28 Mar 2012  What Do YOU Think?

Are Factory Jobs Important to the Economy?

Summing Up: The manufacturing field is key to a strong economy, but a renewed focus on the industry will not necessarily lead to significant job growth, Jim Heskett's readers say. What do you think?

 

Summing Up:

What Next, If Manufacturing Proves Not to be a Creator of Those Good "Factory Jobs" of the Past?

Manufacturing is essential to the health of an economy. It both fuels and results from innovation. It is natural in the course of economic activity that "factory jobs" (a perhaps too-commonly used term, not mine) are tradable on international labor markets. They especially follow the migration of manufacturing activity involving jobs requiring lower skills and compensation. Efforts to revive high value-added manufacturing in the US and UK will have to be based on higher productivity, not necessarily more of those good "factory jobs" of the past. They may not have the desired results if the goal is to create more jobs. That's some of the wisdom from respondents to this month's column.

Gary Higgins argues that the right kind of manufacturing drives an economy in ways that other sectors of a developed economy cannot. He says, "jobs that create wealth are the absolute foundation for any economy this excludes most of the 'non-tradable' (largely personal service) jobs."

While manufacturing jobs are among the most tradable on the international market, as Michael Spence pointed out in his recent book, some are less fungible than others. Germany was cited by Peter Sebregondi as a country that has pursued an enlightened strategy toward manufacturing, through its continued support of an apprentice system that provides the changing mix of skills demanded by today's—not yesterday's—manufacturing. German producers have targeted those customers who require the most exacting, high-performance, costly products. As a result, they have created some of the least tradable manufacturing jobs.

Several readers cited the challenge that a manufacturing revival may not translate into much new employment, given the need for significant productivity improvement necessary to reverse the outflow of manufacturing activity from a developed economy. Peter Hogan reminded us that "manufacturers' share of GDP (in the US) has been stable at just under 15% for the last 30 years, while manufacturing jobs as a share of total non-farm employment have fallen from 20% to 10% over the same time frame."

Worse yet, there is the possibility that the jobs created today and tomorrow may not be as good as the factory jobs of the past. After writing the March column, I attended a board meeting at which the directors toured a newly-created "beauty park" in the US, where companies cooperating to create and manufacture new fashion beauty products are located together in one light industrial park. It is a reflection of colleagues Gary Pisano and Willy Shih's conclusion that manufacturing is part of the innovation process (as Pete Clekurs pointed out). The park is designed to create fast-response product development by linking product designers to manufacturers in a way that minimizes the need to ship liquid ingredients over long distances. It is expected to return at least 1,500 jobs to the area, some of them from other countries, including China. However, most of the jobs, in assembling and packing the components, are of necessity low-wage in nature.

Regardless of the number of jobs it can create, manufacturing activity will be critical to the continued development of the world's leading economies. But will it continue to receive the attention of policymakers once they conclude that it is not the creator of the "factory jobs" of our memory and imagination? What do you think?

Original article

In the current presidential campaign, the favored photo op for candidates is on the floor of a manufacturing plant—preferably one with a lot of heavy equipment. It's the backdrop for the message that a turnaround in American manufacturing employment (which is occurring, whatever the reason) is essential to the social as well as economic recovery of the country.

This line of reasoning makes several assumptions: jobs in manufacturing are somehow superior to those in other sectors; jobs in the service sector are somehow less essential to an economic recovery (in spite of the fact that such jobs make up more than 80 percent of the employment in developed countries); and that manufacturing jobs beget service jobs. It's a short step to conclude that the decline of the middle class and loss of social fabric, at least in the US, can be traced to a drop in "factory jobs," (a notion that New York Times columnist David Brooks calls simplistic). Andy Grove, an influential leader of Intel for many years, warns that R&D and product development capabilities will be lost along with the loss of such jobs.

While examining the closing gap between developed and developing economies, Nobel Prize economist Michael Spence has taken a somewhat different look at the jobs picture. In his book The Next Convergence, Spence focuses on what he calls tradable jobs (making things like cars that can be made somewhere else—largely manufacturing jobs) and nontradable jobs (like nurses and auto mechanics, the vast majority of whom provide services that are consumed where they are produced). Between 1990 and 2008, the US economy added 27 million jobs. Ninety-eight percent of them were in nontradable activities. This is another way of saying that most American job growth has come in sectors where US workers don't compete against overseas workers. Tradable jobs would have actually declined if the loss of jobs in manufacturing hadn't been offset by new tradable jobs involved in the creation of ideas (for example, consulting and the development of new information technologies, nearly all service sector jobs).

Spence argues in favor of, among other things, public policies regarding infrastructure, technology, and education that seek to bring tradable jobs ("work for middle-income people") back to US shores. One model that he cites is Germany between 2000 and 2005, during which it sought to become more competitive by lowering real wages and putting limits on wage and salary growth in both the public and private sectors while continuing to support an apprentice system.

Service sector research indicates that all developing economies are experiencing increases in the proportion of service sector jobs, while jobs that "make things" shrink toward some small, but probably irreducible, proportion such as 10 percent. Further, in terms of job quality, those employed in factory jobs generally are less safe, use more energy, and pollute more than those in services. With the decline in real wages in manufacturing, many service jobs compare quite well on this dimension as well, although some of these are tradable.

This complicated picture raises several questions: How are priorities for government investment—for example, in education, infrastructure, subsidies to specific industries, an apprentice system—influenced by the kind of jobs a country seeks to stimulate? In thinking about priorities, do we devote too much of our concern to the restoration of manufacturing jobs? Or are the priorities roughly the same for all kinds of jobs? Are factory jobs the key to growth and the restoration of a nation's "social fabric?" What do you think?

To read more:

David Brooks, The Materialist Fallacy , The New York Times, February 14, 2012.

Andy Grove, How America Can Create Jobs Bloomberg Businessweek, July 1, 2010.

Michael Spence, The Next Convergence: The Future of Economic Growth in a Multispeed World, Farrar, Straus and Giroux, 2011.

Michael Spence, Globalization and Unemployment: The Downside of Integrating Markets, Foreign Affairs, July/August, 2011.

Comments

    • Luis X. B. Mour?o
    • Senior Solutions Architect, Tectura

    The real short answer is YES.

    The not so long is that in my many years in R&D consulting and advising a wide selection of manufacturing firms world-wide my very conclusion is that the ability to develop new products is tightly connected to knowledge of the manufacturing process.

    Firms that have outsourced manufacturing progressively lose their manufacturing knowledge and with it ability to develop manufacturable new products.

    The above is off course an oversimplified generalization and many factors are involved so this is not black&white, but...

