by Chudi Obi
Throughout most of 20th century, manufacturing was the core economic identity of the United States. America’s manufacturing sector thrived, helping to make it an economic superpower. It was indeed the face of American culture in many ways, with the image of the factory worker defining classic Americana in many parts of the country. Today, however, the economy has changed. Due to the comparatively low cost of labor in many other countries such as China and India, manufacturing companies have outsourced labor or have gone out of business altogether - unable to compete with cheaper imports. The decline of manufacturing was further exacerbated by the Great Recession in 2007-2009. Here we saw many companies collapse under the pressure, laying off workers who had been in their factories for decades. While the country has come out of the recession, many of the manufacturing jobs that were lost have not come back.
The American promise of the post-WWII generation that a high school education with little special training would be sufficient to get a factory job that pays well enough to support your family and send your kids to college is a thing of the past. The American dream that if you work hard and stay honest you will be able to live a decent middle class life is dead. The current reality is that the American economy is slowly becoming more service based, and moving away from the manufacturing base that bolstered it for so long.
This new reality does not mean that manufacturing cannot rise to prominence again in the American economy. The manufacturing sector needs to modernize and evolve to produce the things necessary for modern times, and for which the United States still has a comparative advantage. In terms of intellectual property protection, innovation, and technological advancements, the United States is highly ranked but lags slightly behind countries like South Korea, Sweden, and Germany, the latter of which is known for its progressive integration of science and technology into product design; a process known as “mechatronics.” As free trade continues to expand, it is important to ensure that domestic production modernizes to keep pace with foreign competition.
One way to modernize American manufacturing is to produce simple technology for domestic use. An area that is receiving significant attention is the production of drones. Apart from their military use, drones are increasingly being looked to for commercial needs.
Due to the versatility of drones, states have begun to explore their production. The University of Virginia, for example, has explored designing underwater drones for the US Navy. Senator Mark Warner took notice of this, and has encouraged the state of Virginia to promote drone manufacturing in the state as an economic driver. In a September interview with WTVF, Senator Warner aptly mentioned that those unskilled, low-education jobs that supported middle-class families are becoming obsolete; it is important now to find new avenues to promote manufacturing. Apart from military applications, we see private sector companies like Dominos Pizza and Amazon exploring the use of drones for delivery. Drone manufacturing can be very labor intensive, and would necessarily require an education-heavy skill set. That is one reason why many drones are manufactured in China, as Harry McNabb broke down in this recent Drone Life article.
Another way to rejuvenate manufacturing would be to have manufacturing firms partner with online delivery. In 2013, Proctor and Gamble partnered with Amazon in the latter’s program called Vendor Flex, in which Amazon sets up shop in the manufacturing companies and run its e-commerce and logistics. This helps companies reduce transportation costs. In addition, Amazon hires its own workers for the program which saves the firms money on additional labor costs. This program allows for companies to directly deliver its product straight to the consumer without going through a middle-man. Manufacturing firms can flourish as they have a direct line to sell their products to various outlets and customers.
Currently the US has brought about 22,000 manufacturing jobs back to the country that were lost overseas or to downsizing during the Great Recession. While it is good that some manufacturing jobs have been recovered, it is clearly not enough to have a significant effect on the economy, especially when many Americans are still looking for work. Therefore, it is imperative that the US explore new avenues to expand its manufacturing sector to help not only the economy, but meet the workforce’s growing demands. This can be done by changing the nature of manufacturing to focus on technological advancement. That means not focusing solely on drones, but also solar panels, electric cars etc.: commodities that are in demand today and require a higher degree of technical skill or innovation. Manufacturing firms partnering with Amazon in programs like Vendor Flex help lower the cost of manufacturing. Finally, the government must provide a suitable environment for such industries to grow. This means promoting research into technological advancements to help reduce the cost of manufacturing for firms. In 2015, one million foreign-built drones were sold in the country, mainly as consumer items. With public and military demand for drones rapidly increasing, the government should create an environment to facilitate new firms to produce - thus creating a new industry. It is time for the country to think outside of the box, to let go of the past, and to move towards a more modern vision of manufacturing.
Hausman, S. (2016, September 26). Drones: A New Manufacturing Frontier in Virginia? Retrieved October 14, 2016, from http://wvtf.org/post/drones-new-manufacturing-frontier-virginia#stream/0
Noguchi, Y. (2013, October 28). Moving In With Manufacturers, Amazon Delivers A New Approach. Retrieved October 31, 2016, from http://www.npr.org/2013/10/28/240742832/moving-in-with-manufacturers-amazon-delivers-a-new-approach
Aww Do we NAFTA? (2016, October 21). Retrieved October 31, 2016, from https://www.thisamericanlife.org/radio-archives/episode/599/seriously?act=3#
Hodgson, A. (2014, September 18). Top 5 Manufacturing Economies: What Challenges Are They Facing? Retrieved October 31, 2016, from http://blog.euromonitor.com/2014/09/top-5-manufacturing-economies-what-challenges-are-they-facing.html
McNabb, H. (2016, September 30). Eight Reasons Why Chinese Drone Manufacturers Are Dominating the Industry. Retrieved November 8, 2016, from http://dronelife.com/2016/09/30/eight-reasons-chinese-drone-manufacturers-dominating-industry/