A House Divided Cannot Stand

When you are hashing out a plan, there is nothing wrong in having and even encouraging differing opinions among your stakeholders.

I actually want to hear diverging views to get a more complete picture of what the facts are and what the possibilities may be. Disagreement at this stage of the sausage making does not particularly alarm me.

But there comes a point down the line when you want your team to come together and coalesce around a single plan or strategy. In short, you want buy in on action to be taken.

“A plan without action isn’t a plan. It’s a speech,” said T. Boone Pickens, a Texas oilman who knows from what he speaks. I always keep that notion of action in my mind when I am doing a strategic plan for an economic development organization. Too often, planning can be a trap in that it can actually inhibit action.

Stop Thinking and Go In

President Andrew Jackson, “Old Hickory,” was a man of action and wasted little time in getting down to what he needed to do.

“Take time to deliberate,” he said. “But when the time for action arrives, stop thinking and go in.”

And when you go in, it’s usually best to go with both feet. Half-hearted, timid measures usually reap unsatisfying results. Pedal to the metal. Full tilt boogie.  Any and all divisions are to be put aside as they can destroy what is built.

“A house divided against itself cannot stand,” said Abraham Lincoln, referencing statements by Jesus recorded in all three synoptic gospels (Matthew, Mark, Luke).

A House Divided Gives Me Pause

If I detect a house divided in the course of my work on a site selection project, I will duly note it. When looking at finalist communities that I am visiting on behalf of a corporate client, I hope to see a unified team approach. If I detect deep schisms (not minor disagreements), which are often the result of institutional fiefdoms or competing interests, well, that’s going to give me pause.

Certainly, the last thing I want is for a company that I am serving to be placed in an environment where it becomes a political football among opposing factions. So A) we want to be wanted and B) we want to see a unified team approach, which means one economic development voice in a community, not multiple competing, uncoordinated voices. C) We want competence and a track record of making deals happen smoothly and seamlessly.

Back in South Georgia

This past week, I was back in Screven County, Ga., a rural community about 60 miles north of Savannah, straddling the South Carolina border. It was my second trip there, interviewing stakeholders as part of an investigative process that I believe is necessary in developing a strategic plan of action.

Our job (I’m partnered with Ohio-based Jason Hammans of Hammans Consulting) is to find the right fit for Screven County in terms of where future job growth opportunity lies, with a focus on target industries to be pursued. We’re calling it an action plan, because we will be recommending that certain actions be taken.

Screven County is a community with some wind behind its sails. After decades of no growth and population loss, the county has won two industrial projects with a third one in the mix. Suddenly, this community believes it can attract industrial investment, as do Jason and I.

Tough Row to Hoe

But it will not be easy. I submit that economic development in rural America is much more challenging than in metropolitan centers, where there are more more options and resources. In rural America, where there will be limitations by the very nature of the place, it’s typically a tougher row to hoe.

But that does not mean that rural communities do not have strengths and opportunities that can be leveraged. And that is what we are focused on in our work for the Screven County Development Authority. We gave a mid-term report of our action plan/SWOT analysis to the board this past week in which we went over some of our findings to date.

As no one hurled anything at us, I think we are on the right track. Our full report to the Authority should be completed in April. I promise that we will be offering a plan and not a speech.

Volkswagen Thwarted

So my blog last week about workers at the Volkswagen plant in Chattanooga, Tenn., rejecting representation by the United Auto Workers got a lot of comments, some of which were quite insightful and some of which were kind of out there.

I usually will not comment on the comments, but prefer to remain silent. The way I see it, that’s your opportunity to present your views, and I welcome them even if you might disagree with mine or come up with a totally different take.

But I did get a rather curious email from a Tennessee economic developer who didn’t seem to understand my analysis that the rejection of the UAW, from the standpoint of VW management, may actually hamper the Chattanooga plant’s chances of getting a future SUV production line. The competing candidate for the SUV line is a VW plant in Puebla, Mexico.

The reason is simple. VW’s plans for a work council were thwarted by the vote. It wasn’t so much that VW wanted the UAW. They were probably ambivalent on that. Rather, the company very much wanted its vaunted work council model in Chattanooga, and by U.S. labor law, they figured they had to have the union to get it. In the past, the automaker has concurred with legal experts that a works council would not be legal without a union.

