Davos, Switzerland: A three-volume series of reports (Executive Summary) by the World Economic Forum and Deloitte Touche Tohmatsu Limited examines key trends, effective strategies and best practices related to the global manufacturing sector in three key areas: Globally competitive manufacturing policy; Partnering for competitiveness; and manufacturing value chains driving growth.
The report contends that a competitive tax system, free and fair trade, education and talent development, energy efficiency and technology and innovation are the key drivers behind a successful advanced manufacturing strategy. The report also provides recommendations from manufacturing executives to develop an integrated portfolio of public policies in the U.S. that spur innovation, increase competitiveness, create jobs and stimulate sustainable economic growth.
In today's global economy, government actions and public policy play a critical role in shaping the competitiveness of both nations and the individual companies that operate within their borders. The impact that government policies can have across a number of competitiveness drivers – including trade; financial, monetary, tax and legal systems; infrastructure; education; labour markets; and science and technology – are significant. They can directly create both advantages and disadvantages relative to other nations. As the strategic use of public policy intensifies, collaboration between policy-makers and business leaders to create win-win outcomes becomes more essential.
In Davos in January 2012, business leaders gathered to review and discuss the output of The Future of Manufacturing project, which focused on the question: How are global value chains evolving? The follow-up Manufacturing for Growth initiative focuses on the key question: What should be done? The objective of the Manufacturing for Growth initiative is to foster constructive dialogue and collaboration between business leaders and public policy-makers and, therefore, to facilitate better public policy.
Should Everyone Go to College?
Washingon, DC (Brookings Institution, May 8, 2013): For the past few decades, it has been widely argued that a college degree is a prerequisite to entering the middle class in the United States. Study after study reminds us that higher education is one of the best investments we can make, and President Obama has called it "an economic imperative." We all know that, on average, college graduates make significantly more money over their lifetimes than those with only a high school education. Click here for a downloadable copy of the Brooking Institution report.
What gets less attention is the fact that not all college degrees or college graduates are equal. There is enormous variation in the so-called return to education depending on factors such as institution attended, field of study, whether a student graduates, and post-graduation occupation. While the average return to obtaining a college degree is clearly positive, we emphasize that it is not universally so. For certain schools, majors, occupations, and individuals, college may not be a smart investment.
By telling all young people that they should go to college no matter what, we are actually doing some of them a disservice.
GAO Evaluates STEM
Washington, DC (GAO, April 10, 2013): In fiscal year 2010, 13 federal agencies invested over $3 billion in 209 programs designed to increase knowledge of science, technology, engineering, and mathematics (STEM) fields and attainment of STEM degrees. The number of programs within agencies ranged from 3 to 46, with the Department of Health and Human Services, Department of Energy, and the National Science Foundation administering more than half of the 209 programs. Click here to download a copy of the report recently released by the Government Accounting Office.
Almost a third of all programs had obligations of $1 million or less, while some had obligations of over $100 million. Beyond programs specifically focused on STEM education, agencies funded other broad efforts that contributed to enhancing STEM education. Eighty-three percent of the programs
GAO identified overlapped to some degree with at least 1 other program in that they offered similar services to similar target groups in similar STEM fields to achieve similar objectives. Many programs have a broad scope--serving multiple target groups with multiple services. However, even when programs overlap, the services they provide and the populations they serve may differ in meaningful ways and would therefore not necessarily be duplicative.
Nonetheless, the programs are similar enough that they need to be well coordinated and guided by a robust strategic plan.
MA Gets Career and Tech
"People always make fun of vocational schools, but now they're like, 'Oh man, I wish I went there,'" said Adams, now a junior at Pathfinder Regional Vocational Technical High School, where every recent graduate found a job upon graduating. Click here to see the Today Show feature.
In Massachusetts, where the school is located, the average starting salary in manufacturing is about $45,000. "I can make as much money as someone going to college, coming straight out of high school, and I don't have to pay for college loans or anything like that," Adams said.