    I was recently at a firm in Germany who within a few days from engaging a customer with a special need can develop a solution and have it in production, including any changes that might be necessary from it's suppliers. Not only can they walk down to production to discuss their design options, but as a matter of fact can drive down to most of their suppliers to discuss it with their production.

    Less recently I was at a firm in the USA in the same industry that had outsourced manufacturing to Asia. Not only did they produce a significant quantity of designs that were impractical from a manufacturing perspective but optimistically needed weeks to evaluate a new design.

    Who do you think is losing customers and who is growing in spite of the the fact that the German firm charges a premium for everything is made in Germany?

     
     
     
    • Phil hyland
    • Manager, In transition

    From a simple engineer's view if all we have is service jobs then we rely on someone else to supply the raw goods, i.e., energy and product. At some time these suppliers may ask why they should supply to the USA when it has nothing to give in return, or worse, still ask for repayment. This then leads to a complete collapse.

     
     
     
    • Guy Higgins
    • Principal, Performance2

    I think jobs that create wealth are the absolute foundation for any economy. Now, I need to expand on that. By jobs that create wealth, I mean jobs that involve irreversibly expending energy to transform something into something else that people want to own and will exchange "value" for (value is money or barterable items). In my mind, this excludes most of the "non-tradable" jobs. Value creation is pretty close to factory jobs, although construction, mining, forestry, and similar jobs would also be included.

    Without these wealth-creating jobs, I think that an economy will quickly collapse because there is no input into the economic system. No matter how large the service sector or how important the services (and there are vitally important services), the segment of the economy that transforms "stuff" into other "stuff" that is more desired by the participants in the economy is absolutely critical to the health of an economy.

    How should government prioritize? Government should recognize that the economy is a complex adaptive system -- adapting to whatever the government does, but in ways that will be both emergent and unexpected. ergo, the government needs to minimize regulatory burdens, refrain from imposing answers (because the imposed answer will change the problem in such a way that the answer no longer works), and ensure that most, if not all, people have the opportunity to succeed and to fail.

     
     
     
    • ADS Analytics
    • ADS Analytics

    The trouble with service sector jobs is that they are less productive than manufacturing jobs which is a recipe for stagnant wages - this is arguably one of the factors behind the falling labor share of added value (see chart)..

    If the US is to rely on consumer spending (roughly 70% of the economy) as a driver of its economic growth, then households need to have the money to spend. The other sources of household income (borrowing, savings) are not there (at least not sustainably) to provide the needed boost.

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    • CJ Cullinane

    Having a Manufacturing backgroud I have to vote for "factory jobs". The service jobs are great but eventually someone has to grow the food, make the drugs and medical supplies, as well as produce something to sell. Information technology, customer service, research, even banking are all 'tradeable' areas and will migrate to lower cost areas.

    Manufacturing and producing products is essential for a strong economy. The support for a factory such as suppliers, transportation, even local services, are the ripple effect of manufacturing and produce employment.

    The recent bailout of GM and Chrysler (granted political) was all about the negative effect of the loss of manufacturing jobs and the direct impact on the economy. The factory is essential to a strong economy in my opinion.

     
     
     
    • Sebastian
    • Remoy Communication

    Jim, I am not a manufacturer, but I believe that populations that persist in making things retain a certain practical rigour, earnestness and respect for detail and quality and stick-with-itness, that service economies lose. A product is non-fungeable. It either exists and works or it doesn't. The quality of a delivered service on the other hand is less definative. Hence, it it may be good for a nation to retain a sizeable capability in the craft of manufacturing. It would be interesting to compare the educational achievement levels of nations that manufacture in comparison to those that do not.

     
     
     
    • Pete Ciekurs

    Manufacturing creates far more value add than services by transforming raw materials into useful products creating additional wealth while services tend move wealth around. I don't believe you can sustain a robust and growing economy on a pure service model. Historically manufacturing was the primary driver of building the prosperity of America's middle class.

    Your Harvard colleagues Gary Pisano and Willy Shih share similar view with Andy Grove that exporting manufacturing drains away America's ability to innovate. They characterize as naive the view that innovation is just about R&D and not manufacturing as if manufacturing is not part of the innovation process. The ability to develop sophisticated manufacturing processes is as much about innovation as dreaming up ideas.

    Trade policy expert Clyde Prestowitz in a recent blog post states that manufacturing underwrites about two thirds of all the R&D done in the United States and contributes heavily and disproportionately to increases in productivity in the overall economy. That makes it economically more valuable than most service industries. He goes on to say that the deans of engineering schools, cite the decline in manufacturing as the primary reason for the drop in U.S. science and engineering graduates because there are no jobs available. If the demand currently supplied by imports was entirely supplied by domestic production we'd have an additional 5 million jobs and unemployment would be 4 per cent instead of 8 percent.

    Bottomline manufacturing matters and it matters a lot.

     
     
     
    • TimC
    • Engineer

    Non-tradable jobs are where US workers don't compete with overseas workers - that is only assuming the country has NO immigration. Face reality, you are competing on a global scale, no matter what you do or where you do it.

    And someone has to create value - we can't all give each other haircuts!

    Finally, I have worked many years in both settings and, with modern safety systems and correct management, I would very much disagree with the outdated theory that factory floor jobs are not as safe as service jobs.

     
     
     
    • Ali Ahmadijoo
    • MBA Student, UTM

    It seems to be fantastic diversification of economy toward both service and manufacturing economy. But the question which still remain is that what were the reasons toward this situation? In a very competitive economic environment, to some extent, this technology and manufacturing transfer to developing countries was inevitable(because of very lower manufacturing costs). So even we believe that manufacturing jobs are more reliable, it should be considered that whether the U.S can comeback again or not?

     
     
     
    • Mukesh Jha
    • Sr.Engineer, ISGEC Heavy Engineering Ltd.

    I believe that surge in manufacturing job will create more opportunity for any Economy because the employees who are geting benefited from Factory job are indirectly help in the growth of service sector resulting the boost in service sector/nontradable sector.

