I have been asked to speak at a Civitan luncheon this week. I am honored to be asked especially since it is my daughter, Nichole hosting me. I wanted to speak on a topic that I have passion for. I don’t think my family would interest anyone else. Autism was a possibility since Civitans raise money and support Autism research but I did not feel I was enough an authority on the subject. (Outside of living with little sleep raising an autistic son). Corvettes and music were possibilities if my goal was to facilitate an afternoon nap for the participants. So I decided on Manufacturing. Now I do not claim to be an authority, but I do spend a significant amount of my waking time in the field. I am focusing on the significant role manufacturing has and still does play in the United States. I would like to take this week’s Blog and share my thoughts with you also.
Manufacturing is one of the few industries that produces tangible goods that can be traded. Manufacturing takes raw material,s engineers and produces products that consumers need. These are the goods that nations can trade and build economies.
Manufacturing came to be during the Industrial Revolution. It started with the First Industrial Revolution, 1820 – 1840, in England and spread to Europe. Steam power drove the revolution. The period of 1840 – 1870 is known as the Second Industrial Revolution. It began in the United States and Germany. America quickly became a world leader during this period through innovation and invention. The Cotton Gin revolutionized agriculture and machinery. Electricity and the light bulb vaulted America to a world leader in manufacturing. On May 1, 1869 the final spike was driven on the Transcontinental Railroad. America is a land of diverse and plentiful natural resources. The railroad allowed manufacturers to access these resources nationwide and move their goods from coast to coast.
American manufacturing took another major leap in 1913. Henry Ford had a dream of producing automobiles for the masses. He hired the talents of Frederick Taylor, creator of scientific management. With Taylor’s direction manufacturing became a science and the assembly line was born. Taylor broke the assembly of the Model T into 84 individual steps, introduced interchangeable parts and trained workers to be experts at individual specialized tasks. Before the assembly line the Model T cost $850, $21,000 in today’s money. After the assembly line, $260 or $3,500 in today’s dollars. In 1914 Ford produced 308,162 Model Ts which eclipsed all other manufacturers combined. Henry Ford also raised the workers daily pay to $5 per day, double what other companies were paying. He essentially created the middle class. Other manufacturers had to raise their pay to compete and Ford now had millions of Americans that could afford his Model T.
In the ’40s America found itself in WWII. US manufacturing and the assembly line were the key to America’s victory. 16 million Americans went to war while 24 million Americans answered the call in American defense Manufacturing including “Rosie the Riveter”. Rosie changed America’s view of women in the workforce forever. America’s war production crushed Japan and the Axis. America supplied goods and weapons for all of the Allies. Ford’s Willow Run plant switched from cars to B-24 Liberator Bombers. The B-24 had 1.5 million parts. the Willow Run plant produced a new bomber every 63 minutes. The Liberty ship that supplied troops and supplies to the Allies was built-in 42 days. 3 ships per day were launched from American docks.
Production During WWII AMERICA AXIS
Vehicles 4.4 million 670k
Aircraft 637k 229k
Ships 55k 1,670
With victory in WWII, America and the Allies had learned their lesson after the First World War and set about to rebuild Germany and Japan. America flooded both countries with aid, engineers and experts to help rebuild their economies. One of these experts was a statistician named W Edward Demming. He was sent to create a census in Japan. He also taught engineers statistical process control. This is a scientific process that allows manufacturers to produce quality without expensive machinery. Deming created “Deming’s 14 Points. This was adopted by the Japanese and soon became the basis for TQM or Total Quality management which is a pillar of manufacturing today. Japanese automotive engineers were hosted in the states to learn from American auto manufacturers. Some of the Japanese engineers were more interested in visiting and learning from Safeway Grocery stores. They studied Safeway’s inventory and replenishment systems. These were adopted and became JIT or Just in Time Inventory. The amazing leaps forward in manufacturing by the Japanese were all based on American techniques.
As time passed American manufacturers, naively felt indestructible. They did not pursue continued improvements. They thought they could absorb ever-increasing labor costs, driven by the Unions and pass it on to the consumer. Japan and other countries of lower labor cost began their move into US markets. US manufacturers began moving production to lower labor cost countries to survive. Massive trade deficits began to mount and unemployment rose. The American economy was feeling the impact of US manufacturing’s struggles. As trade deficits climbed many American Manufacturers folded. Those that survived realized they must compete globally. They adopted statistical process management, TQM, Lean, Just in Time and other scientific approaches to production and quality. The surviving US manufacturers became some of the most advanced business systems in America. They had to. As manufacturing was, and still is one of only a few industries that faces real global competition. Wastes were eliminated. Management, Workers and Unions partnered to face the challenges. The survivors thrived and are now World Class companies producing the highest quality goods at competitive prices.
