Manufacturing making a comeback, report says

  • Article by: DEE DEPASS , Star Tribune
  • Updated: December 17, 2013 - 9:01 PM

Hiring needs have prompted efforts to close the “skills gap.”

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General Electric is among U.S. manufacturers considering bringing some production back stateside.

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U.S. factories are hiring. Exports are robust. Production is returning to the United States.

These are all pretty good signs that manufacturing is making a solid recovery across the nation, said a new report released Tuesday.

Since the Great Recession ended, nearly 554,000 jobs have returned to the manufacturing sector, according to a study from Sen. Amy Klobuchar, D-Minn., and the Congressional Joint Economic Committee. The industry now accounts for 12 percent of the U.S. gross domestic product and employs 12 million nationwide.

Such bright spots are a shot in the arm for Klobuchar and the rest of the committee leading the charge for Congress to do more to spur a comeback in U.S. manufacturing.

“For many, many years, people thought that manufacturing had no future in our country. … Well, we are here to tell you today that they are wrong,” Klobuchar told a crowd Tuesday at the U.S. Capitol, while holding a copy of the new report. “Manufacturing has been one of the biggest bright spots in our economy.”

But Klobuchar said about 600,000 manufacturing jobs remain unfilled, including thousands in Minnesota, where companies say they are struggling with a shortage of qualified workers. In 2010, 40 percent of Minnesota plant managers surveyed said the “skills gap” prevented them from filling positions and growing their businesses.

The situation has prompted bipartisan proposals to help the sector. There are more than 14 bills seeking to improve manufacturers’ access to capital, workforce education and training, and access to overseas markets, the report said. The committee will push for manufacturing training in high schools and community colleges, and there are plans to push for a $10.10 minimum hourly wage in 2014, committee members said.

The study found that factory automation and moving production to lower-cost countries were two key factors that drove job cuts during the recession. But in the past few years, the rise of shipping costs and labor rates abroad are spurring some firms — including Caterpillar, General Electric and Ford Motor Co. — to return production back to the United States, a phenomenon called “reshoring.” The report also found that overseas companies such as Lenovo in Beijing, BASF in Germany and Chinese-owned Schwing America (which has a large facility in White Bear Lake) are all opening new factories in the United States.

Officials of Minnesota’s 2,400-member Chamber of Commerce just finished visiting 300 manufacturers statewide. “We are hearing that they are growing, especially those that have some kind of customization and that make products to order,” said Bill Blazar, a chamber senior vice president.

Manufacturing giants such as 3M, Ecolab, Polaris, Valspar, and Toro also have reported healthy sales, further indicating that a manufacturing recovery is well underway.

3M CEO Inge Thulin recently told Wall Street analysts, “We delivered a strong third quarter with [solid] performance from all lines of business.” He followed that up Tuesday by issuing a forecast for 2014 that was stronger than Wall Street expected. The stock shot up 3 percent.

And across the state several companies are expanding their manufacturing and research capabilities, including 3M, Valspar and Polaris.

Such rebounds are being seen across the Midwest, said Creighton University economist Ernie Goss. “The region’s heavy manufacturers reported solid upturns in new orders for November,” he said.

In speaking for the Joint Economic Committee, Sen. Chris Coons, D-Del., and Klobuchar said their new manufacturing report found other signs of progress in the once hard-hit manufacturing sector.

Today, each manufacturing job now supports an additional 1.6 jobs. Each advanced manufacturing job — such as those in engineering or research — creates 4.9 other jobs. Factory wages are 38 percent higher than those of other industries. And finally, U.S. exports have climbed 38 percent since 2009, with exports now exceeding their prerecession peak, Klobuchar said.

But not everything is back to normal.

Minnesota gained 5,300 manufacturing jobs in September and October, but is still down almost 800 jobs for the year, according to the state’s Department of Economic Development and Employment. And the U.S. manufacturing industry lost 2.3 million jobs during the Great Recession.

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  • Amy Klobuchar

  • Manufacturing jobs pay more, and each one support an additional 1.6 jobs. Companies like Ford are beginning to do less work offshore.

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