     
     
     
    • Tom Dolembo
    • Founder, New North Institute

    Michael Spence is brilliant, and I should accept his definitions. I don't, exactly. Manufacturing, or mass manufacturing, today is actually a low labor component operation defined by x-y-z axis cnc machines, robots and complex logistics software. This is as true in China as in the US. The tradable "laborers" are really becoming non-tradable service workers, maintaining floor and stream processes often in a "lights out" facility. They are not wielding hammer and chisel. The problem is Spence's paradigm, which is the fallacy of mass production. There is absolutely no proof that in this modern world, making many things is effectively cheaper than making a few. None. Gordon Donaldson's world is not ours. China, Detroit, wherever, the laborer is a highly skilled manipulator of machines functioning in abstractions, not a peasant or artisan. Labor is a service job. It is a proud thing. Hard to learn, harder to teach. Tradable jobs as a definition exist because, at least for the moment, mass manufacturing assumes that low cost labor has to exist to assemble and complete. That's a peculiar US stereotype. Germany doesn't work that way. Because our labor is expensive, we are told, we can't manufacture in the US, by and large. If we look to the new manufacturing methods, short or no setup turns, automatic production, we can manufacture one product, "serve" a single customer, labor in a non-tradable job, in manufacturing. You can publish your book in a coffee shop machine today. Tomorrow you'll get your car and television the same way. Convergence exists, but it depends on the intelligence of the worker, not the lawyer. Why is billing by the hour more honorable than working for one? Looking on making things as a lower prestige job, that is a problem. Manufacturing in the US is short skilled people. Try to find a tool maker under 65. Defining education by the Great Books Core is a problem. I would agree that yes, manufacturing would have declined anyway, but the reason is that the workforce to produce the products through advanced manufacturing has ceased to exist in the US. There is today a huge shortage of skilled "workers" in the US, and manufacturing innovation languishes without them. So do we all. Worse, there is no one to teach them, and nowhere to learn it. Output, factory production, is simply the physical result of abstract design logic expressed through 3 axis machinery. In the future we will seamlessly have demand met personally. That's the ultimate non-tradable industry. We can rebuild manufacturing in a new paradigm of custom production, one to one service, in the US. But who wants the job?

     
     
     
    • Usiku

    Manufacturing will always be the anchor sector for any economy that wants to control its own destiny. After that, there must be domestic demand for what is being manufactured. This is a more sustainable economy less influenced by outside events. Raw materials must be secured domestically to tighten up this system.

     
     
     
    • Lubna Kabir
    • PwC

    I am in FULL agreement with Andy Grove.

    I recall a comment made by my section G-classmate "When South Korean factory workers are building bicycles they are told to think that my son will make aeroplanes" and that is the truth of what is happening in China and Vietnam today, and will happen in Myanmar tomorrow.

    One of the causes of the recent bankruptcy of Kodak is that its manufacturing base was too far removed from product development.

    Sadly enough there is a huge flaw in the argument of 'nontradeable' jobs. You mention Nursing yet don't state that the crucial shortage of nursing in US is made up by having to import i.e, immigration visas to nurses from developing countries (primarily Philippines). Walk into your local medical lab for a routine bloodwork and see how many Indian technicians there are. I am not at all against immigration, but what I am pointing out is that the 'non tradeable job' market is not closed and exclusive to the US population. Unless Americans are actively studying and pursuing careers in these fields, the shortage has to be made up by bringing in skilled workers from abroad.

    Americans gave up the traditional manufacturing, haven't invested in the new frontier technologies, like alternative energy technology or manufacturing and are woefully behind the Germans, Swedish and Chinese, and in the 'non tradeable services' area lack the skills so rely on immigration and therefore, segments of the population are marginalized to low value-low income service jobs on the retail and fast food floor.

    I agree with the comments made by reader commentator Louis X. B. Mour and Guy Higgins.

    I think part of the problem started when management consultants became too obsessed with cost cutting, re-engineering and Wall St. got fixated on quarterly profits and EPS above every other factor. The other part of the problem is that we have too many lawyers and not a single Engineer or Scientist in the US Senate.

    So folks from HBS were the consultants, strategist, bankers, venture capitalist who created some of these problems. And it really is about time we HBS seriously work on the solution.

    Millionaire business leaders need to listen to Andy Grove, and start taking their eyes off the quarterly or annual financial statement and just think about what is the right investment for the future of America.

    Unless tax policy, government programs change to dramatically boost investment in scaling up manufacturing, large portions of Americans may have to rely on two sectors for job creation: Agriculture and Military services. These are the basic jobs of pre-industrial civilizations.

     
     
     
    • Gene C Walker
    • retired (HBS MBA 1960)

    The concept of tradable/untradable jobs is only helpful as a beginning tool to understand the issues. The demarcation line between them is subject to rapid and unexpected change. This is true even within a nation. Consider telemedical developments. Local doctors with highly specialized skills in many fields are not necessary. Radiologists routinely read results by electronic communication with primary care doctors in other cities - or countries. Much surgery is likely to be done by robot surgery with the specialist in one location guiding the procedure in another with a general surgeon actually at the patient's side. Much technical service work on nuclear sites, aircraft engine repair, electronic systems can be properly guided by an expert guiding a technician far away. Menial service jobs are untradable but they will never be paid enough to support an economy.

    The loss of traditionally better paying manufacturing jobs is the result of the rise of capabilities to produce quality goods in many countries that historically were third world, agrarian importers of manufactured goods from the developed nations. These emerging indus- trial economies start with very low wages and a huge need to find employment for their people who demanded improved lives and incomes. Look at what Japan accomplished after World War II with it national policy of developing quality products that would sell in world markets. South Korea is now the envy of many countries with world class automobiles and electronics. As these countries achieve success their workers want more wages, benefits and public services. This of course raises costs and reduces those countries advantages in the world markets. Japan has lost its $4000 per car cost advantage over US automakers and is now struggling to lower costs without compromising it quality reputation. China has lost some business to other countries as its costs have risen. In a world of fairly free trade companies constantly move on to the next even lower costs with all the attendent social costs and dislocations.

    I believe any nation that has reasonably balanced resources of human capital, natural resources, capital should strive for sustainable balance in it economy. It should not abdicate any major sector of its economy. It should follow policies that do not automatically put historically important industries and experienced human capital at risk. Finance may be profitable but it creates very little that helps people in their daily lives. Our national programs to help displaced workers and industries are just bandaids to placate people. They do not address the underlying causes of the displacements - and they have not helped much but have cost a lot.

    Traditionally countries protected industries and workers with tarrifs and import quotas. If a nation had few able competitors it could increase its internal costs such as wages, benefits,environmental protection, taxes etc. Other countries had to pay the higher price for goods they needed since there was no or limited effective competition from other countries offerings. Consider the nations that have only raw materials to offer the world. These are commonly available from many countries so these commodity producers including much agriculture production remain poor unless they can create cartels which often fail.

    Import tariffs and quotas do nothing to make a country's export offerings more price competitive. What if the tariffs were given to exporters so they could lower their prices and/or increase profits?

    The US has a cost and asset value structure that must be preserved if we are to avoid massive deflation. Our workers need good wages to be able to pay for homes at prices that are anywhere near the current levels. Incomes must be sufficient to support taxes and social costs that are based on current dollars. If we push waqes down to lower world levels how will we avoid bankruptcy of banks, our national and local governments?