However, Gunnar Kilian, secretary general of VW’s global works council, said in a statement last week that he and Frank Patta, another top works council official, will consult U.S. labor law experts to plan further steps. “We are committed to our goal of establishing a works council in Chattanooga,” he said.

Revealing Statements

Now Chattanooga is the only VW plant world-wide without a works council. What’s more, some senior VW managers have made some pretty revealing statements that Chattanooga may not be sitting pretty for expansion, at least in the short run.

It did not help that U.S. Sen. Bob Corker, R-Tenn. and a former mayor of Chattanooga, said prior to the vote that he had “inside information” that if the workers would vote against the union, that the company would reward the Chattanooga plant with the upcoming SUV line.

VW management almost immediately issued a statement essentially saying Corker, without mentioning him by name, was talking out of his hat.

“There is no connection between our Chattanooga employees’ decision about whether to be represented by a union and the decision about where to build a new product for the U.S. market,” said VW Chattanooga CEO and Chairman Frank Fischer said one day before the vote.

The way I read that: “Hey workers, don’t listen to that guy.”

A Board Member Speaks

Bernd Osterloh, a board member and head of the company’s global works council, was quoted as telling the German daily Sueddeutsche Zeitung that he was concerned with the “massive anti-union atmosphere created from the outside by conservatives” surrounding the Chattanooga vote.

He told the paper that the fate of the works council in Chattanooga could determine whether the company decides to make further investments in the state and region.

“I can well imagine that a further VW location in the U.S., in the event one should one be built there, would not necessarily have to go in the South,” he said. “If the subject of co-determination isn’t cleared from the start, we as wage earners could hardly agree to that.”

I don’t know how you can read that any other way, but to see that VW was not pleased by what transpired in Chattanooga.

You Can’t Be Serious

What is almost laughable is that Tennessee officials, with the Chattanooga vote behind them, are now saying with a straight face that a “mega site” between Memphis and Jackson would be ideally suited for a new auto assembly plant — even if its workers are represented by the UAW.

Come on, guys, give it a break. We know what happened in Chattanooga, duly noted by Herr Osterloh. Heck, you had a state senator, Bo Watson, saying shortly before the vote that should a majority of workers support being represented by the UAW, that “any additional incentives…for expansion or otherwise will have a very tough time passing the Tennessee Senate.”

Man up and acknowledge the obvious – that Tennessee is a right-to-work state and unions are not going to be welcomed with open arms. That does not make you in any way unique in the South, which by and large has a better business climate.

By the way, I do believe that the West Tennessee mega-site is viable site for a future auto-assembly plant, but don’t count on Volkswagen looking at it.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas. If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help. All requests for information are considered confidential.

© Unauthorized use of this blog is strictly prohibited. Excerpts and links may be used, but only if expressed permission has been granted.

The Night the Union Died

When I read the news Friday night of Volkswagen workers in Chattanooga rejecting the United Auto Workers, for some reason, I was reminded of Don McLean’s “American Pie,” an anthem to a changing America.

It featured this rather sad refrain:

And they were singing, bye bye Miss American Pie 
Drove my Chevy to the levee, but the levee was dry 
Them good ol’ boys were drinking whiskey and rye, singing… 
This’ll be the day that I die.

I was in high school when American Pie was released. The year was 1972 and an arrogant Detroit, largely dismissive of any Japanese inroads into the market, was turning out what I thought at the time were some very cool muscle cars. (Remember Mopar and Pontiac GTO and the like?).

The United Auto Workers, too, was a power to be reckoned with. Membership would peak in 1979 when it represented 1.5 million workers. Today, it is but a shell of that — about 400,000 members – and Friday night’s vote illustrated just how far the once mighty industrial union had sunk.

In Cahoots

Know this – that the UAW could not even win an election where it had the tacit support of management. And make no mistake about it, VW management, despite its outward statements of neutrality, wanted a European-style “works council” and was in cahoots with the UAW to get one, much to the disbelief and ire of local and national Republican officeholders.

Mind you, VW had a different kind of model in mind with its works council, one largely foreign to corporate America (and to the UAW), which would have differed from traditional U.S. industrial unions in that it could not call for strikes. But the stumbling block was and continues to be that under U.S. law, a works council can only be legal if the workers were represented by a union.

