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Tuesday, September 04, 2007
Bill Steigerwald :: Townhall.com Columnist
Joel Kotkin Debunks the Myth of Deindustrialization
by Bill Steigerwald
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Hail the working man. Another Labor Day is upon us/has come and gone. But are we still celebrating a blue-collar, industrial work force that barely exists anymore? Lots of people think so, but not city guru Joel Kotkin. As he wrote earlier this month in The Wall Street Journal, the death of manufacturing in America is a myth. In fact, in parts of the South, the Great Plains and Pacific Northwest, high-skilled workers are fueling vibrant local economies and helping America make $1.6 trillion worth of industrial stuff -- 42 percent more than in 1982. I talked to Kotkin (joelkotkin.com) Aug. 29 by phone from his home in the Los Angeles area.

Q: So America’s manufacturing work force is not gone?

A: No. It’s still there. But it’s getting smaller. A lot of it isn’t unionized. And it’s increasingly not located in what we would call the key industrial belt.

Q: And America’s manufacturing sector is not in a long-term decline?

A: Not if you take a look at what’s being produced -- and particularly the skilled-job numbers are quite impressive. I have to tell you, almost every place I go in this country, particularly where the economy is growing, if you ask business people what is it that would really help them, they say “skills.” Machinists. Welders. It’s not like there’s a Ph. D. shortage, generally speaking. But there is a welder shortage, there’s a plumber shortage, there’s a machinist shortage. But nobody wants to talk about this. Cities that have lost their industrial base don’t want to talk about it, and many cities that still have it are almost ashamed of it. In one of the great historical ironies, the places where they are not ashamed of manufacturing are places like Houston and Charleston and Charlotte. But the places with the great industrial traditions, it’s almost as if they are ashamed of their lineage.

Q: Why is manufacturing prospering in places like Dubuque, Houston and Seattle?

A: Sometimes it’s just historical circumstances -- the right industry at the right time. But I think the reason that manufacturing -- particularly at the higher end, which is more and more what is there -- is so important is that -- going back to Jane Jacobs -- it is a classic export industry. If you are in Seattle and you are assembling planes, or if you are in Dubuque and you are assembling and building systems for building roads around the world, you are taking money from other parts of the country or the world and you're bringing that money in to your town. Most of the stuff that has been growing isn’t doing that -- it’s retail; it’s health care, which is basically serving your own people. ... It doesn’t have to be manufacturing, but manufacturing is one part of what you have to offer. Manufacturing also has an important sociological impact, which is it provides jobs and opportunities for people who otherwise would be stuck in a job with no upward future. One of the women I interviewed in Charleston had been working in retail making under $10 an hour. Now she’s working in manufacturing and she’s gone up to $15 or $16 an hour. She’s got some health care benefits. She’s got a skill. She feels she’s got a future.

Q: The U.S. has lost about 5 million industrial jobs since 1970 -- most of them low-skill.

A: What you have today -- at least what that Federal Reserve report showed -- is that a higher percentage are high-skilled workers and high-skilled jobs have increased significantly. We have to look at manufacturing in a somewhat different way than we have. Even somebody who’s going to work in, let's say, an auto plant today, going forward is going to be more skilled because you’re going to have more robots; it’s going to be more computerized. So it’s kind of misleading to look at manufacturing as a low-skilled industry. There are pockets of that. But those are the industries that are either being automated or they are really having a hard time holding on. They’re holding on to some extent in parts of the garment industry, parts of the textile industry and some food processing, though over time I think a lot of that will get more automated. That’s where you’ve seen a lot of job losses. But fundamentally, this is part of what an economy should be looking to promote. When I look at a place like Pittsburgh, which has this magnificent history, it seems to be -- maybe I’m wrong -- ashamed of it.

Q: What is going on in manufacturing is what happened to farming over the last 220 years -- we're producing more with fewer and fewer people.

A: That’s exactly right. And the geography of that change is very interesting because it’s moved increasingly to the South and West. But there are pockets in the Great Plains that also are doing very well, which is very interesting. It’s much more the Dakotas, Iowa, out toward the Great Plains, than a great revival taking place in Michigan. Some of that may be because of politics. Some of that may be because of culture. States in the Upper Plains have basically fairly high education levels. A high school graduate in Iowa or the Dakotas is generally much more literate than a high school graduate in the Northeast or California.

Q: Is there a secret to attracting new manufacturing or nurturing the old manufacturing bases?