    I believe we need to consider a system of tradable export/import credits. If a company exports something and is paid in funds brought to the US it would receive a credit which it could sell in a national or world exchange. A company wanting to import would have to buy credits on that market. Of course this will raise the cost of imports and that will be passed on to consumers. At some price for trade credits it will become profitable to stop importing some things and make them in the US, resulting in more jobs. This system can be adjusted as to the ratio of credits needed to import so that our current huge trade deficit can be lowered not stopped at once. The system lets consumers determine what they are willing to pay more for and which frivilous goods they might do without. The government would not be in the business of picking winners and losers- consumers would.

    We spend too much time and money creating pro- grams to address problems of income distribution, unemployment and wealth transfer. I believe a system of tradable export/import credits would go a long way to preserving our current domestic asset and cost structure and would help prevent a massive deflation while putting some brakes on mindless moving of jobs out of the country.

     
     
     
    • Ravindra Edirisooriya
    • P/T Accountant (3/9/12), Midwestern Small Business

    Professor Heskett has asked a profound question to our time (and future) but the answer to this question is not simple in many respects. In order to find the optimal solution to this question, first, one needs to decouple and deconstruct components of the problem and second, assemble the optimal solution with reference (in relation) to all components. The components (major, minor) of this problem are scale (global, national, local), economic sectors (financial, technology, manufacturing, materials, utilities, healthcare, housing), economic evolution (agrarian, industrial, service, information, knowledge, near earth /inter-planetary travel /habitation), jobs (low skilled, high skilled, do people need jobs or do jobs need people?), markets (labor, raw materials, products and services, buyers and sellers), component of value added, consumers (income, purchasing power, inflation /deflation, monitory policy - FED needs to let people kno w how many billions of dollars it prints every month to turn around the economy while it destroys the value of hard earned money), profits (economic, accounting, not for profit public good, bread and butter), population (expanding, stable, contracting), energy (hydrocarbon, renewable, other yet to be discovered), technology (automation, robotics, bio-technology, hyper productivity), innovation (speed, cooperation between individuals, cooperation between nations), peoples' rights (balance between individual and collective rights), nations' rights (democratic governments' right to govern, to feed their people), history (American, world, nations', human), politics (ability and willingness to solve problems of the common people, privileged people, haves, have-nots), peoples' beliefs (what is right and what is wrong, religion, liberty, morality, culture, can you eat and sleep while your neighbor goes hungry and homeless?), humanity (what makes us human? intelligence, tolerance, c ompassion), government policy (which sectors /subsectors to keep /subsidize /promote and which sectors /subsectors to phase-out /outsource if there is a political choice), world views (climate change, limited earth resources) and time (split seconds in Wall St., four years in presidential election cycle, 10, 20, 50, 100, 500, 1000 years in earth time). If one may think slow, one can write a book on this question! Like any good model, we need some simplifying assumptions. However, to think fast, one may drastically simplify the assumptions. Hence, we may strictly assume that the economy has only service and manufacturing sectors, economic profit, a four year timeframe, the government is able and willing to support either one of the sectors and all other variables are stable and constant in the short-term.

    Current technology allows Chinese, Indian, Sri Lankan (and many other countries') doctors to diagnose and treat American patients over the internet if sanctioned. All back office banking and accounting services can be outsourced to many countries (China, India, Sri Lanka and many other countries). Only jobs that are non-tradable are mowing lawns, hair dressing and hamburger flipping. Semi-skilled Chinese citizens who manufacture the Apple I-pads get paid $1.48 per hour and they are flexible on work hours. Is there any chance that we Americans can compete in that labor market? Since American companies seek economic profit, is there a way to make American labor competitive without busting the federal budget by paying out subsides? Trade barriers will hurt all countries since every country can retaliate. Americans buy I-pads made in China and Chinese buy Boeing aircrafts and Caterpillar Heavy earth moving equipment made in America. Hence, given our current economic model, neithe r service sector jobs nor manufacturing sector jobs are more important to the economy than the other!

     
     
     
    • Donald E. Shaw
    • President, Donald E. Shaw, P.E.

    How long will nontradeable (NT) jobs last? Smart devices being built into automobiles and other motorized equipment have changed and will continue to change the nature and need for mechanics. Other NT jobs can also be eliminated by greater use of technology. Register operators at grocery and other consumer products stores are disappearing with the rise of self-check-out technology. Bank tellers have given way to ATMs. Many nurses have become data entry clerks. Toll booth attendants are disappearing due to EZ-Pass and its cousins. Such jobs will keep disappearing as IT provides automated collection of all kinds of data. It seems that most NT jobs today will be NO jobs tomorrow. IT and machine learning threaten just about all NT jobs. Service sector jobs are at best transient because in too many cases they are dependent on the creativity of others. Helping make smart technology or smart machines are the jobs of the future. Only jobs involving creativity provide growth opportunities in today's world.

     
     
     
    • Michael Hogan
    • Energy Consultant, Various

    The key question regarding "manufacturing jobs" isn't one of quantity - clearly increasing productivity, a cornerstone of competitiveness, means that the number of manufacturing jobs per unit of manufactured GDP will always shrink. The key question is whether or not we promote manufactured GDP, in the process promoting whatever manufacturing jobs we gain or retain in the process. Many service jobs may be non-tradeable, but they're also largely non-exportable. I recently heard an economist talking about a study of the job sectors with the most promise over the next 20 years, and one of the top five was "event planner". And he wasn't trying to be funny. For a country to grow wealth at a pace at least roughly equal to its growth in population it must sell value-added goods and/or services to someone other than itself. Germany has sustained its economy and its wealth creation by sustaining its status as the world's leading exporter - and it's not exporting event planning. It's exporting machine tools, aircraft components, medical equipment and automobiles and it's doing it while implementing some of the most stringent environmental and workforce regulations of anywhere in the world. Manufacturing is the beating heart and sole of a wealthy economy - no matter how many or how few manufacturing jobs are involved.

     
     
     
    • Samuel Reich
    • Engineer, Tribco Inc.

    Factory jobs from the engineer down place greater emphasis on deterministic thinking (physical laws) than service jobs which are much more dealing with people. Non-living things do not respond to a smile or a joke. Most factory jobs for the most part only requires politeness to coworkers as people skills. Also only the people who did the experiments or read about them know what to do in a environment of non-living things. Therefore they offer employment different people (engineers vs. salesmen).

    A person looking for or needing continual human interaction or needing cheat someone will not concentrate such work.

     
     
     
    • Jimmy O Murff
    • Respiratory supervisor, Truman Medical Center

    Manufactoring jobs which were outsourced to other countries, are but a small part of the equation. The american worker has failed to realize that many of the manufactorig jobs that were adequit for their fathers and mothers to bring home a real income enough to raise a family, are no longer available without some advanced education. Most mechanical based fcilities have gonr high-tech, and corporations found it more cost effective to relocate their businesses where the population was ready to walk into these facilities with a minimum amount of training needed to run their facilities, alowing maximum profits for the CEO's and shareholders. Americans are not lazy, but have relied on out-dated information for far too long. A high school education will not suffice in today's global economy, as it did in the past.

