MEDIA CONTACT: Dr. Mike Walden, 919.515.4671 or michael_walden@ncsu.edu

YOU DECIDE: Is manufacturing still alive?

By Dr. Mike Walden
North Carolina Cooperative Extension Service

The numbers are scary: 150,000 jobs lost since 1970, two-thirds since just 2000. A sector that employed one in three workers a generation ago, it now is the workplace for only one in seven. And the end isn't in sight. Forecasters expect the sector to continue to shed jobs for the foreseeable future.

What sector am I talking about? Manufacturing. The preceding job numbers are for North Carolina, but a similar pattern has occurred for manufacturing in the nation. Fewer and fewer people get up in the morning and go to work at the factory. Many observers, therefore, conclude that manufacturing in North Carolina and the nation is barely alive today: Its pulse is faint!

Or is it?

Years ago we could perhaps make a one-to-one correspondence between workers in an industry and production in that industry, but this is no longer the case.

Consider the example of agriculture. Seventy years ago almost 33 percent of North Carolinians worked on the farm; today it's 2 percent. Yet farm production is five times greater today compared to the 1930s.

How could this happen?

Improvement in farmer productivity -- or production per work hour -- is the answer. Each farmer today can run rings around his or her predecessors in production because of the marvels of modern farm equipment and technology. More acres can be plowed, more cows milked and more chickens raised per farmer because today's farm workers have greater know-how and better machinery than ever before.

It's the same story in manufacturing.

Factory workers today are matched with space-age equipment and tools and computer technology, so each worker produces much more in an eight-hour day than workers in factories 50, 10 or even five years ago. In North Carolina, one factory worker today can accomplish what three could a generation earlier.

Furthermore, despite all the changes in the economy even in this decade, manufacturing is still on the upswing. Since the national recession ended in 2001, production is up from both U.S. and North Carolina factories.

Also, we're no slackers when it comes to comparisons with other manufacturing countries in the 2000s. Among 15 leading manufacturing nations in the world, the U.S. ranks sixth in growth in manufacturing output and third in improvement in manufacturing productivity.

However, just as the agricultural production revolution caused thousands of workers to leave the farm for other jobs -- in North Carolina, in the textile mills, furniture factories and cigarette firms -- so too has skyrocketing manufacturing productivity displaced thousands of factory workers.

And here lies the rub.

Where are the workers to go who are no longer needed in factories? Without new training, they can't take higher-paying jobs in technology, the professions or the health care and education industries. Studies show that many end up in service jobs, where their pay may be 20 to 30 percent lower.

So today's picture of manufacturing is a complicated one. It's not correct to say that U.S. and North Carolina manufacturing output is shrinking -- it's not -- and, in fact, it's growing faster than in many other countries. Certainly the composition of our manufacturing production has changed. In North Carolina, we're producing more computers, tech equipment, vehicle parts, pharmaceuticals and processed food and fewer cigarettes, tables and chairs and clothes.

But we are using fewer workers in today's manufacturing. Those who remain are better skilled and better paid, while those who have been cut may be in economic limbo for years to come.

This is the manufacturing dilemma, and how we decide to solve it will help set the future course for this important economic sector.

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Dr. Mike Walden is a William Neal Reynolds Professor and extension
economist in the Department of Agricultural and Resource Economics of North
Carolina State University's College of Agriculture and Life Sciences. He
teaches and writes on personal finance, economic outlook and public policy.
His You Decide column is provided every two weeks by the Department of
Communication Services. Earlier You Decide columns are available on the Web
at http://www.cals.ncsu.edu/agcomm/writing/walden/decide.htm
Related audio files are at
http://www.ces.ncsu.edu/depts/agcomm/writing/walden/index.html