A: I think what you are talking about is nurturing new manufacturing that may be growing out of the old manufacturing. What I hear over and over again is the need for skills, the need for a reliable work force. That has probably more to do with companies’ decisions to move than almost anything else. They can’t find the skilled workers they want. I remember talking to a guy whose company was just going gangbusters up in Bellingham, Washington, and he couldn’t find welders. In Bellingham, Washington, you ride into town and “Welders wanted” is the first thing you see. Everyone talks about how we’re becoming a society of low-end service workers and high-end information workers. But here’s something in between -- basically the logistics and manufacturing industry -- and nobody seems to be focused on it.

Q: What can governments do?

A: I would say infrastructure and training are the two big things -- and if you think of the training as part of the infrastructure, it’s really one thing. You need roads that go in and out. You need modern industrial space. You need reliable electricity. You need shipping facilities. You need workers who are relatively skilled, trainable and reliable. It’s really not rocket science that you can do that and that would promote the manufacturing sector of the economy. Oddly enough, I find that one of the great ironies -- and I think of myself as a old Pat Brown-Harry Truman Democrat -- is that Democrats seem to be much less interested in this than occasionally a conservative Republican is interested in it. This sort of gentry liberalism we have now, they don’t really want any of these jobs because, you know what, there is going to be pollution from these industries.

I would argue that if something is going to be manufactured in the United States, it’s going to have much less negative effect on the environment than if it’s manufactured in China. It’s almost like people want to shunt aside all the hard things and have the hard things done by somebody else so they can have their pristine environment. A, that has a sociological effect, since there is no upward mobility for a large portion of the population, and B, you have the stuff built in places that have much worse regulation. In California, they’ll put this regulation in and kick the guy out of California; so the guy goes to Texas, where he can pollute twice as much.

Q: Is a city like Pittsburgh doomed, in the sense that there is nothing we can do to regenerate manufacturing?

A: I’m always reluctant to say what a place can do. It’s like asking a shrink what your problems are after the first session. But I would try to find out if there are companies that are expanding. Are there companies that would like to expand? Are there companies that want to stay? Ask them what they want. We live in this dream world where we say, “Well, if we have a fancy stadium with sky boxes, that will keep businesses here.” Well, what do you mean by businesses? Do you mean the gauleiters who represent multinational corporations, so they can hang out at a fancy football game? Or are we talking about somebody who’s got 15 people working for him in a shop somewhere in the suburbs and would like to get to 30? What are his issues? Are they tax issues? Are they training issues? Are they regulatory issues? You’ve got to go ask! I don’t see anyone interested in that anymore. It’s all “What does some 23-year-old, footloose student want? Does he have enough jazz clubs to go to?” Or some footloose 50-year-old corporate henchman. “Does he have enough arts facilities?"

As a country, we’re kind of delusional about our economies. I’ve found a few places in the country where they focus on this stuff, but I’m kind of becoming a persona non grata for raising these issues. I’m not raising them as a conservative, saying we shouldn’t have taxes or shouldn’t have regulations. I’m just saying, “How do you provide for a broad-based economic opportunity for your people? Isn’t that what’s it about?” Unfortunately, for most mayors in America, that’s not what’s it’s about. What it’s about is, “How do I keep the public employees happy? How do I keep the people at the very top of society happy? And how do I put on a good enough show so that everybody thinks I have a hip, cool city.”

Q: You mentioned earlier you were a Pat Brown-Harry Truman Democrat. What's that?

A: In other words, meat and potatoes; get the job done; that you understand that a Democrat is first and foremost a representative of a middle-class party that has middle class values and is the party of upward mobility and is willing to use the public sector where necessary to lead that charge -- that’s why I’m not a Republican. But I find that Republicans at least are willing to be occasionally skeptical about some of these boondoggles, where most Democrats are in some sort of “dogmatic slumber,” as Kant talked about. You can’t say a bad word about light rail – or that maybe a bus rapid transit can get the job done for a third the price, which means the inner-city Pittsburgh person can actually get to a job in the outer areas. Instead we want to build a cute little light-rail line, so that maybe we can convince a couple yuppies to take the train to work for a couple weeks. It’s demented. Meanwhile, then they wonder why people keep moving farther out into the suburbs or other cities. They’ve expended so much money. Take the $1.5 billion they’ve spent in Pittsburgh (for stadiums, etc.) -- include your stupid ($450 million) light-rail tunnel under the river. What if you had had a tax reduction for businesses? Or if you had built the best bus and toll way system, so that Pittsburgh became a great place to ship goods in and out of? Or if you built a wonderful park system, so that people would say, “I want to come live in Pittsburgh because they have the best park system”? There are a lot of ways that you could have spent or not spent that money.