     
     
     
    • Kapil Kumar Sopory
    • Company Secretary, SMEC(India) Private Limited

    The policy of outsourcing manufacturing abroad only because of low labour costs has led to America being flooded with goods made in China, Korea and other countries. Thus an American is left with no alternative but to use goods not made in US. Doesn't it hit the national pride? The other aspect is that R&D in manufacturing has flown away. This is not a healthy development. Spurt in services sector should not be at the cost of giving little importance to manufacturing. If you manufacture, services are also created. A policy of developing manufacturing from within needs to be devised to reap rich harvest and the mindset of the business has to be changed accordingly.

     
     
     
    • shadreck saili
    • UCT

    In my view service jobs are a product of manufacturing jobs to a very great extent.

    My argument would begin with a comparison. I feel if an economy has a great manufacturing base, it is most assured to create a bigger base of service jobs that would go along side its manufactured products( that create jobs to serve the dignity) and be traded along side each other to other nations. This scenario would certainly create more wealth for the economy as compared to a situation where service jobs take the centre stage. In the scenario of a very strong base for service jobs, the trad-able jobs will mainly be limited to services and will depend on how international trade would allow the transfer of wealth from one nation to another particularly that with strong manufacturing base( restrictions to avoid erosion status core) , where supposedly the services are conducted.

    The Asian Tigers visa vis the Western countries case is a create testimony that manufacturing jobs just need to be protected if nations have to remain with dignity especially in areas of great expertise.

     
     
     
    • David Albert Newman

    Both manufacturing and service industry sectors are important. We still produce and consume tangible products like we also produce and consume intangible services. The proportional mix may change; however, neither will lose utility completely. In fact, the strongest sector--and the ones to heavily promote--are those that combine products and services production and consumption.

     
     
     
    • Anonymous

    Professor Heskett,

    I enjoyed your article. I'm skeptical about the government creating any jobs, and perhaps especially manufacturing jobs. What has been lost in this discussion is that, aside from the period of the recent financial crisis, we manufacture more now than we ever have. Post crisis, manufacturing output has resumed growth. Though there are doubtless multiple reasons manufacturing output has declined, the principal reason seems to be rising manufacturing productivity derived from new technologies. So, it doesn't seem that the jobs lost due to higher productivity are coming back, unless we're arguing for lower productivity and lower competitiveness. That's what makes this question so vexing.

     
     
     
    • Anonymous

    I think we ned to consider that many manufactuirng job, although considered tradeable, can improve the trade deficit situation, clearly there are more complicated factors at work to improve overall economic health. I do think that non-tradeable jobs do have their place in driving job growth and the return of the middle class, especailly skilled jobs, but do they help us compete on a global scale where we run billions of dollars per month in trade deficit?

     
     
     
    • Bruno Morgado
    • Manager, In Transition

    I believe that the answer is very simple: YES I live in Portugal (yeah the little country in Europe that it?s being "helped" by IMF), and one of our major issues is that we do not produce almost anything and import almost everything. It may seem a simplistic approach, but if you look at Portugal you can see that one of the major causes for the current situation is our commercial trade situacion, we import almost everything and are selfsuficient is almost anything, this causes a problem, because you need to buy everything abroad. Why is it China the economy that is growing faster in the last decades? Ok because they don?t go by the rules (environmental, social policies...) but the other reason is that they manufacture almost anything you want, and selt it to the world, and if in the past their products didn?t have quality, nowadays they have, because beside the plants, we also send to China R&D,Design... I belive it?s clear crystal that a country without manufacturing it?s a country without future, and you can see that in USA since 1970 to nowadays, back in that time when you produce almost anything, your middle class was in a much higher percentage than it is right now... today your middle class is less, and with less resources. And we can also see other thing: the concentration of money in few hands, that?s another problem in world today and causing social problems, wealth distribution, but that will lead us to another issues...

     
     
     
    • David Lindsay
    • Tutor/Lecturer, Edinburgh Napier Business School

    Interesting research area for both psychologists and economists -I guess the photo op is similar here in the UK with Prime Minister Cameron et al choosing NHS locations to get his message accross that nothing succeeds like nostalgia -for an era that has long gone in terms of GDP/Business Modelling and employment. Facts are that labor-intensive industry has all but vanished from the West replaced with IP/Design and high-tech "thinking roles" [Apple, Microsoft,Google et al who favor consumers who "consider" their products rather than just use them [utilitarian & functional] . There is also a touch of "honest working-class blue -collar" sentiment here where transparent jobs and tasks were the foundations to a nation's wealth generation -China is a good contemporary example - with certain mass appeal when touting for votes .Truth is the world has evolved due to high demand for inexpensive goods provide d by the East while back home we have relied on Silicon Valley, Tourism/Hospitality, Public and Service Sectors and the like to feed our GDP while "manual" work in good times was deemed "dis-satisfying" to many. In hard times this is a state to which politicians may allude in their oratory, but in power, would not find the will nor the budget to maintain save for the usual rainbow of "re-skilling" courses in an attempt to remove many thousand work seekers from the national statistics . Some economists argue that unemployment is a natural consequence of our free market system and we should accept that ,at any time, there will be varying percentages of unemployed reflecting the growth or decline of a country's performance. The cycle will move round and the next challenge is to create both "work" and a reward system which does not rely heavily on "tradeable" or "non-tradeable " jobs per se but more on the understanding of the global economy as a potential harvest to which we add our own specific skills and reap our relative rewards without the 20th century mission of taking over the entire galaxy. We learn and feed off other nations' culture and diversity which in turn nourishes our creativity -we must take account of the cost now that pay-back time is here .

     
     
     
    • s k kotwani
    • dy. vice president - procurement, IndusInd Bank Ltd.

    Over the years, there has been a definite shift in preference for white collar - service sector jobs in both the developed and the develping economies. Admissions being sought in the relevent fields of education would support this argument.

    The fact however is that employment in manufacturing - both the tradable and non-tradable jobs, is essential to the social and economic recovery of any economy. There needs to be regular upgrade supported by current technology advancement / enablement - in order to maintain continuity.

     
     
     
    • Kamal Gupta
    • CEO, Edseva

    Businesses in US have been shifting factory jobs overseas for many decades - to Japan, Korea, Taiwan, ASEAN, China mainly. That is how the economics worked. And there is no way these jobs can come back to America till costs come on par with developing or poor nations.

    What the government can do, what it should have done right from 2009, was to announce public works.

