Kennametal CEO Calls on Executives to Talk Up Manufacturing's Strengths

Factories are safer and more efficient than ever. Companies are reporting record profits. And data suggests that U.S. manufacturing is rebounding stronger and faster than most other sectors. Despite all that, an estimated 600,000 manufacturing jobs remain unfilled, and in a new poll commissioned by industrial-tooling maker Kennametal Inc., 71% of respondents said they would not recommend a manufacturing career to young Americans-primarily because they believe no manufacturing jobs are available. Maybe it's time for manufacturers to chip in a few bucks and hire a public-relations agent. "Contrary to public perception, the manufacturing industry is leading the economic recovery," says Carlos Cardoso, CEO and chairman of Latrobe, Pa.-based Kennametal. "It is time for our industry to reintroduce itself to the American people in a manner that encourages them to understand the vitality and importance of U.S. manufacturing to the global economy." On Monday at the National Press Club in Washington, D.C., Cardoso implored executives to speak up about the good things happening in U.S. manufacturing. Afterward, he spoke with IndustryWeek about the disconnect between perception and reality in American manufacturing - and how it's hurting the industry. IW: What prompted Kennametal to commission this survey exploring the perception gap in American manufacturing? CC: The No. 1 reason is that we believe it is our obligation to manufacturing and to the communities in which we do business. We keep reading about the high unemployment rate. We keep reading about all the financial challenges that we have as a country. And we feel that feel very strongly that we need a strong manufacturing footprint in this country -- and that's what has made this country great. One of the main drivers for a solution for a lot of the economic problems we have is to make manufacturing stronger in this country. To do that, we have a skills gap that we need to address. We have a perception gap. We have a lack of focus from our representatives in Washington to making manufacturing a priority. So I think we needed to start somewhere, and we felt this would be a great place to start. And this study really validates a number of studies that have been done in the last 12 months. IW: There was a time in this country when manufacturing was a fundamental part of the fabric of society, and young people were encouraged to follow in their parents' footsteps and work in factories. Today we have survey after survey concluding that parents, high schools and guidance counselors are dissuading kids from pursuing careers in manufacturing. Where did we go wrong? CC: First of all this country was founded on manufacturing. What made this country great is that especially after World War 2, we manufactured things here for the whole world and people were very proud of that. In the decades that went by, manufacturing went from being dirty, unsafe, low-tech and unskilled, to what is today a highly skilled, high-tech. very clean, very safe environment. And I think because manufacturing is one of the oldest industries in our country, that perception of [dirty, unsafe and low-tech] is very difficult to overcome. Throughout the years, I also think the regulatory environment created a big challenge for manufacturers. Believe me, I think there is need for regulation -- a market cannot be totally free -- but I think we have to a certain extent overregulated cost versus benefit, or at least made it very challenging for manufacturers to be competitive. ... Just to give you a point of reference, the value added by manufacturing to our economy is about $1.6 trillion. However, the cost of regulation is about $1.7 trillion. So in order for us to continue to be competitive and have manufacturing jobs, we over the years have become more productive. And if we keep the output the same, and become more productive, that means [fewer] jobs. So manufacturers over the last decade exported low-tech, low-paying jobs in order to keep and generate high-paying jobs in this country, and I think that created a perception that jobs are manufacturing jobs are not stable. IW: Was there anything in the survey that surprised you? CC: In general I wasn't surprised by the overall theme of the survey. At times, though, I was very surprised by the numbers, and by how pervasive the lack of understanding of manufacturing is. I knew that there was a lack of understanding; I just didn't understand the extent of it. It was a lot more pervasive than what I thought it was. The fact that parents don't encourage their kids to get into manufacturing, the fact that at the K-12 educational level, manufacturing is not seen as a career option, for instance, is surprising to me. Because at the end of the day, I truly believe that manufacturing jobs equal middle class. You read all the time about how the middle class is shrinking, and you read a list of excuses of why that's happening. The reality is the middle class is shrinking at the pace that the manufacturing jobs have shrunk. So if you want the middle class to expand, it's pretty simple: Let's create more manufacturing jobs, and the middle class will increase.