In recent years a new phenomenon has occurred called Re-Shoring. American companies are looking domestically for manufacturing. US companies are bringing their own manufacturing facilities back to the United States and even foreign companies are looking to the US to build new facilities. Previously business looked at unit cost as the determining factor. Companies are now looking at the true costs and coming back to the United States. Foreign manufacturing has seen a decline in quality and US manufacturers produce some of the best quality goods in the world. Companies are looking at the large lots they must buy of imported goods and the time they take to bring finished goods to market. After 911, customs issues have delayed shipments. Shorter supply lines allow for faster reaction to changes, smaller inventories and faster replenishment. Lower labor cost countries are experiencing a contentious increase in labor cost as foreign workers seek to increase their standard of living. Made in America means something and companies are noticing. When taken as a whole American Manufactured goods are the best investment and companies are noticing.
A few facts about manufacturing today;
- In 2013 American manufacturing contributed $2.08 trillion to the US economy, up from $2.03 trillion in 2012.
- US manufacturing accounts for 12.5% of the US GDP
- Manufacturing supports 17.4 million jobs
- 12 million people 9% of the US workforce are employed directly in manufacturing
- Taken alone US manufacturing would be the 8th largest economy in the world
A few facts about Oklahoma manufacturing today
- In 2013 OK manufacturers produced $17.5 billion
- In 2012 manufacturing accounted for 10.9% of Oklahoma’s gross product
- In 2011 manufacturing employed 138,000 people or 8.2% of the states workers
Manufacturing faces two major challenges today, People and Perceptions.
Between 2010 and 2013 manufacturing job openings grew 4.3%. Analyst say that growth in the industry is being held back due to a lingering job skills gap. There are currently 600,000 unfilled positions in manufacturing in the United States. 82% of manufacturers report moderate or serious shortages of skilled help. 25% report that the shortage is negatively affecting their ability to expand. The current age of a highly skilled worker is 56 years old. If manufacturing continues to grow at the present rate and baby bombers continue to retire at the current rate, the shortage of skilled labor will be 875,000 by the year 2020. With a current high school drop out rate of 30%, things do not look good for American manufacturing in the future.
This is compounded by the current perception of manufacturing. The general public looks at manufacturing as dirty, low tech, dangerous and low paying. All of these are far from the truth, yet the perception remains. Manufacturing leads other industry in their safety efforts. Many companies have entire management system simple to address safety. Manufacturing uses high-tech to compete globally. Manufacturing’s average pay is higher than national averages for other industries. These mis-perceptions lead skilled people away from manufacturing into other fields at the time they are needed most.
The National Association of Manufacturers has launched “Dream It, Do It” in response to these challenges. “Dream It, Do It” is designed to showcase the incredible career opportunities available in manufacturing to the emerging workforce. Through “Dream IT, Do It” manufacturers attempt to connect with students, parents and educators to create an understanding of the manufacturing renaissance in the US. The key elements of the program are;
- Classroom Visits
- Job Shadowing
- Educator and Student Tours
- Career Fairs
- Collaborative Training Programs
- Awareness Campaign
Through these elements manufacturers will attempt to show some of these advantages to a career in manufacturing;
- Low threshold of entry
- Early advancement opportunities
- early increases in salary levels
Directing these elements at Middle School and High School age students also gives participating companies the opportunity to address the reasons for students to stay in school and graduate. In Tulsa, “Dream It, Do It” is collaborating with “The High School Completion Coalition” to encourage students to stay in school and graduate. Ebsco with several other Tulsa area manufacturers are attempting to spread the word through “Dream It, Do It”. You will see us in class rooms and job fairs across the metro area. We are inviting the students. parents and teachers into our business to see first hand the opportunities manufacturing offers.
If you would like more information on “Dream It, Do It” visit the Northeast Oklahoma chapter of “Dream It, Do It” at http://www.dreamitdoitok.org/.
Now if you’ll excuse me, I need to go out and hire tomorrows superstars.