    USA is short of high speed rail, both for passengers & freight. Many of the highways and airports could use upgrading. High speed broadband needs to reach the deep rural areas. All of these and such public works can create jobs in America.

     
     
     
    • Philippe Gouamba
    • Vice President of Human Resources, Skyline Windows, LLC

    Often times it is important to state the obvious and to preach to the choir. Although Service jobs are supposedly more elegant and require working with one's brain as opposed to working with one's brawn, service jobs alone (this is hyperbole ..of course) cannot sustain an economy. As stated earlier in the forum, someone has to work on the raw materials. The bulk of manufacturing jobs require less education so that a person that only has a high school education has a chance of finding work and earning a half decent living. With only a high school education, jobs in Engineering or the financial sector are not accessible. We used to talk about "structural unemployment", meaning that the structure of our economy is changing say from a manufacturing based economy to a services based economy and that change has happened. The result is that thousands of people now have skills that have become irrelevant. These individuals need to be retrained so they may work in growing sectors of our economy. Are factory jobs important to the economy..emphatically: YES they are but......the more interesting question is this one. Is the manufacturing segment of the American economy ready for a comeback? Or even can America grow a new and up to date Factory/Manufacturing sector? In my humble opinion, all those jobs that were short-sightedly off-shored by the Bush administration are not ever coming back. The US economy and the US middle and lower classes will have to do with little help from a dying manufacturing sector. We will need to KEEP the factory/manufacturing jobs that we have and try desperately to grow that sector as we re-train those individuals that have been structurally un-employed....all while we struggle to grow our bread and butter service industries. It will be a long and arduous climb for the US economy.

     
     
     
    • Anonymous

    Factory jobs are important to the economy, but it is not the government's job to create jobs. It is the government's job to provide an environment in which the private sector can respond to needs and opportunities to provide what people want and need, cost-effectively. The only sustainable jobs are those that are an outgrowth of financially viable economic activity - not government programs financed by burdening existing enterprises and individuals. Otherwise, government programs are not "investments" - they are subsidies for unecomomic activity.

     
     
     
    • Jack D. Pond
    • VP/CIO, Lexington Technology

    After years of discussion on the merit of "service based economies", I still find it troubling that most of it (including this article, with the nomenclature "nontradeable jobs"), start with the assumption that there are limitless resources input into the system with limited or no thought given to the actual source of the resources.

    To me this appears the equivalent of shop keepers selling goods to each other under the assumption that endless consumables will magically stock the shelves, and ignores the fact that even in the most primative of trade systems, both parties (shopkeeper and suppliers) need to have negotiable bartering items or the entire shopkeeper universe runs out of fuel.

    Since these "nontradeable jobs" by the proposed definition cannot service the consumable producers, exactly how can a reasonable person propose this approach is sustainable when these "tradeable jobs" are not geographically located in a manner that makes them serviceable by "nontradeable jobs".

    Furthermore (and as mentioned previously in prior comments), while these "nontradeable" jobs may be initially profitable, when the source of the funding (the "tradeable" workers) is exhausted, there will be neither "tradeable" or "nontradeable" jobs to fuel the economy.

     
     
     
    • Anonymous

    This question is vexing because it should be resolved in the free market, not by academic advisors to our federal government. Our Federal government was never intended to engage in this kind of investment. And it does a demonstrably poor job of picking winners. That the question itself is taken so seriously is indicative of how ingrained is our thinking that the Federal government is responsible for everything. We need to challenge that assumption.

     
     
     
    • Edward Hare
    • Retired Director...Strategy and Planning, Fortune 250 Manufacturer

    Several very good comments here already. Like one observer, I recall how the advent of a "service based economy" was lauded as manufacturing jobs left the US in droves. I thought it folly. Seems to me the US economy has become terribly unbalanced. There is too little appreciation, especially among politicians, of what jobs and industries truly "create" wealth. Nail salons, tanning spas, casinos and the like DO NOT create wealth. Rather they should be outgrowths of a prosperous and vital ecomony. In my hometown local politicians are spending public funds for a hockey arena and a baseball park on top of a museum dedicated to celebrating America on Wheels. While some jobs may result none of these "industries" actually create wealth....a point politicians seem thoroughly incapable of understanding. Worse, government has increasingly defined its role as the financier of a whole range of endeavors.....pledging public money to reduce the risk to "developers". Time was the profit motive was sufficient for entrepreneurs to take risks to prove an idea and business concept. Now, hardly any are willing to do so without subsidy and incentives provided by politicians with limited vision and, too often, murky motives. As a country we'd better understand much, much better where real wealth creation comes from. I suspect much of manufacturing qualifies (think Boeing and Caterpillar).... if you have what it takes to compete with other countries. Mining and extraction, and agriculture are almost certainly others. Lawyers, hail salons, chiropractors, and lawn service companies.....not so much.

     
     
     
    • Peter Sebregondi
    • HPS

    Dear Prof. Heskett,

    Someone in the forum said: "...we have too many lawyers and not a single Engineer or Scientist in the US Senate. He will like that Dr. Angela Merkel, the German chancellor, holds a PhD in physics.

    The combination of aggressive automation and permanent invention of new industries and technologies is helping to grow the standard of living and to generate the export surplus, which is helping Germans to travel a lot into all parts of the world, to help third world countries as well as the new poor member countries of the European Union, etc.

    May I add some context re Germany: 200 years ago, UK was the leading high-tech and manufacturing country in the world. At that time Germany has learned from UK the enthusiasm for engineering and science, the wealth creators. Unfortunately UK and U.S. have focused in recent years on financial services and lawyers, the wealth distributors.

    Since nearly 200 years German government has consistently and persistently focused on the key success factors for export: - Funding R&D in the latest and greatest high growth industries and technologies (the U.S. government is traditionally also heavily sponsoring R&D, but primarily through the defense budget) - The high quality of the public cost-free schools and technical universities (better than the private ones), - The skills of employees and particularly of factory workers; supported by an apprentice system with an education performed jointly by government (theory) & business (practice) -Thousands of engineers and scientists started companies that have today between 500 and 5,000 employees, are still private and loyal to their highly skilled employees, and that are world market leaders in their respective fields (the hidden champions), - Focus on complex high-quality products and systems, - Being proud of the country's export success is part of the national DNA, - Engineers and scientists have a much higher reputation than lawyers and bankers, - A very good public infrastructure, - The overall very good relationship between company owners and unions/employees (it happens that unions are pushing companies to drive productivity and innovation faster!) - The curiosity and willingness of Germans to go abroad, speak foreign languages, explore the world and make everybody happy who likes "Made in Germany".

    By the way, after the financial services bubble burst, growing "advanced manufacturing" is now the focus of David Cameron's UK government.

