Photo by Yi Chen, Investigative Reporting Workshop
The search for manufacturing's future
Tuesday, June 19th, 2012
YORK, Pa. — Air conditioners. Animal crackers. Automobiles. Motorcycles. Machine tools. Peppermint Patties. Potato chips. Tanks. Turbines. Those are just a few of the things that have been made in York and surrounding towns over the past 250 years, including many that are still being made today.
In fact, York County is the self-proclaimed “Factory Tour Capital of the World.” This month the county will host the “Made in America Tours Event.” Participants will be able to walk factory floors to see everything from workers assembling motorcycles to frying potato chips to baking all-natural dog treats. Another attraction in town is the Agricultural and Industrial Museum, which highlights the history of manufacturing in York.
A recent Brookings Institution study shows that nearly 20 percent of the workers in the York metropolitan area are employed in manufacturing, double the national average. Local leaders say that isn’t by accident.
Darrell Auterson, president of the York County Economic Alliance, says: “A lot of parts of the country gave up on manufacturing. York County never did.”
John Lloyd, who is president of MANTEC, a nonprofit manufacturing consulting agency based in York that is mostly financed by the Pennsylvania and federal governments, says: “We don’t want to lose that, because we don’t have anything to replace it with at this point.”
It isn’t clear whether the country gave up on manufacturing or whether manufacturing gave up on the country.
A new study of manufacturing employment by the Investigative Reporting Workshop shows that factory jobs declined by 40 percent since 1970, when 19 million Americans worked in factories. Last year, even after a small gain from 2010, there were 11.7 million manufacturing jobs. Factory employment peaked in 1979, when there were 21 million manufacturing workers. How the study was done.
Major losses punctuated jobs trend
The national drop in manufacturing jobs didn’t happen in a straight line, but rather followed somewhat cyclical patterns. Major declines surrounding and during the recessions of 1974-'75, 1981-'82, 1990, 2001, 2008-'09 were sometimes followed by only modest increases. But 2011 was the first year of small gains after a decade of steady losses.
Those ups and downs took a toll on workers, of course. “For some workers, their life has been one plant closing after another,” says Alan Vandersloot, AFL-CIO community services liaison for United Way of York County.
The numbers also suggest that last year’s increase in manufacturing employment in 2011 (a net gain of 200,000 jobs) most likely is a result of the slow recovery in the economy rather than in a major trend back to more dependence on manufacturing jobs. In particular, the auto industry’s recovery from the depths of the 2008-2009 recession has boosted factory employment.
Photo by Yi Chen for the Investigative Reporting Workshop
Alan Vandersloot, a former production operator and union member, serves on the York Area Labor-Management Council. "Workers of York" was dedicated in 1999 as a tribute to workers .
The declines were especially felt in the Northeast and Midwest, the historical centers of American manufacturing. New York state, which had the most manufacturing jobs in the nation in 1970, lost three-fourths of its factory jobs. Pennsylvania saw its manufacturing workforce go down by nearly two-thirds over those four decades, falling from 1.53 million in 1970 to 564,000 in 2011.
Manufacturing employment grew in 14 states between 1970 and 2011, most of them relatively small and all of them west of the Mississippi River. Of major manufacturing states, only Texas saw a gain in that period, up 13 percent.
Economy kept growing
Even with the sharp decline in the number of manufacturing workers, the economy kept growing.
The nation’s Gross Domestic Product, adjusted to account for inflation, more than tripled in those four decades, from about $4.2 trillion to nearly $13.5 trillion.
The total number of nonfarm jobs went up by 85 percent between 1970 and 2011, as the population increased by more than 50 percent. The number of workers grew more rapidly than population largely because more women entered the workforce, especially during the '70s and '80s.
The steep decline in manufacturing workers didn’t really affect the output of the manufacturing sector of the economy. Industrial production nearly tripled between 1970 and 2011, as measured by the Federal Reserve Board’s monthly index.
“We’re making as much as we ever did,” Lloyd says. “If we weren’t making more with 50 percent fewer people, manufacturing wouldn’t be as competitive.”
Does manufacturing matter?
Those statistics have left some people wondering whether the loss of manufacturing jobs is anything more than another structural shift in the American economy, similar to the one the nation experienced from early in the last century as people moved out of farming and into factories. Whole sections of the nation were largely de-populated, leaving empty schools, storefronts and fractured families. And still the nation prospered. Wages and the standard of living grew. Agricultural production is higher than ever, and farm products are among the most important exports, helping finance the nation’s thirst for imported oil and other goods.
The ripple effect for other businesses and cultural institutions concerns Frank Banta, a former production manager from Newnan, Ga. “We are all impacted by the loss of manufacturing jobs because not only are those direct jobs lost, but also all of the sub-supplier jobs, support, maintenance; machine-makers, and advertising jobs also disappear. The loss of revenue directly impacts schools, churches and all community-based service industries; entertainment, dining, recreation, etc.” Banta now operates a computer service and support company.
