American Manufacturing: Five Clear Trends

Manufacturing holds a vaunted place in the American psyche. From Henry Ford to the modern era, manufacturing is often seen as the epitome of America’s industrial prowess. With manufacturing so intimately intertwined with the nation’s self-image, it’s natural that fears about manufacturing’s decline will organically extend to fear about America’s decline. We hear this sentiment often echoed by politicians. But is American manufacturing actually in decline?

While the evidence paints a mixed picture, several distinct trends emerge. Here are the five most notable:

1) Due largely to automation, manufacturing productivity has nearly doubled over the past twenty years

Manufacturing Sector – Real Output

2) In contrast to the service sector, manufacturing employment has remained stagnant the past twenty years

Employment in Manufacturing versus Service Sector

3) Despite employment stagnation, the manufacturing sector faces a widening shortage of  workers

Job Openings and Hires in the Manufacturing Sector

vacant-jobs

Two million U.S. manufacturing jobs will remain vacant over the next decade due to a shortage of trained workers (Source: U.S. Bureau of Labor Statistics)

4) The manufacturing labor shortage is largely due to a lack of talent with required skills

5) Due to labor shortage, manufacturers are squeezing more out of their existing workforce

Average Annual Working Hours Per Employee

average-work-hours

On average, annual working hours in manufacturing is 17 percent more than in all private business (Source: Manufacturing Institute)

Bottom Line

Nationally:

The stagnation in manufacturing job creation does not mean there are not opportunities in the sector. On the contrary, the productivity of American manufacturing has exploded and as baby boomers continue to retire a multitude of high-paying jobs are opening up.  The problem is a skill gap – there are not enough skilled workers to fill the openings. In lieu of a trained labor force, manufacturers are forced to stretch their human capital through frequent mandatory overtime. This creates added payroll burdens and employment law complexities.

But is there a solution?  Of course there is a solution and it is not magical or global or even political.  The manufacturing sector’s best approach to meeting its labor needs is via a thoughtful, systematic, and strategic approach to recruiting, managing, and developing talent.

Locally:

While we speak about the manufacturer sector nationally, the lack of skilled workers also impacts our local and regional businesses.   Every day Minnesota business owners navigate their own workforce needs and challenges.  For some, this skilled work force challenge creates immediate legal complexities and costs. For others, the lack of a skilled work force waiting to replace their aging work force impacts the long-term value of their business enterprise.   Whether faced with a short-term or long-term challenge, most business owners grapple with these issues.


 

Attorney Kim Lowe helps businesses in the manufacturing sector, navigate the complex legal and business issues faced by the modern enterprise.  Utilizing decades of legal, business and leadership experience, as well as her nationally recognized unique cross-sector expertise, Kim helps business and thought leaders create, fund and operate for-profit enterprises, benefit corporations, cooperatives and/or nonprofit organizations grappling with workforce and other challenges.

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