     
     
     
    • Godspower Nnwoka
    • CEO, Chioma production Ltd

    In responding to the discusion question,"are factory jobs important to the economy?,one could argue that the strength of any nation's economic growth will depend on how structured and competitive are the industries in global Market. If you benchmark the American industries to that of china,American are lagging because they are less competitive compared to chinese industries and can not create jobs or impact positively to the economy. Factory must be fully funded to create jobs.service industry requires retraining for new innovation that is flexible to global demand,stimulate sme sector and boost job creation which in turn good for the economy. Yes if they are funded and No if the resource are not surficicent to drive competitive improvement.

     
     
     
    • Peter Hogan
    • Manager, US State Department

    According to Moody's, manufacturing's share of GDP has been stable at just under 15% for the last 30 years, while manufacturing jobs as a share of total non-farm employment have fallen from 20% to 10% over the same time frame. Productivity increases are a good thing. The public policy question is whether good jobs, in whatever sector, are available for our population, and whether our education system prepares our citizens to perform them.

     
     
     
    • Anonymous

    This country can not and will not survive without manufacturing jobs, they are the core of this country and alway's have been.

     
     
     
    • David Physick
    • Consultant, Glowinkowski International

    I believe it is crucial to have a manufacturing base. Perhaps the term 'factory jobs' is a little demeaning? In the UK, our manufacturing base is much depleted; I spent a good proportion of my time in the 1980s closing manufacturing businesses in and around Liverpool because their management hadn't woken up to the emerging phenomenon of globalisation. The old Ford factory in Liverpool is now owned by Tata and produces the Range Rover Evoke (horrible looking thing!) and it has contributed massively to an up-turn in prosperity in the City. Formula 1 is concentrated in the UK. Numerous bio-technology businesses are established here. These businesses are definitely not the 'smoke-stack' enterprises of a hundred years ago. A prominent and prosperous manufacturing sector drives job creation in adjacent sectors, e.g. distribution, service and maintenance. So it is win-win. What is even more vital is a fervent intent through a cou ntry's education system to excite and enthral youngsters to the career prospects in manufacturing. Some of the very best managers I know honed their skills as apprentice engineers. The education curriculum needs to be designed to develop the required skills and not be divided by gender; that division is entirely out-of-date. From a social responsibility angle, off-shoring production to places where lower standards prevail for employees, e.g. consider all the critical comments concerning Apple's procurement chain, needs to be condemned. Action on that depends upon consumer behaviour, which is another topic of discussion entirely.

     
     
     
    • Marlis Krichewsky
    • Research Engineer, Center for Innovation and Resarch in Pedagogy in Paris

    Manufacturing and factories are extremely important for economic prosperity and many well paid service jobs can't be disconnected from industry . But: the real question is not how to re-industrialize our countries (I'm from France), but how to revolutionize our economies. We need new sustainable ecologically sound industries which are run differently (see Gary Hamel 2012 "What matters now" and McCarney & Getz (2010) "Freedom Inc." or Ricardo Semler, "The Seven-day-week-end". Industry and jobs do not have to be RE-stored, but profoundly transformed and developed on entirely new principles.

     
     
     
    • Taat Subekti
    • Chairman, Dharma Shanti Foundation

    I believe the answer is Yes. However, the consideration is what type of factory? Low tech, high tech, green tech, clean tech? For less advanced nation, the question is the factory will use domestic material (such natural raw material) or use imported material. If the factory uses imported material, it would much benefit economic progress of the given nation

     
     
     
    • Anju Kotwani
    • Freelance Writer

    Whether factory jobs are created or non-tradable jobs are created, the story will remain the same until government curbs the ever declining innovation rate and falling education standards in US due to which the workers are facing stiff competiton from overseas.

     
     
     
    • Anonymous

    If we buy all of our manufactured goods from outside our shores, then we will have a significant trade deficit. We will be spending all of our money buying things from others. How will we pay our service workers here? We will just get poorer and poorer.

     
     
     
    • Rich Bubb
    • Engineer, undisclosed

    Sure, trade-able jobs like assembly operations can be done almost anywhere on the planet. But the engineering and manufacturing skills and efforts to develop those widgets and assembly methods and eventually end up with a cost effective and user-desired product is a lot more difficult than most people (those not in the mfgr realm) ever imagined. Take for example an item as seemingly simple as a switch in a car. I know from an engineering (read: daily hands on experience) viewpoint that the smallest of dimensional inconsistencies can literally end up shutting down more than one car assembly plant/facility. And it all can be the difference between +/- 0.2mm (that's same as +/- 0.0079") being correct or not. Yet those manufacturing Heroes (Capped on purpose) sweat this level of detail 24/7. And the first somebody in the "corner office" decides they can save $0.01 by moving the whole factory's operations somewhere else, it's done; and the consequences are disregarded almost 100% of the time.

    In addition, for those readers who know about defects parts per million (aka: ppm), having to deal with literally single digit ppm year in, year out, is a pressure cooker most people just cannot fathom. Yet I and the excellent mfgr people I work with fight that fight, and we love it. I have had conversations with non-engineering and non-manufacturing people who at times get to actually do an engineering task, and their sense of accomplishment and pride in the/their results makes them feel on top of the world. I just smile, because that is what I and my tradable co-worker's do for years.

    For the readers of this writing, look around you, where ever you are in the world, and try to contemplate something as mundane as the tube that holds the ink in your favorite pen. Seriously try to think about how you'd go about making that seemingly little piece of plastic. Consider the dimensions, material, environment, training of "tradable" production personnel, and how you could literally ensure that the measurements of that little tube are correct. Then be able to prove that your Manufacturing and Quality System/s are robust and performing "and meets or exceeds expectations". Is the brain starting to be boggled? The sad fact is that the astounding volume of knowledge to make just an ink containment tube can fill volumes.

    Here's a bit of my history. At a former employer, we made fuel rails (device that assists in delivery of fuel to the fuel injectors on engines). If one characteristic of one of them failed, one of two possibilities would likely manifest. The best case scenario is that ONLY the car would catch fire and burn up. The worst case scenario is that the OWNER in the car burns up. Heady responsibility. Yet how often is there news of such failures? Almost never, and each engine has one, and millions are made, assembled onto new cars, and driven (used) for 5 to 15 years. And how often are these devices made and tested perfectly. Every single day. I designed the production line that makes those fuel rails for the mid 2000's Jaguar engines. Helium mass spectrometers are used to test the products. Non-trivial by most estimations.

    So the next time anyone you overhear starts dissing about tradable jobs, they are basically professing their ignorance of the Workers / Methods / Materials / Measurement System Methods / and Environment (Cause & Effect 101) of mere factory jobs. And designing that Jaguar production line was done while I was also completely responsible for 4 other fuel rail manufacturing line making fuel rails for Ford and GM. Not exactly a walk in the park, wouldn't you say?