Adam Woods, who owns a custom screen-printing company in Camden, N.J., says, “The loss of manufacturing creates giant swaths of urban wastelands full of vacant buildings and unemployed people who commute to the suburbs to work for minimum wage at chain fast-food restaurants and retail stores, generally spending more on their commute than the job is worth. Because prosperity and its link to education, safety and development is so localized in this country, the abandoned neighborhoods go down very quickly.”
A recent report from the Brookings Institution says, “…Manufacturing does indeed matter to the U.S. economy…. The nation need not and should not passively accept the decline or stagnation of manufacturing jobs, wages, or production.”
Brookings says that manufacturing:
- Provides high-wage jobs
- Is the major source for innovation in the economy
- Can help reduce the nation’s trade deficit
- Contributes to environmental sustainability
Because of those factors, Brookings advocates that the nation undertake a defined manufacturing policy, much like that of Germany and other nations. Under such a policy, some firms and their workers would be winners and others losers.
“Not every manufacturing firm or industry is equally able to contribute to the achievement of those purposes, even with the right kinds of policy assistance. Not every manufacturing job can or should be saved,” the report says. “Because there are differences within as well as between industries in the extent to which manufacturers contribute to the achievement of these national goals, a national manufacturing policy requires an understanding of the advantages and challenges that differing industries, as well as different firms with different ‘production recipes’ have in doing so.”
Manufacturing a 'wealth generator'
Photo by Yi Chen for the Investigative Reporting Workshop
John Lloyd, president and CEO of Mantec, helps small and mid-level manufacturers to innovate to compete. Mantec is housed in a former silk mill that has been converted to condominiums and offices.
From John Lloyd’s perspective in York, the need to sustain and grow manufacturing is somewhat simpler: “Manufacturing is a wealth generator. It brings dollars into the community.”
The organization he runs, Mantec, is one of 60 centers nationwide established to help manufacturing companies maintain and grow their businesses. It was first formed in 1988, and serves nine counties in southeastern Pennsylvania from its base in York. Mantec, which operates out of an old silk mill (another piece of York's manufacturing legacy) charges its client companies for its services, but most of its funding comes from the state and federal government. State and federal budget cuts are putting pressure on Mantec’s budget, even as demand for its services grows.
By now it is trite to say that manufacturing has changed. Companies that don’t innovate, don't reach out to new markets, don’t find better, faster ways of doing what they do, simply don’t survive.
“The factory that’s drilling into a block of steel, that’s probably already gone to China,” Lloyd says.
In that atmosphere, part of Mantec’s challenge, perhaps surprisingly, is getting companies to work with its consultants. “Fifty percent of the businesses we contact don’t want our help,” he says. “They don't recognize that they need outside resources.”
An innovation success story
The rejections make him all the prouder of those that do reach out and get help. One of the success stories Lloyd likes to tell involves Advanced Scientifics of Millersburg, Pa.
A few years ago the company’s main product was sheep’s blood, which is used to help grow bacteria cultures in laboratories. But the company was facing stiff competition and was down to only about 10 employees. With Mantec’s help, the firm developed a new focus — the containers it was using to ship the blood. Now, Advanced Scientifics has 350 employees at a plant in Millersburg and another in Mexico.
To Lloyd, the lesson is companies need to be what he calls “meaningfully unique.”
The fact that Advanced Scientifics also makes things outside the United States is, of course, part of the trend that has moved millions of jobs overseas. But the trend to international manufacturing cuts both ways.
Auterson, president of the York County Economic Alliance, says there are 450 foreign-owned companies operating in York County.
Among them is Stauffer’s Biscuit Co., which started making animal crackers in a York bakery in 1871. Pictures of the original downtown bakery adorn the walls of a Stauffer’s outlet store in York. Today, the firm has bakeries in York, in Santa Anita, Calif., and Cuba, N.Y. It is owned by Meiji Co. Ltd. of Japan, which bought the company in 2004.
Caterpillar, Harley shifts rock York
York also is where that most iconic of American products — the Harley-Davidson motorcycle — is assembled. Harley’s story in York is a microcosm of the changes in manufacturing both here and around the nation.
The company, founded in 1903 in Milwaukee, was sold in the late 1960s to the conglomerate AMF. Harley came to York in 1973 to take over an AMF snowmobile facility (for a couple of years AMF marketed snowmobiles under the Harley name, but discontinued the line in 1975). In 1981, a group of Harley executives reacquired the company; it went public in 1987.
At one point, Harley employed more than 3,000 workers in York, and its growth and presence helped offset the loss of a major Caterpillar plant in 1996, at a cost of 1,100 manufacturing jobs. The departure of Caterpillar sent shockwaves through the community and remains a fresh memory in the minds of many. The sprawling Caterpillar plant ultimately was rehabbed into an office and industrial park, but that took a long time to accomplish. Caterpillar has kept a distribution facility in York.
So when Harley threatened in 2009 to pick up and leave for a Kentucky location, citing labor rules and wages that made the York operations uncompetitive, people remembered.
This time the outcome was different.