Also, the National Labor Relations Act forbids management from “assisting” labor unions, hence the postured neutrality stance from VW management. Reading between the lines, I believe the company wanted the UAW because the union represented a means and a way for a works council to happen. There were probably some “you don’t rock my boat and I won’t rock your boat” discussions in Germany.

Now I will admit that this is conjecture on my part, but I can tell you it’s based on some firsthand knowledge and experience with working with German automotive suppliers in the Southeast on site selection projects. They have a different culture when it comes to manufacturing.

A Different History

Back home in Deutschland, where apprenticeship programs are still commonplace on factory floors, companies don’t have the historical adversarial relationship with labor unions that we do in this country. In Germany, it has been more of a collaborative nature, with the goal of solving problems and making better product without the adversarial drama.

I think that was what Volkswagen had in mind for Chattanooga, as the works council model has worked very well for the company not just in Germany but worldwide. Indeed, the Chattanooga plant is the only plant that doesn’t have such arrangement. And, ironically, that is now what might cost it the long run.

It’s no great secret that Chattanooga will be vying against the VW plant in Puebla, Mexico, for production of a long-awaited SUV. Despite assertions from U.S. Sen. Bob Corker that he was privy to inside information that a yea-vote for the union would have hurt Chattanooga’s chances for that expanded production, the company released a rather revealing statement the day before the election that contradicted the Republican senator from Tennessee and a former mayor of Chattanooga.

Volkswagen Chattanooga CEO and Chairman Frank Fischer said, “There is no connection between our Chattanooga employees’ decision about whether to be represented by a union and the decision about where to build a new product for the U.S. market.”

Unintended Consequences?

It would not surprise me if Friday’s election results may now give the edge to Puebla as management’s plans for Chattanooga have at least for now been thwarted. I guess we will find out soon enough, but this could be a classic case of unintended consequences.

Despite the difficulties posed by U.S. law, if Volkswagen Chattanooga could have pursued its works council agenda without turning to the UAW, maybe it should have. Hindsight is always 20-20.

And there still might be ways for the company to reach that goal, as alluded to by Fischer who said in a statement that Friday night’s vote in rejecting the UAW was not a vote against a works council, and that he still hopes to develop one that is in accord with American labor law.

I suspect it will take some fence-mending on the part of the company with the GOP and the hiring of some high-priced Washington lobbyists and labor lawyers for that to happen. And while the UAW has been emasculated, the company will also likely still need the Obama administration and the Dems to agree not oppose a future works council arrangement, even if it takes a little bending of the law to make it happen.

In short, Volkswagen misplayed its hand big time. It alienated the Republican party by playing footsy with the UAW and probably never seriously pursued another way of forming a works council. With Friday’s vote, it’s back to the drawing board and Plan B, if there is a Plan B. There very well might not be one.

Their Last Best Chance

For the UAW, really for all industrial unions (I am not speaking about public-sector unions), Friday night might have been their last best chance to make any meaningful mark in hopes of a comeback. It would be hard to imagine that they will ever have this kind of chance again. The Chattanooga vote was teed up for them and they still blew it. If they can’t win one like this, what can they win?

This latest defeat comes on what can only be described as a long trail of tears for not just the UAW, but for industrial unions in general. Looking back, this may very well be seen as a pivotal night, the night the union died.

Oh sure, the UAW will continue to exist and still represent workers at Ford, GM and Chrysler plants across the country (and at a Mitsubishi plant in Illinois), but its dream of making inroads into the foreign-based automakers in the South, well, that’s over. It’s not going to happen. Kaput as they say in German.

So let’s continue to put this in a little historical context. In 2012, Indiana, still a bastion of Midwest manufacturing with a history of organized labor activity, became a right to work state. It was followed by Michigan, which also became a right to work state in 2013. Michigan, the birthplace of the UAW. Michigan of all places.

Not Your Father’s Country

Now I am of the age where I should not be surprised by much of anything, but when Michigan became a right to work state, well, I started hearing strains of  American Pie in my head. This is not your father’s country and it never will be.

