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White House / ECONOMY

In Manufacturing, Blue-Collar Jobs Need White-Collar Training

February 26, 2012

Jack Schron has shaken hands with a lot of politicians.

His factory in Cleveland is campaign-backdrop gold: a midsized, family-owned, high-tech facility, built on a reclaimed brownfield site. And because Schron is a Republican member of the Cuyahoga County Council, his factory floor has already borne the footprints of at least one GOP presidential candidate, Newt Gingrich.

“There are some things that come up every four years,” Schron says. One is the Olympics. Another is “politicians waking up and saying, ‘We gotta stop losing the good jobs in manufacturing.’ ”

 

The difference this year, he said, is that the Democrats are talking about manufacturing too. From his budget to his travel schedule, President Obama has left no doubt that a pitch to blue-collar workers and a promise to rebuild the country’s manufacturing base will be a crucial part of his reelection campaign.

But a closer look at Schron's company, Jergens, and the state of modern American manufacturing reveals that Obama’s pitch is not without peril. The president’s policies reflect a new economic reality: Manufacturing may be a blue-collar touchstone, but jobs in American manufacturing in the 21st century increasingly require white-collar credentials. 

Jergens makes standard components such as clamps, fasteners, and lifting equipment. A lot has changed since Schron’s father and grandfather founded the company in 1942: Processes are more high-tech, customers are more international, and workers are increasingly required to bring more skills to the factory floor.   

“We don’t even call our operating floor a factory, just to set the tone,” Schron said. Instead, a sign welcomes employees to the "Technology Distribution Center."

Employees operate lasers, robotics, and computer numeric-control tools, Schron said. They calibrate measurements to one ten-thousandth of an inch. Working on Jergens's factory floor, Schron said, can feel like working on the starship Enterprise.  

Technology and globalization have changed how Jergens products are made and where they're sold, Schron said. But most important, he said, “the thinking process has changed.” There are no more siloes between physical labor and white-collar work -- everyone, from the factory floor to the sales office, is expected to talk the same language.  

Backing manufacturing has traditionally helped politicians woo Rust Belt voters, labor unions, and laid-off factory workers who want a return to America’s manufacturing heyday. The president leans on some of that populist language in his statements, making sure to emphasize the need to restore a sense of security to middle-class Americans and struggling towns.

“Manufacturing has just changed drastically over the past 10 years. It’s no longer the nation’s antipoverty program. Low-value, low-skilled jobs are pretty much gone from the industry,” said Edward W. Hill, dean of the College of Urban Affairs at Cleveland State University. “There is a much higher share of white-collar and high-skilled labor, and much lower share of blue-collar labor.”

While there are many well-paying manufacturing jobs available that don’t require a four-year college degree, or a strong background in science, math, or engineering, employers are increasingly asking for a higher set of skills, experts and economists say. And despite the recent uptick in hiring, the long-term trend in American manufacturing is toward more productivity and fewer jobs, meaning that the overall size of the workforce is likely to keep shrinking. The old days — when a factory employed an entire town — aren’t coming back any time soon.

Even jobs on the shop floor will increasingly require an industry certification, an associate’s degree, or some sort of community-college training, said Gardner Carrick, senior director of strategic initiatives at the Manufacturing Institute. 

“It’s sort of redefining what the middle-class job is," Carrick said. "You’re going to make a very good wage, but you’re going to need a higher skill set.”

Employees increasingly must be able to work in teams and be fully computer-literate. They need to be able to deal with complex pieces of machinery, and in many cases they need to be able to operate with less oversight from a supervisor than in the past, experts say.

“Someone who has been laid off during this recession will need some degree of retraining or retooling,” Hill said. As for new hires coming in to succeed an aging workforce, “the person coming in is not going to have the skill set that the person coming out had when they were hired,” Hill said.

Heading into his reelection campaign, Obama has repeatedly linked the need to rebuild the country’s manufacturing base to a revival of the hard-hit middle class. “We know that we've got to rebuild a middle class, and a lot of that is going to have to do with how well we do in manufacturing and how well we do in those jobs that are related to making products here in the United States of America,” he said in a speech last year at Northern Virginia Community College.

Obama has argued that America’s strength in manufacturing comes from its skilled labor force and capacity for research and innovation. The president’s budget calls for $8 billion for better job-training programs at community colleges and $140.8 billion for science and engineering research, including $2.2 billion for advanced manufacturing. He has called for a special corporate tax rate for manufacturers: only 25 percent. 

The administration has also made the argument, gaining traction among some economists, that a strong manufacturing sector has spillover effects into other sectors. A strong industrial base, they contend, helps to strengthen the economy as a whole.

“We believe manufacturing punches above its weight economically,” White House National Economic Council Director Gene Sperling told reporters on Monday. Manufacturing generates 70 percent of all private-sector research and development, 90 percent of patents, and 60 percent of exports, Sperling said. Beyond the 11 million people it employs directly, he said, innovation fueled by manufacturing creates jobs in services and research sectors.

Innovation in manufacturing occurs across the board, from small businesses to huge corporations, experts say. But elite scientists and engineers and high- and mid-technology industries power most of the spillover effects.

Companies that produce semiconductors, computers, electronics, pharmaceuticals, and chemicals invest the most in research and receive the most patents, reports the National Science Foundation. And for all industries, companies that spend more than $50 million per year on research and development reported the highest incidence of both product and process innovation between 2006 and 2008, according to the NSF.

New industries, high-tech industries, and highly educated employees — not the traditional manufacturing base — are responsible many of the economic benefits the Obama administration keeps talking about.

Some of the administration’s tax proposals tap more directly into the impulse to protect products "made in America." Yet those proposals, with their direct populist appeal, make little sense in a globalized marketplace, experts and economists say. 

The key proposals being pushed by Obama include preventing American companies from deducting their moving expenses when they shift their plants overseas, giving them a tax break for coming home, and creating a minimum tax on multinational companies.

These measures make less sense than simply lowering the overall corporate tax rate to make America an attractive place for any company, regardless of origin, to set up shop, according to Stephen Ezell, a senior analyst at the Information Technology and Innovation Foundation. Ezell added that it’s also important to preserve incentives for investing in research and capital equipment.

The push to speak out in support of manufacturing likely came from both the president’s political and economic staff, said Jared Bernstein, a former member of Obama’s economic team now at the Center on Budget and Policy Priorities.

But the administration’s focus on job training and advanced manufacturing, which respond to the 21st century needs of the sector, reveal that supporting domestic manufacturing means supporting an increasingly high-tech, higher-skilled sector. The president’s proposals reflect an industry that is demanding more from its workers, and drawing innovation and productivity gains from its technical expertise. It reflects an industry that is becoming more and more elite. 

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