Q: Instead what we have are two stadiums, a gigantic convention center that’s empty half of the time or giving away its space and a $450 million light-rail tunnel.

A: I’ll tell you the truth, a lot of the blame comes to the journalists. The journalists never ask the tough questions. They basically follow the scripts that they are given. And also part of the problem, and we’ve talked about this in general about journalism these days, you have got a bunch of young kids who are there for two or three years. They don’t understand what crap this is. To them it’s all, “Well, there’s an art museum downtown. That’ll be good for me.” If there is some “starkitect” -designed building, they say, “Wow, that’s sort of fun for me.” They don’t care.

Q: I’ve always said the newspapers of America should be indicted en masse for having countenanced 50 or 60 years of the destruction of cities. I bet 95 percent of newspapers have applauded and cheered every boondoggle, every urban-renewal project back in the 1950s, every new light-rail project -- no matter what it was, newspapers cheered them on.

A: And what happens if you have the temerity to suggest that this may not be the way to go? You’re “anti-city,” you’re “pro-suburbs,” you’re a “neoconservative” -- like I’m Dick Cheney or something. You get name-called. And all you’re saying is, “Look, are we sure that what we are putting our money into is really what matters, given the tremendous pressing needs that every city has?”

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About The Author
Bill Steigerwald, born and raised in Pittsburgh, is a former L.A. Times copy editor and free-lancer who also worked as a docudrama researcher for CBS-TV in Hollywood before becoming a reporter for the Pittsburgh Post-Gazette and a columnist Pittsburgh Tribune-Review. Bill Steigerwald recently retired from daily newspaper journalism..
 
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Just wait until nanotechnology...
...comes into its own.

Once we can build anything and replicate anything to the most exacting tolerances, we WILL enter Kurzweil's Singularity.

You can stop worrying about illegals sneaking in and jobs leaving, then. With your own replicator, you'll be "growing your own."

automation
One of my favorite programs is How Its Made The automtion shown on this progam is amazing.The engineering that goes into these machines isa a sight to behold

DoctorO
You have no idea what you are talking about. First, one can not move South to avoid regulations. Most of them are federal and the Southern States have become quite adept at making their own. If you don't believe it check the link on my 7:44 post. That is in a fairly small town.
Also, every major manufacturer that I know has a training department and conducts training. Some large companies have huge training departments that invest a LOT of time and money into training. The place I retired from rotated people in and out of training from the line organizations. I myself spent 8.5 years in the training organization. Most companies do some kind of training, mostly OJT. And if your company has more than 50 people in it you are required by law to do annual training on a variety of subjects like chemical control procedures and MSDS sheets. (Another federal regulation).

Truer Words Never Written.
"It's been the West Coast Annex of the liberal NE Megalopolis for quite some time, now." [Southern California]

Exactly! The San Francisco to San Diego megalopolis is nothing more than NYC West. California's elected representatives go "home" to New York, Boston, or New Jersey, for the "Holidays".

Bucko*

*A fashionable affectation among the intellectually superior (so they think) of other TH posters. Thought I'd give it a try.

Reality Check Part 3
Our consumer products industry, for all practical purposes has left the country. What is left of manufacturing is construction, mining, processing (think refineries and chemicals), and "high value" industry (think motor vehicles and airplanes). They have the best chance of staying in the U.S. because the labor content is miniscule and the investment is high or they must be done locally. Our trade reps will probably try to sell these to foreign corporations to offset the trade deficit. But be vigilant, because sales of disk drive technology, airframe technology and espionage stealing military equipment technology puts high skilled/high value industries and our national security at risk over the long term.

Education is often touted as the magic bullet for the US to “stay Competitive” in the global economy. Like there is a shortage of educated Indians. But in this matter I believe we are pushing a string, not pulling a rope. To get beyond superficial and impractical debates on ideology, we must answer some basic questions honestly:
What is the need (job demand) for a big program to educate in math and science? What industry provides bullish long term employment prospects for a lot of Americans to justify the high financial investment?
How will our fellow citizens, who lack the intellect or abilities to be successful in these high value jobs, make a living wage?
Should we be competing with illegal immigrants from, and residents of, third world countries? Can we, without becoming a third world country ourselves?

And please, do not let the elites think for you.