Pathfinder is a beneficiary of a program called "Amp It Up," a Massachusetts initiative to encourage students to explore careers in advanced manufacturing. Instead of offering dark and dusty shops full of woodworking or table saws, many vocational schools are now full of state-of-the art machines and computers that teach students code, programming and design skills.
That has made these schools wildly popular. "There is a waiting list for the shop right now for kids who want to get into it," said Pathfinder's principal, Mary Jane Rickson. "The machine shops are clamoring for people right now. They can't expand because they don't have any highly skilled people."
And experts predict demand will only increase. Over the next decade. Massachusetts expects to create 100,000 new advanced manufacturing jobs, the largest growth of any sector. Many of those new jobs will be in biotechnology and involve creating medical components.
"The question is, how do we make sure the opportunity is there to get the skills level across the need in our economy," said Massachusetts Gov. Deval Patrick.
Made in the USA?
Walmart, the nation's largest retailer, earlier this year announced it will boost sourcing of U.S. products by $50 billion during the next 10 years. General Electric is investing $1 billion through 2014 to revitalize its U.S. appliances business and create more than 1,500 U.S. jobs.
Mom-and-pops are also engineering entire business strategies devoted to locally-made goods — everything from toys to housewares. It's not simply patriotism and desire for perceived safer products that are altering shopping habits.
The recession, and still-flat recovery for many Americans, have created a painful realization. All those cheap goods made in China and elsewhere come at a price — lost U.S. manufacturing jobs. A growing pocket of consumers, in fact, are connecting the economic dots between their shopping carts — brimming with foreign-made stuff — and America's future.
They're calculating the trade-offs of paying more for locally-made goods. "The Great Recession certainly brought that home, and highlighted the fact that so many jobs have been lost," said James Cerruti, senior partner for strategy and research at consulting firm Brandlogic. "People have become aware of that."
"'Made in the USA' is known for one thing, quality," said Robert von Goeben, co-founder of California-based Green Toys. All of their products from teething toys to blocks are made domestically and shipped to 75 countries.
"We are reaching a tipping point, where Americans are relearning its competitive advantage," von Goeben said. "It's not about the cheapest product, but the best quality product."
From offshore production to insourcing
For many consumers, affordability has driven the bulk of purchasing decisions. Businesses in turn have ventured abroad for cheap labor and specific manufacturing skills to keep prices down.
So what's driving big and small businesses to increase sourcing of U.S. products — beyond the obvious good PR?
In short, a shift in global manufacturing that's in the early stages. A combination of factors including rising labor costs are eroding China's cost advantage as an export platform for North America.
Mexico, meanwhile, is rebounding as a manufacturing base, and wages there will be significantly lower than in China, according to a Boston Consulting Group report. By 2015, BCG forecasts that for many goods destined for North American consumers — manufacturing in some parts of the U.S. will be just as economical as manufacturing in China.
For years, the main attraction of China outsourcing has been access to low-cost labor. But pile on related business costs such as transportation of goods, duties and industrial real-estate expenses, and the global manufacturing landscape is no longer China-dependent.
Domestic manufacturing, meanwhile, is on the mend. The pace of growth in the U.S. manufacturing sector picked up to its fastest rate in more than a year and a half in February, as new orders continued to accelerate.
And imported goods — at least in footwear and apparel — are retreating slightly. While more than 97 percent of apparel and 98 percent of shoes sold in the U.S. are made overseas, U.S. imports in those two categories in 2011 declined for the first time ever since such data has been tracked by the American Apparel & Footwear Association.
"The cost competitiveness of U.S. manufacturing is on the rise," said Cerruti of Brandlogic.
Of course, plenty of goods are still made abroad. And many Americans are broke, jobless or underemployed four years after the 2008 economic crisis. An unemployment measure that factors in those who have quit looking for jobs, as well as those working part-time for economic reasons, is at 14.4 percent. For many, buying "Made in the USA" is a luxury they can't afford.
USA love list
Despite many shoppers' thin wallets, there's a growing appetite for domestically-made goods.
