From SCDigest's On-Target E-Magazine
- July 16, 2014 -
Supply Chain News: California Experience with Advanced Manufacturing Tells the Sad Tale Relative to Jobs
Mirroring National Trends, Output in State has Surged, while Number of Manufacturing Jobs Continues to Decline
SCDigest Editorial Staff
There is certain much evidence that some levels of US manufacturing are coming back home from offshore, or that companies are deciding to stay here rather than offshore due to rising costs abroad, more supply chain agility from domestic sourcing, and more.
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In 2001, as that recession started and China joined the Word Trade Organization, offshoring surged, as companies, especially in high tech, searched the globe for lower costs. It's been downhill ever since. |
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Manufacturing in general has been a relatively bright spot in the economy since the end of the recession in 2009, and today the Federal Reserve announced another slight tick up in US manufacturing output, to a level of 99.7 in June from 99.5 in May, meaning US production is almost all the way back to the peak and base year of 2007.
But a recent study on California's manufacturing sector shows how "advanced" manufacturing has changed the employment dynamic: while output surges, the number of jobs is actually going in the other direction.
The output of California factories surged 73% during the last 15 years, which is twice as fast as the rest of the US. But with that robust growth, manufacturing employment fell 34% over the same period, according to a new report from the Los Angeles County Economic Development Corp.
Automation, lean practices, ruthless cost-cutting and more resulted in the state's manufacturing workforce shrinking to 1.2 million in 2012 from 2.1 million jobs in 1990, which is a faster rate of decline than the nation as a whole.
Those figures means the number of manufacturing jobs lost during period is about equal to the number of manufacturing employees today. Manufacturing jobs have been essentially cut in half in the state.
"The composition of manufacturing is going to change and has been changing," LAEDC economist Christine Cooper said. "It's becoming more advanced and technologically intensive. And it's more lean."
Together, these manufacturing changes have simply led to substantial gains in productivity. Companies rarely need thousands of workers to operate even very large factories anymore.
Consider the tale of Parkdale Mills, a yarn maker that a few years go re-opened a factory in Gaffney, South Carolina that had been closed for many years.
Touted as an example of "reshoring" success, the Parkdale facility produces 2.5 million pounds of yarn a week with about 140 workers. In 1980, that production level would have required more than 2,000 people, the company says.
Nationally, there are about 12.1 million workers in manufacturing jobs, according to the Bureau of Labor Statistics.
(Manufacturing Article Continued Below)
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