Now let me tell you what happened last month in Youngstown, Ohio, a city with a long tradition of labor union activism. Workers there voted two-to-one against forming a union at two Vallourec Star pipe mills.

Representatives of the United Electrical Workers Union make noise that they will renew their fight to organize and represent workers, but they always say that after a loss. They had their heads handed to them in Youngstown, Ohio, of all places. Watch for Ohio to fall in line with Indiana and Michigan and become a right-to-work state, just as their southern counterparts have been for many years.

In the world of corporate site selection, my bailiwick, I have now come to the belief that many companies continue to have an inflated fear of labor unions. That fear is largely misplaced. The once mighty lion of organized labor, at least on the industrial side, is now virtually toothless wherever I go, whether it be a right-to-work state or not.

That’s just the way it is, and that’s the way it’s going to be for the foreseeable future. The time of the industrial union in this country has come and gone. They are mostly relics of an industrial past, and we have been witnessing their slow demise for some time now.

To some of you, probably Democrats, this historical unraveling is a sad fact which gives corporations an inordinate amount of power to essentially take advantage of workers in a whole host of ways and will keep the middle class under assault. To others of you, mostly Republicans, it is good riddance as unions were nothing more than an irritating and sometimes corrupt hindrance preventing efficient work to be done.

Me, well, I just call it like I see it. And the way I see it is that there will be no comeback for industrial unions in this country. Their day is done. A Friday night in Chattanooga sealed the deal.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas. If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help. All requests for information are considered confidential.

© Unauthorized use of this blog is strictly prohibited. Excerpts and links may be used, but only if expressed permission has been granted.

A Recovery at Half Speed

Ever since I was a boy, I have been drawn to reading history. Now I realize that my knowledge of the Old West gunfighter Doc Holliday having briefly practiced dentistry in Dallas will likely never be of much use to me on a practical level. Still, I do not believe my reading of history has been an altogether useless endeavor.

You see, history can provide telltale markers and clues as to the workings of what is happening today. When we look at things from a historical perspective, we can sometimes detect and recognize certain trends and timelines, which thereby gives us a deeper understanding of how things are and how they may play out.

And in the business of corporate site selection – one of my core functions as a consultant – ascertaining historical knowledge can be of huge significance in determining where and how to risk capital resources.

This whole notion of business climate is largely derived from how state and local governments interact with businesses, particularly on regulatory and tax matters. In that regard, some places have a better history than others.

Intertwined Histories

So I was pleased and impressed when I heard Dr. Al Niemi, dean of the Edwin L. Cox School of Business at Southern Methodist University, give his annual economic forecast to an audience of business people at the school’s branch campus near my home in Plano.

That’s because he based much of his analysis on history. You may recall that I did some of that in my blog last week, in which I cited the long-term trend of history as the reason why manufacturing, which is becoming ever more efficient in a new digital machine age, will not produce a significant jobs revival in this country despite all the hoopla to the contrary.

Dr. Niemi and I also have our own personal histories that have intertwined. He was briefly the dean of the business school of the University of Alabama at Birmingham, and I was the business editor of The Birmingham News, then the dominant daily newspaper in the state.

I visited with him at UAB, either in late 1996 or early 1997, having learned that the powers that be within the University of Alabama system were thwarting his efforts to build up the Birmingham program, as it was viewed as a threat to the main campus in Tuscaloosa. It’s the age-old story of politics and fiefdoms.

Dr. Niemi, who had earlier served as a dean to the business school at the University of Georgia, promptly left UAB in 1997 for a much better job at SMU, where he has been ever since. He now leads what has become one of the top-ranked business schools in the nation, and the students there are lucky to have him. I know I could learn a thing or two by sitting in on the “Evolution of American Capitalism,” a history class that he teaches.

But for purposes of this blog, it’s what he said about our current economy, which is of most interest. It was why he attracted a crowd of business people for his luncheon address, which he warned from the outset, “Folks, I don’t have a lot of good news today.”

The good doctor is no spin doctor. He calls it like he sees it. So here is a smattering of what he said.

The Slowest Recover in Our Lifetime

We will know more soon, but our nation’s economic growth in 2013 will probably clock in at the 1.7-1.8 percent range, certainly nothing stellar and par for the course of late. And therein lies the problem.

