A manufacturing recovery is clearly underway, but critical gaps are hindering progress including recruiting and workforce development, a panel of experts said during a wide-ranging discussion at the Advanced Manufacturing Technology Show.
As one indicator of recovery, the two-day event at the Dayton Airport Expo Center drew 158 exhibitors this year compared to 138 last year, with pre-registrations up 30 percent.
The panel included Scott Paul, president of the Washington, D.C.-based Alliance for American Manufacturing, Alan Shaffer, president of manufacturer Dayton Progress Corporation, and John Leland, director of the University of Dayton Research Institute.
Public misconceptions also hinder growth, panelists said, especially with the notion that automation will cancel out significant job growth in the industry or that jobs don’t pay well. Skilled manufacturing jobs on average pay very well at $66,756 annually, said Shaffer, well above the average even for those with four-year college degrees.
He called the high wage jobs a “national secret,” that can keep youngsters off the unemployment line with good pay after training as engineers, machinists, quality technicians, programmers and welders. Companies are in hiring mode, too, Shaffer said, with many retirements within an aging workforce. Estimates says hundreds of thousands of jobs in the field are unfilled.
Still, manufacturing ranks low as a career choice and misconceptions abound. Those misconceptions don’t extend to foreign buyers of U.S. companies, however. Shaffer cited statistics showing that 61 percent of all American companies bought by foreign firms are manufacturers. “They think the United States is a great place to manufacture,” Shaffer said.
Paul said recovery is still intact with auto and light truck sales strong, new single family home sales up since 2009 and fixed equipment investment rising. But the Industrial Production Index is still below pre-recession 2007 levels, although it’s rising, and industrial capacity utilization is below average at 76.1 percent.
“You see massive loss of industry in Dayton, but there is recovery, and that can be improved,” Paul said. Industry employment in the Dayton metro area has declined from 80,000 in 1990 to half that today.
That trend, however strong, could be at a turning point. Dramatic reductions in energy costs from new natural gas deposits, the auto industry’s resurgence, growing additive or 3D manufacturing and reshoring of industry from abroad are all factors pointing to expansions.
The top states seeing more manufacturing being brought back from abroad include California, Ohio, North Carolina and Illinois, Paul said. Industries poised for growth include Ohio staples like transportation equipment, chemicals and machinery. Job growth from continued recovery, both direct and indirect, could be 4.7 million by 2020.
“Reshoring is real,”Paul said. “China is no longer the default for manufacturing.”
Leland noted that federal spending for research and development as a percentage of Gross Domestic Product has declined from more than 2 percent in 1965 to 1 percent today. Meanwhile, the U.S. has been lagging other nations in university degrees in the natural sciences and engineering.
Rebuilding manufacturing is crucial for economic progress, he said. “You cannot have a vital economy unless you are taking something and adding value to it,” Leland said.
Key Manufacturing Strength Indicators
• Auto/Light Truck Sales strong.
• New Single Family Home Sales/Starts/Permits up since 2009, but only about 50% of 1990-1999 average.
• Real Fixed/Equipment Investment rising.
• Balance of International Trade, with exception of China trade, improving.
• Industrial Production Index still below 2007 levels, but rising.
• Capacity Utilization at 76.1%, or well below average.
• New Manufacturing Orders at pre-recession levels.
• Manufacturing employment is up 4% since 2010, but flat for past 18 months
Source: Alliance for American Manufacturing