A healthy U.S. manufacturing environment leads to much-needed job creation in the sector, higher wages and a boost in vital home-grown innovation, in the view of U.S. Department of Commerce chief economist Susan Helper.
“Manufacturing remains a key driver of the economy,” she said.
Helper is part of an impressive lineup of speakers that will take part in the Wisconsin Manufacturing Extension Partnership’s Manufacturing Matters! conference, which will take place on Thursday, Feb. 26, at the Hyatt Regency hotel in downtown Milwaukee.
For a complete conference schedule or to register for the event, go to www.manufacturingmatters.org.
Helper’s research focuses on the globalization of supply chains and the revitalization of U.S. manufacturing. Manufacturing accounts for 14 percent of the country’s gross domestic product and pays higher wages than average, Helper noted.
“Manufacturing punches above its weight,” she said.
Helper extolled the strong and critical tie between manufacturing and innovation and the need to discard the outdated notion that manufacturing is “dirty, dumb and dangerous.”
She stressed the importance of keeping manufacturing on U.S. soil, pointing out that moving production offshore not only leads to job cuts at domestic manufacturers, but also lost opportunities to innovate.
Manufacturing also creates a variety of important “spillover” benefits for the economy, she said.
“There are a lot of service jobs tied to manufacturing,” Helper said. “Higher wages also mean you spend more at restaurants and on things like entertainment.”
A key focus of the Obama administration is focusing on how to strengthen the link between larger manufacturers and the small and mid-size firms that often serve as their suppliers, Helper said.
“The average original equipment manufacturer gets 50 to 70 percent of its input from smaller firms,” she said.
In addition, when sales for OEMs rise, there almost always is a corresponding uptick for their suppliers, Helper added.
She also stressed the importance for manufacturers to consider overall value, not just price, when making supply chain decisions. She pointed to a tool developed by the Department of Commerce, known as Assess Costs Everywhere (ACE), which allows companies to compare all costs associated with producing goods overseas. It can be found at acetool.commerce.gov.
“It helps you look at the hidden costs of a far-flung supply chain,” Helper said.
Having a strong local supply chain could potentially reduce costs for domestic manufacturers, she pointed out.
“When you’ve got a five- or six-week supply chain, you may over order to make sure the part is there. Then you’re forced to sell what’s leftover at scrap value,” she said.
Helper also spoke of the continuing rebound in the manufacturing sector, which struggled mightily during the Great Recession. Manufacturing job growth is on the rise, with the sector adding nearly 790,000 jobs in the U.S. since February 2010. However, Helper warns that the number of jobs being added in the sector is small compared with the jobs lost during the past decade.
Certain areas within manufacturing are exhibiting strength, including automotive. The average age of a car on the road is 11 years, a record figure, Helper noted.
“People are going to have to buy new cars,” she said.
Helper also addressed the skills gap issue, whether real or perceived, that has hampered manufacturers who claim to struggle to find qualified candidates to fill open jobs. It doesn’t bode well for U.S. manufacturers to compete with China and Mexico for low-wage work, Helper said.
“That means that the skills of existing workers need to be upgraded, in part, through apprenticeship and training programs,” she said.
On the public policy front, Helper pointed to the passage of bipartisan legislation to build the National Network for Manufacturing Innovation, consisting of regional hubs aimed at accelerating development and adoption of cutting-edge manufacturing technologies for making new, globally competitive products.
“There’s a view that we didn’t invest in our manufacturing ecosystem for decades,” Helper said.
Helper is on leave from Case Western Reserve University in Cleveland, where she is a professor of economics. She is the former chairwoman of the Economics department at Case Western and has been a visiting scholar at the University of Oxford; the University of California, Berkeley; Harvard University; and the Massachusetts Institute of Technology.
She previously was a senior economist on the staff of the White House Council of Economic Advisers.
Helper received her Ph.D. in economics from Harvard and a bachelor of arts in economics, government and Spanish from Oberlin College in Ohio. Helper currently resides in Washington, D.C.