Blogger Sarah Wagner has turned her passion for "Made in USA" products into a successful website, USA Love List, devoted to sourcing and showcasing where to buy domestically-made goods. USA Love List is devoted to sourcing and showcasing where to buy domestically-made items, ranging from lip gloss to pet food. She regularly scans the aisles of big retailers such as Costco and Target for American-made goods.
Site traffic has mushroomed since USA Love List launched in November 2011. "There's clearly a hunger for this sort of information," said Wagner, based in Philadelphia. "Companies have no idea how much Americans want to support American companies. They want to get behind their neighbors and communities to make sure those jobs stay there. It's struck a nerve with a lot of people," she said.
American-made green products
Among the growing piles of American-made goods, many are made with recycled materials. Turns out it's easier to manufacture green products domestically because sourcing of recycled materials including recycled plastic is particularly plentiful and transparent in the U.S., said Jenna Sellers Miller, president of Architec Housewares, a nine-employee housewares business, based in Delray Beach, Fla.
Some of Architec's EcoSmart line of products are sourced domestically. The products are available at Target, Macy's and Bed Bath & Beyond. "We're getting appointments with retailers who just want to see our 'Made in the USA' products," Miller said.
Domestically-sourced recycled materials and a broader commitment to the environment shape Green Toys business strategy as well. With their factory and warehouse 10 miles apart in northern California, they also cut transportation costs and related emissions.
The 12-employee company also creates a ripple effect of jobs including supporting local drivers, shipping and packaging companies and testing labs. "We could not have started this company anywhere else," von Goeben said. "This is a uniquely American company."
Later this year, Green Toys will ship its first batch of toys from northern California to China. Said von Goeben, "It's the irony of all ironies."
How Should We Use Real-Time Jobs Data
Moscow, ID (EMSI, April 9, 2013): Several years ago, "real-time labor market data" arrived on the scene. The idea behind this data is good: use job-posting analytics to shed more light on the labor market by providing current data on employer demand. Many people have asked when we will add real-time data to our tools, and we have researched this extensively ourselves.
What we've found is that while the idea is interesting, putting the data into practice in a safe, reliable, and consistent way is much more complicated. Click here for a downloadable copy of the report. The U.S. economy is huge and the labor market is full of "churn" (i.e., new hires plus those who left a job or switched jobs). Job postings represent a much smaller subset of that churn, and can't easily be turned into real, solid, and actionable numbers. So, at this moment, here are our two big takeaways with regard to job postings:
- PROS: Job postings give us specific and detailed information on the types of skills that employers want and who those actual employers are. This means that job postings are a good source of information on skills and companies that are hiring.
- CONS: Job postings are not the same thing as labor market data. In other words, they aren't necessarily real jobs, and they only represent a small part of the economic activity that occurs in America's enormous economy. Furthermore, job postings are problematic because they are subject to seasonal shifts and the quality of the data is all about how good we are at scraping company websites. This is a bit like depending on the internet (uncontrolled and unverified) for information vs. depending on more standardized and economically sound sources (federal and state payroll records).
With all this said, if you are working on a strategic planning project (e.g., gathering information to justify a new educational program), it is imperative to use job-posting data in conjunction with labor market data. Job postings, after all, are only the tip of the iceberg.
SACA Breaks Ground on Tec Centro
Tec Centro, at 102 Chester St., is intended to provide Spanish and English speakers basic employment training and specific job skills in areas such as construction, building maintenance, health care, forklift operation and computer and office jobs. The $2.7 million center also will include a cafe as part of a culinary program.
The lack of good English-language skills combined with a lack of basic employment skills has held back many in the city's Hispanic community, resulting in high unemployment and underemployment, Carlos Graupera, SACA executive director, has said.
Tec Centro is being developed in a former industrial building in the heart of the city's southeast area. The 15,000-square-foot building was last used by a woodworking company. The civic association purchased the building nearly four years ago.
Renovation work actually begins April 15. Completion is expected in December. The training center is scheduled to open Jan. 1.