“There have been 10 economic expansions since World War II, and we are in the 11^th expansion right now,” said Dr. Niemi. “If you look at the previous 10 expansions going back to the 40s, the average rate of real growth was 4.7 percent. 

“So far in the expansion that started in July 2009 the real rate of growth over those 18 quarters is 2.4 percent. So to put our current recovery in perspective, it is a recovery at half speed. … We are living through the slowest recovery in our lifetime.”

Unprecedented

I was born in 1954, during a recession that began the year before. It took 21 months after the end of that recession before we got back to the same number of people who were at work before the recession began. That was pretty much true with our other recessions. Typically, the number of people who eventually got back to work after a recession equaled the pre-recessionary levels after 15 to 25 months. In short, it takes some time to recover.

But we are now in our 73^rd month since the recession ended in July 2009. And yet we still have about 2 million fewer people working today than we did in December of 2007 at our peak employment. “That is unprecedented in American history,” Dr. Niemi said.

The Illusion of Good News

The headlines are not telling the whole story. The real story behind the story of dropping unemployment rates is due to the fact that more Americans are simply leaving the labor force, usually discouraged, rather than gaining actual employment.

This takes the unemployment rate down, as unemployment only counts those individuals “looking for work.” In fact the number of working age Americans over the age of 16 no longer in the labor force just hit an all time high of 91.8 million.

Taking into account the discouraged workers who have taken themselves out of the workforce and the underemployed, those people working in jobs that are below their skill levels, the real unemployment rate in America is probably more like 16 or 17 percent, Dr. Niemi said.

And even if we were to add 200,000 jobs a month, this country would not reach full employment (now a rate of 5 percent unemployment) until 2029. If the economy picks up more steam and we averaged 250,000 jobs a month, we would only reach full employment by 2021, Dr. Niemi said.

“We got back to full employment 11 years after the Great Depression. If we go to 2029, that is 20 years and there is nothing like it in American history. And that is a very likely scenario,” Dr. Niemi said.

 Friday’s Anemic Report

Certainly the latest jobs report, released Friday, doesn’t provide much in the way of hope. The economy added a paltry 113,000 jobs in January. That anemic report was only marginally better than the 74,000 jobs created in December, which was the worst month of job creation in three years.

Space does not permit me to tell you more of what Dr. Niemi said about the current state of our economy. But he did say this, which I take true to heart and is good advice:

If you are right of center in your politics, force yourself for a week to read the editorial page of The New York Times and watch MSNBC to see what the “other side” is saying. Conversely, if you are left of center in your political leanings, force yourself for a week to read the editorial page of the Wall Street Journal and watch Fox News.

Both sides have their spins, and it may seem as if we are living in two different worlds, but the truth is usually somewhere in between.

The Good and Not So Good in Tennessee

Two big developments in Tennessee this past week have caught my eye and could be of huge significance in terms of site selection. On the face of it, one is good and one is not so good. First the good.

In his State of the State Address, Gov. Bill Haslam offered the “Tennessee Promise.” It’s something that other governors may want to steal a page from.

“The Tennessee Promise is an ongoing commitment to every student – from every kindergartner to every high school senior. We will promise that he or she can attend two years of community college or a college of applied technology absolutely free.

“If students then choose to go on to a four-year school, our transfer pathways program makes it possible for those students to start as a junior. By getting their first two years free, the cost of a four-year degree is cut in half.”

The governor has promised putting $300 million in surplus lottery reserves into an endowment to cover the $34 million-a-year cost of Tennessee Promise. This is music to my ears if it happens.

And now the not so good. In a move that it bound to have ramifications throughout the Southern auto industry, hourly workers at the Volkswagen assembly plant in Chattanooga will vote Feb. 12-14 on whether they want to be represented by the United Auto Workers.

The National Labor Relations Board set the election after Volkswagen Group of America and the UAW reached an agreement. The UAW has other ongoing organizing drives to attempt to represent workers at Nissan plants in Mississippi and Tennessee and at a Mercedes-Benz plant in Alabama.

UAW membership has fallen steadily since reaching a peak of nearly 1.5 million in 1979 to almost 400,000 in 2012, attributable to automation at assembly plants and a declining share of the U.S. auto market for General Motors, Ford and Chrysler Group. Outside of union membership at a Mitsubishi Motors plant in the Midwest, nearly all UAW members at automakers are from GM, Ford and Chrysler.