    I have personally witnessed freshly minted mechanical engineers (from Purdue) and MBAs who did well in University utterly fail when required to function in relatively simple (tradable?, really?) factory jobs. Yet, they walk into their first/new job thinking, "How hard could this be?", or, "You just push that button and the ink-tube is dropped into that tote. What's so hard about that?" Try showing a freshly minted mechanical engineer how to calculate the rpm to drill a hole without smoking (read: ruining) yet another drill bit is not tradable. Yet it happens every day. The tradable and experienced manufacturing Heroes around the world should all call in sick just one day. A few of those events would get some real non-trivial attention.

    People who know the least about tradable jobs should just try to work a day in the production associates' shoes. I have seen it attempted. The results are almost never useable.

     
     
     
    • Anonymous

    It depends if you are asking an economist or a politician. While an economist may prefer a job that adds most economic value, a politician would prefer a scenario that influences most number of votes.

    I think that if there is unemployment then all jobs are important for economy. As long as the equation for "market price of the produced goods", "the cost of production" and "the cost to support otherwise unemployed labor" is favorable then Factory jobs are important for economy.

     
     
     
    • Jim Prestridge
    • Retired

    I am in Andy Grove's camp and agree with his logic. However, the fact is that no one knows the answer to the question. If Andy Grove's view is wrong and lost manufacturing jobs are replaced with equally rewarding nontradable activities that allow us to maintain and enhance our standard of living, there is no problem and we can relax. However, what are the consequences if he is right? Suppose we end up with what is essentially a hollowed out economy with high structural unemployment Is that a risk we really want to take or should we begin to address the issue as Grove suggests? At times businesses are faced with unknowns that have the potential to wreck their business model and strategy. Competent managers find a way to address the issue even though the answers are unknown. Incompetent managers find ways to explain why there is no problem.

     
     
     
    • Mok Tuck Sung
    • Owner, Profit Tools

    It make sense to work on creating manufacturing jobs in US. The advantages of out sourcing work to other countries has been exceeded. The following are the general big picture reasons of why US must create a better and stronger manufacturing sector. The reasons are: 1) Ready large domestic market. 2) Ready available raw materials. 3) Available of land and transportation systems. 4) Large pool of world class talent. 5) Strength of the US dollar. 6) Starts to lower the un-employment rate almost immediately. 7) Kick start the economy (up stream and down stream) up trend. 8) Regain R&D capabilities. 9) Regain "self sufficient" statue. 10) Ability to provide more social benefits to the less fortunate. With this in place, the nation's social fabric will be stronger.

     
     
     
    • Ajay Kumar Gupta
    • Doctoral Researcher and Faculty(ITM), Tata Institute of Social Science, Mumbai, India

    Manufacturing jobs have more realistic target than service sector jobs. For example in banking, insurance and financial market jobs, employees are given generally exaggerated target to meet. And unmet target attracts so many undue penalties. Service sector jobs promise promotion based on performance. From top to bottom, employees are appraised what they achieve before deadlines. Means to achieve is less valued. And this is the point where unethical practices emerge. These practices put unrealistic mental, moral and judgmental pressure on employees. This vicious cycle of value chain break social fabric. Manufacturing jobs generally based on targets produced by automatic machines. So, unrealistic target apparently become absent. Employees in manufacturing jobs know their duty and responsibilities very well. After working hours is over, they pack up. In service sector, it is not about working hours, but it is about following cultural practices. Generally, you cannot pack up as long as boss is sitting in the office (India, PSU). Service sector can create employment, but tactics, practices and trends to survive compel people to compromise, whereas, in manufacturing sector jobs, tactics, trends and politics are generally missing. I think manufacturing jobs have more clarity, accountability and realistic than service sector jobs. Manufacturing jobs may have less incentive, salary compared to service sector, but employee cohesion in manufacturing is certainly more than service sector. The other differentiating factor is intervention. Manufacturing jobs need more direction than intervention. And targets are generally collective whereas in service sector, targets are individual based. People are concerned about their own target at any cost. It also hints that trust level in manufacturing sector is more than service sector. Further research to know about attrition level in manufacturing and service sector can validate our assumption and perception.

     
     
     
    • Klaas Rodenburg
    • CEO, Alberta Centre Of Excellence for BIM

    It is not the jobs that are important it is the capabilty of an economy to manufacture products that creates the wealth that will in turn support the "non-tradeable" jobs.

    When creative knowledge workers collaborate face-to-face with the workers on the factory floor there is a potential for great synergies in both product design and production efficiencies. The combined wealth created by both sectors will fund the jobs in the service sectors creating resilient local economies not held hostage to the decisions of multi-national corporations only interested in tax breaks.

    From my perspective it is better to invest in flexible, mostly automated plants with fewer "good" local factory jobs than the Apple approach of using hundreds of thousands of low pay foreign workers in unhealthy conditions to produce products solely for export.

     
     
     
    • Kate Putnam
    • CEO, Package Machinery Co Inc

    Not all factory jobs are like I Love Lucy. Many manufacturing jobs today are high performance jobs that require experience and skill. The people them are in short supply because, as a society, we have chosen to value knowledge and service workers over those skilled with their hands. I don't want to see these jobs go overseas but I am finding it very difficult, if not impossible, to find the skilled workers we need. These are well-paid positions and the current holders of them are retiring or dying off. While machine building may be outsourced, maintenance and support cannot be. We have to learn to value those knowledge workers whose skills are imbedded in their hands and encourage more of them to learn how to use their talents better.

     
     
     
    • LAURENCE BRODY
    • PRINCIPAL, AU INVESTMENTS

    Our culture has changed. The public relies on government to provide entitlements, so why work hard for less. Manufacturing jobs are harder and require more effort than white collar jobs.

    The work ethic has been replaced by a consumer ethic. Our country is in transition from a work society to a purely consumer society where play and entertainment supercede work before play, business before pleasure ethic.

    I think the country's voters will decide where we go, manufacturing or not

     
     
     
    • Renato
    • Public Administrator, Government

    I live in Brazil and it's funny as the problems that US and Brazil are having are similar. Our economies are very different. You have a developed economy and we are trying to achieve this. But we have the same problems in many areas.

    I think all the products have services in itself. You can buy a shaver or go to a barbering. It's the same. The question is "what can add more value ?". The people buy products because the value is bigger on that. The people try to maximize the value they recieve so they buy from where it's cheaper with the same quality. If you can improve the value added not to matter if it's have the product form or the service form. Like that not to metter if the jobs are in service sector or in industrial one. What matter in short-term is if the jobs have inovation, productivity, make money and improve the social welfare. In the long-term what matter is if the economic model are sustainable and make the balance of payments balanced.