Reality Checl Part 2
Today, companies/managers in all sectors have decided that training is not their problem. They relocate from industrial to non-industrial regions to chase cheaper labor, avoid unions and regulations, and negotiate land and tax breaks. They think that corporate welfare programs should provide these training programs and that the supply of labor should be instantaneous (just in time) relative to their needs. Maybe bring in some Russian math majors or Indian programmers or Polish machinists and pay them cheap, work ‘em hard, and avoid the training costs.

Reality Check
So often we use these articles as a place to spin ideology, and try to prove ourselves and our political thought managers right. That is not useful. What would be useful is to understand how we have gotten to where we are and ask, "Is this where we should be?"

The types of jobs that are referred to as high end and skilled are known as "Skilled Trades." Once upon a time training was considered an investment by industry. Traditionally, companies have provided in-house programs including classroom training and apprenticeship under a craftsman at their own cost. The process takes years and on the job training is integral to it. Also, similar industries used to cluster in an area so that as one company slumped others might not and would hire those skilled workers that were laid off. That made it sensible to take out a thirty year mortgage on a house. Pretty smart, huh? If you ever wondered why it seems that Germany has excelled in the skilled trades area, it is because they got it and still get it. But that was then and this is now.


BUT WHO ARE THEY WORKING FOR?
Foreign auto makers and other foreign manufacturers-- so where's the real money going? The profits are going overseas.

The profits can then be invested in foreign industrial progress AND OUR I.O.U.'S.

Skilled labor shortage
Truly, this is something the market can handle if given the chance. If there's a shortage of welders or millwrights the wages should go up.

The problem with this is that it takes time. Political 'solutions' add to the delays (Southern California for example). And there is competition from other countries and from other disciplines. If you can't get enough typists, for instance, trained before the automation is available to do what you need with the smaller work force, the need for the larger work force goes away.

Jane Jacobs
I am very impressed that Kotkin has read Jane Jacobs, one of the most important writers on systems of self-organization in free economies.

Put her work together with Toffler's and you'll get what we have: a very high-tech, small scale manufacturing base that is revolutionizing the structure of our economy.

And the pundits don't get it because all they can think about is the loss of the "old dinosaurs," the huge, bureaucratic, corruption-ridden, unionized companies. The companies that dominated our economy in Toffler's Second Wave high industrial age.

Say bye, by to all of that.

"A: Sometimes it’s just historical circumstances -- the right industry at the right time. But I think the reason that manufacturing -- particularly at the higher end, which is more and more what is there -- is so important is that -- going back to Jane Jacobs -- it is a classic export industry. If you are in Seattle and you are assembling planes, or if you are in Dubuque and you are assembling and building systems for building roads around the world, you are taking money from other parts of the country or the world and you're bringing that money in to your town."

Good points, Steigerwald & Kotkin
Unfortunately, too many people ignored Booker T. Washington's advice a century ago: "Get a practical education, own property, don't move North." (paraphrased)

Certainly, the Jim Crow laws of a half-century ago caused real hardship. Still, considerable damage has been done since by mostly well-intentioned people who continue to encourage a mind-set shift from 'learn and earn' to 'victimhood and rights.'


Steigerwald is correct...
The days of going straight from high school graduation, with no real work skills, to a high-paying job in a steel mill or auto plant are long gone. However, there are very good opportunities in the vocations between brain surgeon and no-skill-at-all: the so-called "skilled trades".... electrician, plumber, carpenter, welder, H&A/C, etc. Drywallers used to be good as well, but that has been largely taken over by legals and illegals from Mexico.

Steigerwald, What Are You?
Have you been living under a rock for a couple of decades? But you make me feel a lot better. I now know that the Chinese are faking it -- putting Made in China on everything but all along it has been made in the U.S.A.. Oh, you mean Assembled in the U.S.A. (Here are the secret words but don't tell anyone else -- Council on Foreign Relations.)

Reliable Work Force
*What I hear over and over again is the need for skills, the need for a reliable work force. *

This cry goes from top to bottom in America today. My youngest sister spent a year or two as a hostess at a midrange chain restaurant and she was furstrated to the point of fury at the level of employees who did not know how to work and would not learn -- who turned up their noses at all parts of the job save the waitress part -- who frequently worked only a day or two and never came back again. Same again in our office. The girl who had my job before me lasted 2 months before she abruptly quit without notice; she had found that the job required actual skills and initiative, and also that a large chunk of it was tedious and repetitive. She quit.