VW has emphasized its neutrality in the vote by secret ballot. And I actually believe that because VW’s supervisory board, the equivalent of a U.S. company’s board of directors, is evenly split between labor and management members.

Whatever happens, this vote is a shot across the bow for all the foreign-owned, non-union automotive plants throughout the Southeast. In short, this could only help Mexico. Stay tuned.

Nice Job

Finally, kudos to Michigan-based Consultant Connect for putting together this past week the Summit Dallas, where I got to meet economic developers from Big  Sky Economic Development, Montana; the Roanoke Regional Parntership, Virginia; AEP/Indiana Michigan Power; Northwest Arkansas Council; Amarillo EDC, Texas; Pennsylvania Community and Economic Development; Indy Partnership, Indiana; and the Southwest Development Coalition of Southwest Indiana.

The economic developers were a topnotch group as were the site selection consultants who provided them counsel. Good event.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas. If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help. All requests for information are considered confidential.

© Unauthorized use of this blog is strictly prohibited. Excerpts and links may be used, but only if expressed permission has been granted.

 

Can Manufacturing Spur a Jobs Revival?

In his State of the Union address last week, President Barack Obama spoke in laudatory terms of “a manufacturing sector that’s adding jobs for the first time since the 1990s.”

Well, technically that is true. Manufacturing jobs, after a long and steep decline, have grown by about 570,000 since early 2010, coming out of what can only be accurately called as the Great Recession.

But what the president didn’t say was that job growth at factories has slowed sharply in the past three years — from 207,000 in 2011, to 154,000 in 2012, to just 77,000 last year, according to the Labor Department.

I think it is safe to say that much of what the president said about a resurgence of the nation’s industrial sector can best characterized  by what Peter Tchir of TF Market Advisors would call a big dose of “hopium.”

As a student of American history, I suspect that most presidents, past, present and future, have and will use their office as a bully pulpit to instill hope among the American people.  And maybe that is altogether proper. Maybe the nation’s highest office should be occupied by a cheerleader in chief, albeit one who can get things done.

But getting things done does not characterize the present environment in Washington. Indeed, a recent Gallup poll shows that the federal government, at 21 percent, leads the list of what Americans consider the most important problems facing the country.

Mega-Trends in Our Favor

Despite the uncertainties and frailties caused by a dysfunctional government, a cursory view would indicate that U.S. manufacturing is on a much better footing today than it was just a few years ago. We have some mega-trends in our favor.

Rising wages in China and cheaper energy costs in this country have raised hopes that more U.S. companies will bring back manufacturing work and jobs to America — a prospect that Obama specifically mentioned in his speech. And some of that has actually happened and no doubt will continue to happen.

A recent example is Kent International, a New Jersey-based bicycle maker, which announced that it will move its production to Clarendon, South Carolina, and create 175 new jobs and assemble 500,000 bicycles annually by 2016. The company had moved all of its production overseas in 1990s because of lower costs of production abroad. The company’s bicycles are sold at Wal-Mart and Target among other retailers.

But here’s the kicker — most experts don’t see a big burst of new manufacturing jobs taking place despite all the hopium about a “manufacturing renaissance” in this country.

The Second Machine Age 

That’s because to some degree people, or at least most people, are becoming functionally obsolete for advanced manufacturing. Technological change has resulted in the automation of  so many functions in the manufacturing process, in which software-driven machines have essentially become substitutes, not complements, to people on the factory floor. We are entering “The Second Machine Age,” which is the title of a new book by Erik Brynjolfsson and Andrew McAfee.

In the book, the authors tell of Dutch chess grandmaster Jan Hein Donner, who was asked how he’d prepare for a chess match against a computer, like I.B.M.’s Deep Blue. Donner replied: “I would bring a hammer.”

For those relatively few people who will still be needed to run increasingly automated manufacturing systems, plant managers say they can’t find enough of them with the desired skill sets required. That problem will likely only worsen by the fact that about 2.7 million manufacturing workers are expected to retire between now and 2018.

