David Chavern of the U.S. Chamber of Commerce came to manufacturing-heavy Elkhart County to talk about the state of U.S. manufacturing -- and it's not all doom and gloom.
ELKHART — When he addressed the Greater Elkhart Chamber of Commerce’s annual meeting, David Chavern spoke on a topic more relevant to this area than to most other places: Manufacturing.
“With the thriving manufacturing sector driving growth in our economy and sharpening our competitive edge, there’s no reason America can’t reemerge as an undisputed global economic leader,” said Chavern, executive vice president and chief operating officer of the U.S. Chamber of Commerce. “We don’t need to fear competition. In fact, the international arena represents much more of an economic opportunity than a threat. We can and should win in the world.”
He warned, though, that government needs to enact policies to support manufacturing. The federal government “is getting in the way as much as they’re helping,” he said. He also warned that manufacturing jobs are changing.
The topic of manufacturing was fitting here, Chavern said, “given the importance of manufacturing in Elkhart and in Elkhart County.” In fact, nearly half of employment in this county is in manufacturing, making us one of the most manufacturing-heavy locations in the country, according to the U.S. Census Bureau and the U.S. Bureau of Labor Statistics.
THE GOOD NEWS
Chavern shared some interesting figures about U.S. manufacturing, figures he said contradict a belief that American manufacturing is declining:
Manufacturers in the U.S. generate $1.7 trillion in value each year, 12 percent of the country’s gross domestic product.
Manufacturing provides 17 million U.S. jobs, 12 million of them in engineering and production. Those jobs are well above average income levels.
For every 100 direct jobs in manufacturing, they support another 58 non-manufacturing jobs.
Manufacturing drives more innovation than any other sector of the U.S. economy, responsible for two-thirds of all research and development in the country.
The U.S. share of global manufacturing output hasn’t changed over the last 40 years. “We make a lot in America,” he said.
The U.S. remains the world’s largest manufacturer, accounting for 21 percent of world manufacturing value added in 2010. That’s more than China, Russia, Brazil and India combined.
Even concerns about “offshoring,” or shipping manufacturing jobs overseas, are overblown, he said. Of those jobs, 90 percent got to add production to serve other markets, not the U.S. markets.
THE EMPLOYMENT CHALLENGES
He noted, though, that the number of manufacturing jobs has dropped due to leaner and more advanced manufacturing. “Our efficiency gains have permanently altered the concept of a good manufacturing job. For earlier generations, unskilled workers — or those without a college degree — could count on a stable living on a factory floor. They could enjoy a solid middle-class lifestyle and raise a family with an assembly line job.
“Today, though, the opportunities for unskilled workers on the factory floor are quickly disappearing. Factory jobs are wonderful and we want a lot more of them in the U.S., but we need to understand that in the future most will require advanced skills and training,” he said.
“Put simply, the U.S. manufacturing sector is never again going to be a guaranteed source of unskilled employment,” he said.
THE THREE Ps
Leaders have to have a serious public-policy discussion on three factors related to manufacturing: People, perspective and policies.
For people, the educational system needs to allow for advanced skills and training and customized advanced manufacturing certification. Those ideas are already being pushed here in a report commissioned by the Corporate Partnership for Economic Growth.
The country also needs to reform it’s “completely irrational immigration system” which holds us back in attracting international talent, he said.
For perspective, it “must be global. Policy makers must never forget that they have the central responsibility to set the terms and conditions that will allow our businesses and our economy to compete and thrive. Too often our politicians think our economy ends at our borders.”
In terms of policies, “many of our standing policies have done fundamental, long-term damage to our manufacturing sector,” he said, leading to boosting of costs in manufacturing by an estimated 20 percent. “A strong business environment starts with a competitive tax system, but our tangled tax code is anything but competitive,” Chavern said.
The country needs legal reform, he said.
Free trade agreements help U.S. manufacturers, he said, and the government needs to provide infrastructure and keep from getting in the way of companies having access to abundant energy at affordable prices, Chavern said.
“Any policies that are corroding the business environment, corrupting our economic ecosystem or threatening the vitality of manufacturing, they keystone species of our economy, must be fixed now. We simply can’t compete otherwise,” he said.
IN THE END
We’re in the best position in the world for manufacturing, he said, with our demographics, our access to resources and our history of entrepreneurship. “If we want it there’s no reason why manufacturing in the United States can’t grow by leaps and bounds, employing millions of additional workers in knowledge-based jobs that drive expanding prosperity for the middle class and for our nation,” he said.