Ultimately, Harley’s union workers overwhelmingly agreed to a company plan even though it cut the permanent workforce by half and gave the company the ability to hire workers on an as-needed basis. Local leaders and the state also worked out a deal to provide $15 million in incentives to help Harley retool its plant and retrain its workers.
Harley spokesman Bob Klein says the company needed to make the changes in order to be able to respond more quickly to changes in demand. “Ultimately the goal is what we refer to as ‘any, any, any’: being able to produce any motorcycle, on any line, on any day,” he says. Harley is making similar demands and changes at its other plants in Kansas City and Milwaukee.
Paul Cover Jr., negotiator for the members of Local 175 of the International Association of Machinists and Aerospace Workers that represents the Harley workers, was quoted when the agreement was reached as saying: “We support the agreement because it keeps jobs in the area.”
Skilled factory workers hard to find
Ironically, many manufacturing companies say that finding workers with the skills and training needed for today’s factory jobs is a key challenge if the nation hopes to rebuild its manufacturing prowess. Kathleen Fasanella of Albuquerque, N.M., says, “First, I have to tell you that the big manufacturing crisis is one that nobody is talking about. It is that we can't find enough workers. It is insane. We have all these unemployed people on one hand, and on the other, a bunch of jobs that no one is qualified to do. “
Fasanella works in and writes about the apparel business, one of the industries that has largely gone offshore. “I don't know anyone who is running with a full staff. By ‘anyone,’ I mean thousands of companies, a lot of them very small who can't grow without workers," she says.
Part of the problem, she says, is that the American culture seems to discourage young people and others from pursuing careers in manufacturing. “People do not aspire for their kids to work in factories, even though it pays really well, a whole lot better than they imagine. Most people go off to college even though they have no facility for it, never considering a stable long-term career in manufacturing. If it weren't for immigrant labor, we'd been in worse trouble than we are now. Nobody else wants a factory job.”
John Lloyd says, “People still think of manufacturing as being dirty, dark, and dangerous.” He says that parents and teachers don’t suggest manufacturing careers, even for students who might be better off pursuing technical or vocational training instead of a traditional college degree.
Building the workforce manufacturers and other employers need is a key focus of the York County Economic Alliance, Auterson says. The alliance has created a unit devoted to workforce development. He says it has two areas of emphasis: First, “how do we improve the incumbent workforce skill sets to match the needs of employers today.” And second, “how do we put in place a strategy for cultivating and developing the talent pool that we need for tomorrow. That’s the pipeline strategy. Because these problems aren’t going to go away. They are going to be with us for decades and decades.”
Parents don't want children in factories
Photo by Yi Chen for the Investigative Reporting Workshop
Ellie Lamison manages workforce development for the York County Economic Alliance. One focus has been partnering with the educational community to attract a younger generation.
Ellie Lamison, manager of workforce development for the Alliance, says she spends most of her time on programs aimed at building interest in career education, rather than on training and retraining programs for current workers. “The pipeline is something we are focusing on. We are working with the high schools and down into the middle schools.”
Lamison also finds that one of her challenges is getting parents on board. For example, she says York County companies have a particular need for high precision welders. “That’s not necessarily something that a student’s parent is driving them towards. Like ‘great, why don’t you go get your certificate to be a welder.' That is just not something that our society has pumped up as being a good career,” she says. The truth is, welders’ wages are better than those of many college graduates.
Building a workforce with a set of skills that can be adapted to new jobs or old jobs that are still in demand is one element of solving any shortages of workers. Vandersloot says companies themselves have neglected this fact at their own expense.
“A lot of the companies got away from spending money on training,” Vandersloot says. “Manufacturers have to have a vision, and it’s not just today’s stock market price.”
But training, or retraining, current workers who might find themselves either out of work or needing new skills also is an issue.
Around the nation, there are many training programs for what Alan Vandersloot calls “displaced workers.”
Among the things he does is meet with workers once they have been told that a layoff or plant closing is coming to make them aware of programs and services that might be available to help them find new jobs.
Perhaps surprisingly, he says, “Some older workers would not take advantage of training programs.” In some cases, they hope that a layoff will be short. In other instances, they figure out how to muddle through on the resources they have.
Training not an end-all, be-all
The reality, also, is that training hasn’t proven to be a magic bullet for many people who have found themselves out of work in traditional industries.
Bernard Shipman, of Concord, N.C., spent 30 years in electronics, “the last 15 of it watching layoffs happen and waiting for my turn. In December 2008, I finally got it, but I tried for the next bandwagon of biotech and went to school. I've finally graduated, and the recession has pulled the rug out from under that industry."
Now, he’s unemployed again.
His training was paid for through a federal program called Trade Adjustment Assistance, which helps workers who have lost their jobs because of overseas competition. The program paid the community college tuition, and covered his commuting expenses and unemployment benefits.
“I feel very lucky to have gotten it,” he says. “I'll keep trying, I'm doing OK. At least my wife has a good job.”
This story was produced with help from sources in the Public Insight Network from American Public Media.