Confessions of a Plant Manager

I was recently in a manufacturing plant in Georgia, where the plant manager told me that his biggest challenge, the one thing that kept him up at night, was the prospect of finding suitable talent to take over from the process engineers and maintenance technicians who would soon be retiring after many years of service. The potential replacement candidates with the needed skills are few and far between, he said.

In his State of the Union address, Obama said improved job training will be key to his administration’s efforts to make it easier for Americans to join and stay in the middle class. At a General Electric factory near Milwaukee, Obama signed a presidential memo directing Vice President Joe Biden to lead the review, and to work with cities, businesses and labor leaders to better match training to employer needs.

“Our economy’s changing,” Obama said. “Not all of today’s good jobs need a four-year degree. But the ones that don’t need a college degree do need some specialized training.”

After his remarks, Obama signed a presidential memorandum directing a review of how to make federal training programs more focused on helping workers get the right skills for in-demand jobs and remain a part of the middle class.

The Great Uncoupling

Now that sounds all very good. I would be hard pressed to say that upping the ante on training is a bad approach. Certainly corporate clients that I have represented during site selection projects look favorably at those locations where training programs can be offered, usually through a local community college.

And the president’s idea of creating high-tech manufacturing research hubs around the nation to spark innovation, I mean, how could I be against innovation and research and development? Continued investment in technologies does for the most part drive future production.

But where this could all break down is in the cruel reality of the numbers. Does a manufacturing revival necessarily go hand-in-hand with a big jobs revival? The evidence would indicate that the two can be – and increasingly are – uncoupled.

History provides us with some important clues. Manufacturing in America accounted for slightly less than 20 million jobs at its peak in 1979. Today, it’s barely 11 million. The picture is even bleaker when you consider population growth, since the labor force in 1979 was about 105 million whereas it now stands at about 155 million.

Correspondingly, manufacturing accounted for 28 percent of U.S. gross domestic product in 1953; 20 percent in 1980; and 12 percent in 2012, according to the U.S. Bureau of Economic Analysis. Over that same period, GDP increased from $2.6 trillion to $15.5 trillion. In short, manufacturing output more than tripled during that 60-year span, but the stuff being manufactured was being produced by fewer and fewer people.

And that has been true in all developed countries – Germany, Japan, and even China.

Where Most Job Growth Occurred

Also keep in mind that nearly 54 percent of jobs created in 2013 were in the low wage sector, a key reason steady hiring has yet to strongly push up wages. The biggest percentage increase in job growth occurred in the temporary help industry, according to Labor Department data. Those jobs tend to pay less and provide fewer benefits.

Hotels, restaurants, amusement parks and other entertainment firms posted the next biggest percentage gain. The third-largest gain was at retail businesses.

None of this is to say that the United States won’t continue to be a powerhouse in manufacturing. I believe that our manufacturing sector, after sustaining some serious body blows, has found its technological footing to compete and win on a global scale. By virtue of the fact that more CEOs are even suggesting taking a long hard look at re-shoring would indicate as much.

With the shale gas revolution, which we are only now starting to understand, and disruptive technologies such as 3D printing, still in its infancy, you have to wonder if we may be at “the beginning of something big,” as noted by Bruce Katz, a vice president at the Brookings Institution.

Shooting for a Miracle

We just might. My gut says we are, even if I have my doubts as to whether that will translate into millions of new manufacturing jobs being created. With 6 million manufacturing jobs lost in the last decade, if we could recoup one-third of that number, I would chalk it up to be an incredible feat, a miracle in the making. But even the most bullish economists aren’t predicting that, as it just goes against the tide of history.

I did hear one featured speaker at a gathering of economic developers this past fall in Tucson, Arizona, predict that the energy boom, which is quite real, would result in millions of newly-created manufacturing jobs. He said that the manufacturing slice of the total workforce pie would rise to 15 percent from its current 12 percent.

Too bad that manufacturing represents only about 9 percent of all jobs today. Oh well.

So taking all these things in account, with some positive headwinds blowing our way, it is not surprising that President Obama speaks in terms of restoring lost manufacturing jobs. One could argue that would be his job as the cheerleader in chief.

But I have to wonder if the machines in this new age will permit that to actually happen. I’m not so sure. He might have to bring a hammer.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas. If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help. All requests for information are considered confidential.

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