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What is Killing U.S. Jobs?

The recurring theme in this year’s State of the Union address was unemployment in the United States. President Obama’s remarks got us thinking about what exactly has killed jobs in the U.S. Is it outsourcing, globalization, lack of “the right” employee training, or just plain old poor work ethic by the American work force?

Propelling our interest in all of this talk about jobs and unemployment rates in the U.S. is a fascinating article by The New York Times that attempts to answer the question “Why doesn’t Apple make the iPhone and other Apple products in the United States?” Many of us, especially when criticizing business leaders or politicians who advocate “outsourcing,” believe that if a company like Apple wanted to simply suck up a little more labor costs, it could manufacture its products in the U.S and create hundreds of thousands of domestic jobs. If a company moves jobs out of the country, it must be due to the so-called “corporate greed” that’s ravished Wall Street and Silicon Valley.

Unfortunately, asking companies to spend a little more and get jobs back to American soil isn’t as simple as it may seem. Just take a look at the not-very-optimistic answer Steve Jobs had for President Obama at a 2011 dinner for top Silicon Valley luminaries after the President asked him “why can’t (Apple manufacturing) work come home?” Jobs responded simply, “Those jobs aren’t coming back”.

Ouch.

One of the reasons we liked The New York Times article so much is that it brought to light the tremendous product manufacturing complexities companies are facing in today’s ever increasing globalized market, regardless of where that product might be distributed.

First, how can the U.S. allow its work force to become unqualified and ill equipped to the point of losing such major manufacturing jobs to its overseas counterparts? Consider this information, as outlined by The New York Times, on China’s ability to scale its manufacturing machine:

  1. “Factories in Asia ‘can scale up and down faster’ and ‘Asian supply chains have surpassed what’s in the U.S.’ The result is that ‘we (U.S.) can’t compete at this point,’ one executive said.”
  2. Chinese manufacturing facility, Foxconn, has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. The scale is sizeable when compared to US manufacturing plants. “Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day”, the article claims.
  3. The article also notes that, “Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States. In China, it took 15 days.”
  4. “Foxconn Technology has dozens of facilities in Asia and Eastern Europe, and in Mexico and Brazil, and it assembles an estimated 40 percent of the world’s consumer electronics for customers like Amazon, Dell, Hewlett-Packard, Motorola, Nintendo, Nokia, Samsung and Sony”, according to the article.

The article goes on to quote Martin Schmidt, associate provost at the Massachusetts Institute of Technology. “Schmidt said that ‘the challenge in setting up U.S. plants is finding a technical work force.’” In particular, companies say they need engineers with more than a high school education, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend. “‘They’re good jobs, but the country doesn’t have enough to feed the demand,’ Mr. Schmidt said.”

I think it is safe to say that the manufacturing playing field between the U.S. and China isn’t equal. However, we’ve got to get competitive. And we have to start someplace, right? We think that someplace has to be in education. Specifically, its time to invest in the development of youth programs that focus on science and engineering. These programs must be rooted and eventually feed into University skilled degree programs. That’s a good investment bet for the long-term viability of the U.S.

The U.S. must invest in the education of its future leaders!

And, in case you haven’t heard enough already, here are a few more sobering statements from the article:

  1. “Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.”
  2. “The reality is that we will probably never recover the manufacturing jobs we’ve been accustomed to the past 50 or 60 years. Globalization is changing our economy. But, what’s clear is that the United States needs to invest in developing skilled, middle class workers from the ground up.”
  3. “We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”
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