"Green" manufacturing technology offers more than a way to slow environmental destruction; it could be a powerful antidote for America's economic crises, mass job losses, and diminished international status.
Because of cheap labor, the U.S. has been outsourcing manufacturing jobs since the 80's. Now, we are now in recession with our diminished manufacturing base and must rely upon an economy based on service, knowledge, transportation, and financial management to pull us through. The fallacy is, this "new" economy does not produce wealth. And, it does not create the $20-per-hour jobs that traditionally were a ticket to the middle class for people who cannot be trained to be litigators or hedge-fund managers.
Manufacturing, conversely, actually creates both wealth and jobs. Developing "green" manufacturing technology also offers opportunities to become a net exporter of environmentally friendly products and processes. "Green" manufacturing, and the technology to support it, can create the required $20-per-hour jobs to sustain a strong middle class while helping to solve air, energy, water, and food crises.
Just the Facts, Minus the "Spin"
- Jobs paying $20 per hour that historically enabled wage earners to support a middle-class standard of living are leaving the U.S. Public sector aside, only 16% of today's workers earn the $20-per-hour baseline wage, down 60% since 1979.
- Service and transportation jobs, per se, cease to exist in the absence of wealth. Rather, they exist and thrive as by-products of middle-class incomes buying products and services. No stable job means no consumer confidence or spending.
- A financially driven economy has proven to be an unregulated pyramid filled with credit card and home equity debt, insolvent Wall Street houses, and short term horizons. Leveraging debt translates into depreciating the future of the middle class, who bear the brunt of the excesses.
- Manufacturing is an incubator for technology and science, which require proximity to facilities where hypotheses can be tested and worker feedback can fuel product innovation. Without this proximity, the science and technology jobs, like customer service jobs, follow the manufacturing jobs overseas.
- As the manufacturing plants close, people lose the knowledge and memory of what manufacturing meant to a community. Decent-paying, entry-level jobs offering a future are replaced by menial, dead-end jobs. We could forget our heritage as makers and creators, a tradition that made our country what it is.
- Our environment is rapidly approaching the tipping point for sustainability. The time to do something is NOW.
Why the "Usual" Answers Don't Offer Real Solutions
- "Usual" Answer #1: We need tax credits for re-education and retraining. The question is, retraining for what, if the substantive jobs that support the middle class are going away? Fifteen percent of college-educated workers now find themselves in jobs for which they are overeducated, and which often do not pay $20 per hour.
- "Usual" Answer #2: Mandate programs such as "No Child Left Behind." These programs work against manufacturing's need for vocational and technical education. Without blue collars, we do not need white collars.
- "Usual" Answer #3: We need tax cuts for business to create jobs. Giving tax cuts to businesses offering no specific program for creating sustainable $20-per-hour jobs in the U.S. amounts to subsidizing potential off-shoring activities.
- "Usual" Answer #4: American manufacturing is fine -- productivity is up. Productivity gains without the requisite process improvements and a business growth strategy is fatally flawed. Employee turnover rises and stress levels increase, as employers look at productivity gains primarily as a driver for down-sizing the workforce. In the modern economy, growth is a condition of competition. By exploiting improved process productivity gains, the growing company can treat existing labor and overhead as if fixed costs and get new, incremental business in return for no expenditure beyond the cost of their materials. The result is growth with profitability.
Winning the Game
- Real Solution #1: Know that we can succeed in manufacturing.
- Adopt methodologies such as the Toyota Production System to reduce labor costs, and cheap foreign labor becomes a non-factor.
- Because the high costs of oil and logistics of a full inventory pipeline, companies who sell and source where they manufacture will have a competitive advantage. Companies only "off-shore" to sell "off-shore."
- Real Solution #2: Create a government-sponsored program, similar to the "Apollo Program," to create jobs based on solving environmental needs. Such a program, focused on self-sustaining and renewable solar, wind, water turbine, clean hydrogen energy and desalination of the ocean's water, could jump-start a revival of U.S. manufacturing.
- Incent companies, by tax policy, which make environmentally friendly and sustainable end products here.
- Create prizes to reward innovation for environmental friendly products manufactured here.
- Utilize existing tax supported agencies such as NIST manufacturing centers to:
- Define and teach best practices to manufacturers through shared network of knowledge resources;
- Benchmark on the successes -- Toyota, Wiremold, Danaher Corp. and employ proven lean executives on oversight boards;
- Challenge "economy of scale" thinking and standard cost accounting for more market-based accounting systems;
- Focus on small businesses or start-up companies and nurture "incubator green manufacturing zones";
- Real Solution #3: Set up educational policy and programs in line with future needs -- programs to encourage engineering, technical and vocational education.
- Real Solution #4: Define goals and metrics with ambitious stretches for carbon emission reductions, water desalination, and energy production to meet targeted carbon footprint and job creation benchmarks.
- Measure and report on the results;
- Launch a public relations campaign, with logo and motto, to get all Americans behind effort;
- Publicize benefits to taxpayers for a program, which, if conceived and funded correctly, will become self-sufficient and produce tax revenues from a revitalized, productive middle class with sustainable wages
John Madigan is a Consultant with Madigan Associates. He has 25 years of experience in manufacturing and four years in lean manufacturing consulting. His background in materials and operations management were with Continental Can, Storagetek, CKD, Wiremold, and the Chicago Manufacturing Center.