Georgia Manufacturing Is Winning Again

This week’s Courier Herald column:

It was the fall of 1989 and I was finishing my last quarter at the University of Georgia. I had made a drive to North Georgia to interview with a major textile company. I knew much of the textile industry was already moving overseas, but this particular company had been used as an example in several of my management classes as an American manufacturer that was adapting and modernizing.

Countering foreign competition in manufacturing is not a new concept or fear. In the eighties, we were all worried about the mighty industrial fortress of Japan. Then they were quite the worthy competitor, far from today’s empire of permanent negative interest rates.

The company had a reputation for employees having great longevity. As I was being given the plant tour, I was introduced to a lady working on the shop floor. I was told her name and her life’s story. She had worked for the company for more than two decades. She had several relatives and her own son working there too. I was told many positives about her and her people. She instantly felt like family.

As we got out of earshot, the plant manager leaned over to me and said, “It’s a shame about her. She and a couple of dozen others are going to be laid off next week.” I was confused. This was a successful and growing company. She was like family. To several of her coworkers, she was family. And after the glowing intro buy the manager, a cold and stark “her time is up”.

The problem was she was among the lowest skilled workers. While the mill had more business than it could handle, the processes were being mechanized. Her job function was no longer needed. She would be costlier to retrain for the jobs that remained than a buyout would be. The personal affection the managers had for her would not overcome the harsh realities of economics.

A friend of my family spent much of the first half of his career moving textile equipment from mills in the southern US to Central and South America. He spent the second half moving the same equipment from those mills to Asia. Much of the clothing end of textiles has a history of capitol flowing to where labor is the cheapest and least regulated.

It was with this background that I was a bit surprised to see that Georgia was selected last week as the location for the first U.S. factory for Adidas to make shoes. The location is a equally surprising – Cherokee County, in suburban Atlanta. The northern Atlanta suburbs have a tight labor market, and are not known for large quantities of affordable unskilled labor. They are, however, an epicenter for skilled technical labor.

The factory illustrates not only how manufacturing, but manufacturing jobs, are changing. According to the Atlanta Business Chronicle, the Adidas facility will use a “Speedfactory model, which relies on automation and production robots.” Thus, the 160 people that will make up to a half million shoes per year won’t be unskilled. Even though they will work in manufacturing, much of their skill will be required for the high level of automation deployed in a modern factory.

Much of our current political debate is focused on returning jobs to the US that disappeared in manufacturing. These jobs didn’t necessarily go overseas. Many of them just went away, with capital replacing labor. The remaining jobs require skills that manage capital to create the value added in production to justify wages for an American standard of living.

America’s job and wage problem isn’t that we don’t make things anymore, but that too often our education system doesn’t create real skills required by today’s employers. Seventy percent of jobs available in America don’t require a college degree, but we spend a disproportionate amount of our higher education dollars on university level courses.

If we want to get serious about “winning again” with respect to manufacturing, we need to get serious about understanding what a manufacturing job is in this millennium. Programs such as the recently launched German Apprenticeship program in Newnan are a good start.

The American dream is still available for those willing and able to work. To unlock our potential, we’re going to have to do a better job of ensuring that Americans have the right skills needed for the winning jobs of today and tomorrow.

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CharlieEllynnDave BearseNoway2016Benevolus Recent comment authors
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Saltycracker
Saltycracker

Well said. We have had blogs on what the role of legislature is to encourage positive action on this. The first step is not forming various disjointed study committees or making taxpayer guaranteed student loans readily available for every whim. It is participating in corporate and community actions to identify those with potential and develop those skills. As much as I rib on acronyms for everything ASVAB (Armed Services Vocational Aptitude Battery) is an excellent guideline. There are others readily available. Identify those skills in local demand by applications, references and most importantly, testing, give them grants, corporate scholarships or… Read more »

gcp
gcp

And the two presidential candidates continue to give us useless, populist rhetoric. Traditional manufacturing jobs in the US peaked in 1977 and our economy has changed quite a bit since then for a variety of reasons. As for training, we need more of what we see at Gwinnett Tech with it’s March 2016 job placement rate of 98%.

An excellent explanation of our changing economy.
http://www.marketwatch.com/story/donald-hillary-and-bernie-are-lying-to-us-about-those-lost-manufacturing-jobs-2016-05-12

Benevolus
Benevolus

Well the candidates have to get elected first before they can do anything vis a vis the government. So to some extent they are going to say what they think they need to to win. Then when they do win the other party (ahem) tries to block every initiative- even if they used to like it.

