workers in an industry and production in that industry, this is no longer the case. Consider the example of agriculture. Seventy years ago almost one-third of North Carolinians worked on the farm. Today it’s 2 percent. Yet farm production is five times greater today compared to the 1930s.

How could this happen? Improvements in farmer productivity, or production per work hour, are the answer. Each farmer today can run rings around his or her predecessors in output produced because of the marvels of modern farm equipment and technology. More acres can be plowed, more cows milked, and more chickens raised per farmer because today’s farm workers have greater know-how and better machinery than ever before.

It’s the same story in manufacturing. Factory workers today are matched with space-age equipment and tools and computer technology, and so each worker gets much more produced in an eight-hour day than workers in factories of 50, 100, or even five years ago. In North Carolina, one factory worker today can accomplish what took three workers a generation earlier.

Despite all the changes in the economy even in this decade, manufacturing is still on the upswing. Since the national recession ended in 2001, production is up from both U.S. and North Carolina factories

Also, we’re no slacker when it comes to comparisons with other manufacturing countries in the 2000s. Among 15 leading manufacturing nations in the world, the United States ranked sixth in growth in manufacturing output and third in improvement in manufacturing productivity.

However, just like the revolution in agricultural production caused thousands of workers to leave the farm for other jobs—in North Carolina, in the textile mills, furniture factories, and cigarette firms—so too has skyrocketing manufacturing productivity displaced thousands of factory workers.

Here lies the rub. Where are the workers to go who are no longer needed in factories? Without new training, they can’t take higher-paying jobs in technology, the professions, or the health-care and education industries. Studies show that many end up in service jobs, where their pay may be 20 percent to 30 percent lower.

So today’s picture of manufacturing is complicated. It’s not correct to say that U.S. and North Carolina manufacturing output is shrinking. It’s not. It’s growing faster than in many other countries. Certainly the composition of our manufacturing production has changed. In North Carolina, we’re producing more computers, tech equipment, vehicle parts, pharmaceuticals, and processed food and fewer cigarettes, tables and chairs, and clothes.

But we are using fewer workers in today’s manufacturing. Those that remain are better-skilled and better-paid, while those who have been cut might be in economic limbo for years to come. This is the manufacturing problem.

Dr. Michael Walden is a William Neal Reynolds distinguished professor at North Carolina State University and an adjunct scholar of the John Locke Foundation.