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Can Trump bring manufacturing jobs back? A conversation with Vaclav Smil

Inauguration Day is finally here: Today Donald J. Trump will be sworn in as the 45th president of the United States. One of the key factors that propelled Trump's surprisingly strong appeal to white working-class voters was his promise to revive the American manufacturing sector, which has been losing jobs for many years. Even before taking office, Trump pointed to annoucnements by Carrier, Ford, and Sprint that those companies would retain or add American jobs as early proof that, as he often said during his campaign, he alone can save this sector of America's economy.

But how realistic is this scenario? Critics and news analysts have already begun picking apart Trump's claims that these deals amount to a manufacturing resurgence, while others are skeptical, to say the least, that a few deals will stem the tide driven by outsourcing and an increasingly digital economy.

We turned to Vaclav Smil for some perspective on this issue. Smil is the author of, among many other books, Made in the USA, which chronicled the rise and retreat of American manufacturing. True to form, Smil's answers to our questions were detailed, wide-ranging, and offered no simple answers to complex questions.

In Made in the USA, you point out that the growth of manufacturing was critical to the development of America. Yet the US has been losing manufacturing jobs since 2000. So is manufacturing just a relic of the pre-digital era that will soon fade into irrelevance?
Manufacturing jobs in affluent countries have been declining for much longer, with the first big wave caused by the two oil price rises of the 1970s. Every advanced economy now employs fewer people in manufacturing than it did a generation ago, and the manufacturing's share in national GDP has been declining even in Germany. But in most of these economies the total value of manufacturing has remained fairly steady or it has actually increased with advances in productivity. These advances will continue as many additional manufacturing processes will be taken over by further automation and robotization.

But this does not mean the end of manufacturing – just a different, and more sophisticated, phase where a much larger share of the overall process will go to better design, higher reliability, longer durability, and attention to the entire life cycle of products (maximized recycling, reduced environmental impact). Inevitably, new jobs in this kind of manufacturing will not offer walk-in jobs at minimum wage but instead require considerable preparation and experience. Unfortunately, only a few countries - most notably Germany, and also Switzerland and Austria and the Czech Republic - have well-established rigorous apprentice programs that produce skilled labor force able to turn products that are globally in high demand. In contrast, few countries have neglected to train such workers as much as the US: boasting of exceptional PhDs from great graduate schools is not enough!

Then is Donald Trump right that we can bring back manufacturing jobs? Is it a simple matter of undoing trade deals and getting them back from China and Mexico?
There is nothing simple about any of these matters. The US was losing manufacturing jobs to Asia - Japan, Taiwan, South Korea, Singapore, Malaysia - for a few decades before China emerged as the leading exporter during the 1990s. Even if trade deals could be instantly undone, and even if Americans would readily sign up for all kinds of new manufacturing jobs, re-creating entire (or nearly entire) industries that have been lost to imports - apparel, textiles, shoes, electronics, kitchen gadgets, furniture, sporting goods, cheap steel - would take decades and enormous investment in state-of-the art factories. The realistic goal is to stop further job losses through modernizing existing facilities and concentrating on products that would find not only domestic customers but that would be also able to compete globally. Even at the height of its manufacturing power, the US was a weak exporter (measured as a share of GDP) compared to many EU and Asian countries. 

Some analysts have argued that even if Trump is successful at preventing some businesses from moving jobs out of the country, increasing automation will still mean fewer jobs in American factories. What’s the role of technology in this kind of labor shift?
There is nothing new in this great labor churning. Automation will keep on advancing but the stories of entirely robotized factories making everything we need in a matter of years or a decade are just that - stories. In reality, there will be always many manufacturing jobs: human skills and judgment will remain unsurpassed in designing and improving new products and in bringing them to market, or succeeding with old ideas. Chobani yogurt comes to mind here: Established in 2005, it rose swiftly to nationwide prominence by selling nothing more than yogurt with lower water content! 
 
So what specific steps should the United States do to preserve our manufacturing sector and stem the loss of jobs?
Do not propagate the notion that a university degree is theonly way to a good life. Train young people in extended apprentice programs so they could, after a few years, emerge as knowledgeable participants in a new, educated, and flexible labor force - that is how Mercedes and Siemens do it, that is how Germany has the lowest unemployment rate among its young people. Subsidizing such programs makes more sense than building more big-box stores to sell more Chinese imports: skilled labor producing desirable parts, machines, electronics, or foodstuffs helps to create better social conditions and prevent further slide into even greater economic inequality. This amounts to nothing but a fundamental nation-building challenge: should the US strive, as it has done for decades, for the lowest common denominator by importing the cheapest products and offering at home the least rewarding mass-scale jobs in retail or food service? Or should it be investing in human capital, training people to make first-class products and maintain stronger socioeconomic fabric? The answer should be obvious - otherwise there will be more Detroits.
 

  • Posted at 06:06 pm on Mon, 23 Jan 2017 in

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