But a lot of this could probably be handled in-state anyway, where the One-Party system allows progress- if only someone shows the courage to lead.

Saltycracker
Saltycracker

I had seen the article and attributed the manufacturing jobs today are going high tech. Charlie pointed that out. We are desperately short of skills. At all levels, Recently read that we need 232,000 welders in the US. China is doing our high tech welding. Our open borders allow in the unskilled and our immigration policies minimize the skilled getting in. Our social programs and lax enforcement of their abuse enable the able bodied. Now we have social unrest promoted by our leaders challenging the justice system from every angle. Evita Clinton will get foundation millions from corporates, pay Bill… Read more »

Saltycracker
Saltycracker

I want to add, in conversation with a fellow civic club associate, a Homeland Security training specialist, about a relative looking at colleges with strong law enforcement degrees. He advised those graduates are easy to find but what they are looking for are those with high tech computer skills and the aptitude for law enforcement which they will teach. Combined studies in both, automatic employment.

Benevolus
Benevolus

Even in my tiny company. I needed someone with warehouse skills and website-building/maintenance skills. Neither of those are full-time jobs for us but a person with both could have a nice job. The warehouse guys don’t know squat about computers and the computer guys aren’t interested in the warehouse work. (Fortunately I found someone recently, but it was lucky.)

Noway2016
Noway2016

B, do you still need a guy with those skills? Sorry, didn’t read to the end of your post.

Benevolus
Benevolus

I’m OK for the moment!

Raleigh
Raleigh

Interesting article. Cherokee county is a Bedroom community and has been for many years. Most people work outside the county and it will take many 160 job factories to change that. The real reason most factories relocate to Cherokee is the tax incentive packages offered to them. A few years back those incentives won Cherokee a large office furniture manufacture. It didn’t last. Once the incentives ran out the manufacture moved out to the next tax haven leaving a huge empty building and unemployment in its wake. Automated machinery is easy to move. Much has been written about the changing… Read more »

Saltycracker
Saltycracker

Tax incentives are an attraction that enriches a legislator and gets results as long as we keep it up or don’t get out bid. The permanent solution is logistics (airport, rail, port), good schools, good lifestyles and skilled workers.
Our weakness is skilled workers and all you have to do is read the headlines of our political focus to know, this is a risky state.

Raleigh
Raleigh

Once upon a time Georgia had a really good technical school program through high schools and trade schools where trades and trade skills were taught but that has been decimated in favor of college programs. Now we call trade schools technical colleges. Where changes really should be made is at the Board of Regents.

Dave Bearse
Dave Bearse

The jobs that moved overseas aren’t coming back. They’re already being reduced by mechanization overseas. Automation will also reduce service employment as it continues to reduce manufacturing employment. Long term, given the current economy structure, there won’t be enough for people to do.

Raleigh
Raleigh

The question remains the same, “How are you going to get them to buy your cars (Product)” You have to have consumers with enough financial clout to buy the product or you don’t have a company. In most cases that means the consumer has to have a job.

Ellynn
Ellynn

Automation can’t fix or program themselves. My cousin is a programmer at Oshkosh Truck. He does the code and process changes to assembly lines and other systems. Brilliant guy who couldn’t afford technical college, taught himself how to code and applied for a job at OT. Passed their skills test even though he had no certification. It’s not about having enough to do, it’s changing the mind set on what a job is, and updating the skills to go with it.

Dave Bearse
Dave Bearse

AI has the potential to reduce the numbers of those that fix or program. We’re awash in manufactured material things, even the poor.

US railroads in 1980 employed 550,000 to move 4.5B ton-miles.
US railroads in 2011 employed 235,000 to move 12.1B ton-miles.

It was good-paying employment then and is good-paying employment today, but there are only about half has many employees needed to move three times the freight, a six-fold increase in productivity.

Saltycracker
Saltycracker

I believe the US is at the threshold of opportunity. The approach we need to advantage in a global economy is technical. In manufacturing the mass number of workers are being replaced by a few that know robotics and can work in assembly teams. We need the disrupters and innovators not the whiners. Two years ago there were 5,000 plus Uber drivers in Atlanta averaging over $15 hr. There are a lot more today. Meanwhile we have politicians trying to crush them. To get them on welfare and dependent on them. Many took that work advantage to acquire skills to… Read more »