It isnt the jobs that have changed so much as the people who fill them, though. People want their work to be exciting, interesting, entertaining -- most of all they want it to be entertaining; and work is not like that. Even race drivers spend most of their time pounding out laps around the track with no audience, doing tire testing and component adjusting, and they spend even more time schmoozing people they do not like and answering the same question about why they crashed in Turn 1 to 500 different people.

Automation is taking over everywhere, as the Boomers retire and Generation Whine concentrates on Work Life Balance (getting paid to not do the work they were hired for). Our typing pool used to be 10 girls with typewriters; when the computer was brought in, seven of them lost their jobs because three girls with computers could do the work of 10. Now there is no typing pool. I am doing a job that used to employ three people. That is because they cannot find the other two people to hire. This will continue.

Mountain Rose
The reason jobs are not going to CA are all in my post above. High taxes and even higher regulations. Also some of the highest electricity rates in the nation/world. The only thing that is flowing freely to CA is illegals.

Almost good column
Mr. Steigerwald makes some excellent points, for example a few months ago I saw an ad on the internet version of our local liberal rag looking for Auto mechanics who could operate the new testing/diagnostic machines as well as repair cars. The starting salary was 80K to 90K dependent on skills and experience and this was in Columbia, SC, a city not known for a high cost of living.
Mr. Steigerwald also hits the nail on the head with the football stadiums, convention centers, and rapid transit systems. They always push these things as “money makers” for the city, and like most liberal programs, they just never pan out. The only people the stadiums benefit are the owners. The convention centers only benefit the construction firms and what every politician is getting the kickbacks. The rapid transit systems are the same except with them almost nobody benefits, and 20% of your gas/road tax dollars are dedicated to these boondoggles. Hey but the GAIA worshipping greens like them.
What Mr. Steigerwald misses out on is what government can do. Sure, we would all like lower taxes and contrary to what the lying liberals tell you, corporations don’t pay taxes; people do. But, that isn’t the big issue. The big issue is the millions of government regulations that stifle business, industry, and yes sometimes government itself. (See attached article about a historic cemetery upgrade project that was stopped due to the “restored” fence being too high”.
It isn’t that we don’t need some regulation, but these onerous regs have grown beyond all reason and 90% of them don’t work. In fact most of them don’t work so bad that they actually do harm. Albore was supposed to head a panel that was charged with getting rid of unnecessary regulation. The only thing he and Klinton got rid of was military personnel and blue dresses. The one single thing we as a nation could do to help increase business is eliminate a lot of these regs.

http://www.thestate.com/local/story/162491.html

Rose, this may well be
the first thing you've ever writtten here that I didn't largely agree with.

The author didn't tie the job relocation to a specific direction. He tied it to state or local governments that are interested in a reasonable business climate- though his interview subject (and maybe the author, as well) might have different ideas than we do of what constitutes reasonable.

Here in Mich, we have a government that concentrates mostly on trying to keep & attract large, well established employers with a high-profile sales effort and incentives designed to reduce their cost of doing business. In the meantime, they pursue policies that degrade the business climate for small & medium sized firms, which create about 75% of the job growth. I know you see something similar where you are.

Besides, you must admit that very little of Southern Calif. is really part of the Southwest anymore (& those parts that could be considered so are too outnumbered by the rest of the area to count). It's been the West Coast Annex of the liberal NE Megalopolis for quite some time, now.

Schpin, Schpin, Schpin
Another pro-globalist spins the facts to con the American people into swallowing a load of hooey.

If jobs have moved to the South and West, WHERE ARE THEY?

You can't get more South and West than Southern California. The jobs didn't come here.

I did the same very specialized skill for 24 years. I am a good employee, a team player and a hard worker, who has a good attitude and lears fast.

If unemployment was as low as these liars claim, then employers would be eager to hire me.

There are plenty of similar jobs that a company could train me to do, but there are so many qualified applicants who trained for those specific jobs, the companies can afford to turn up their noses at me.

So Schpin, schpin, schpin all you want, but we all know the truth.

Interesting article.
Could this be part of the reason why Americans are getting so fat?

We used to have parks, playgrounds and sports courts in easy walking distance of almost anyone. Now, you have to 'make a day of it.' And, you don't get around to it as often as we used to.

And trade schools have always been the bane of liberals. (Everyone NEEDS a college education just to make ends meet. Strange how so many got along without the sheepskin for so long.)

Told my grandson if he wanted to make a bundle - be a plumber, or an electrician. There's always a demand for them!
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