Is a Manufacturing Rebound Really Happening?

Friday, 15 Feb 2013 08:09 AM

By Michael Kling

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U.S. manufacturing is supposed to be rebounding, bringing thousands of jobs back to our shores. Is it really?

Information from the St. Louis Federal Reserve Bank shows a much more subdued picture. In fact, it’s not clear much of a rebound is happening, notes Slate, pointing to the Fed’s data. Before the Great Recession began, almost 14 million Americans were employed in manufacturing.

Manufacturing jobs dropped to roughly 10 million in the aftermath of the recession and have increased since then, but have yet to break through the 12 million mark — nowhere near the pre-recession level.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

Before 2001, manufacturing jobs typically dropped sharply during recessions, but then rebounded as the economy recovered. More than 17 million workers were employed in manufacturing at the start of the 2001 recession. The sector hasn’t recovered since then, and it’s not certain it will.

Most of the jobs created in the last three years are due to the recovery economy.

Anecdotal evidence points to U.S. companies bringing jobs back home, or “reshoring,” but finding exact numbers is difficult, according to MarketWatch.

“Unfortunately there’s not a lot of hard numbers,” Chad Moutray, chief economist of the National Association of Manufacturers (NAM), tells MarketWatch. “There just isn’t a lot of data.”

The Reshoring Initiative, an organization promoting reshoring, estimates that 50,000 manufacturing jobs have returned to the United States the last three years, MarketWatch reports. But the organization doesn’t know how many jobs left at the same time.

To increase manufacturing jobs, experts say the U.S. should cut corporate taxes, streamline regulations, and seek more free-trade agreements. The corporate tax rate, at 35 percent, is the highest in the industrialized world, and not better than average even after counting deductions and tax breaks.

And U.S. manufacturing costs are about 20 percent higher compared with the nation’s biggest trading partners, NAM estimates.

“Washington can create an environment to make the industry more robust,” Karen Kurek, head of the manufacturing practice at global business-consulting firm McGladrey, tells MarketWatch. “President Obama has to take a hard look at taxes.”

The government must also strive to improve education and job skills needed for manufacturing jobs, experts say.

“Kids think manufacturing is dead,” Harry Moser, founder and president of the Reshoring Initiative, told MarketWatch. “We need more people to become machinists and technicians. Everybody thinks they need to go to college.”

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

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