The previous post trumpeted Mayville Engineering Company (MEC), an employee-owned Mayville company which has added hundreds of new jobs in recent years.
Mayville (population about 5,000) has always been a busy manufacturing city, with many jobs provided by metal fabricators. This industrial history is a fascinating subject going back to companies which formed after the Mayville Iron Works closed in 1928, but I will have to cover that in a future post. My question is: Is MEC’s success evidence that our country has come to its senses about the importance of manufacturing?
In Mayville we never believed the specious predictions made in the 1990's, that the "service" economy would provide work for the middle class which could take the place of industrial jobs. Let the factory work go overseas, they said. The service economy will take care of you. But you could never persuade the locals around here, who have worked in local “industry,” that service jobs would be a substitute for their production work. And a switch to service jobs has not gone so well for the average worker forced into that by layoffs, for the worker whose new “service” job is at the fast food restaurant or at the big box retailer paying not much more than minimum wage. And, we ask, where does the income come from which makes it possible for people to have money so that they can afford to go to the store or the restaurant? At some point along the way people have to make things to generate wealth. That’s the simple thought process around here.
Now, thank goodness, the rest of the country is getting the same message, and we now read praises for manufacturing. Here is Liz Ann Sonders of Charles Schwab, an excellent business and economics writer and speaker:
America is getting serious again about making stuff, and that bodes well for stocks, says Liz Ann Sonders of Charles Schwab. U.S. manufacturers are improving their competitiveness, and the domestic energy scene is on the rise. "It's a big story that is just starting to capture the broad mind-set," Sonders says. "We are going to look back five years from now and realize we were in a transformation in terms of what the drivers of growth are inside of our economy. We're actually going to be producing things and exporting things again."
Liz Ann Sonders, as quoted in this U.S.A Today article. Sonders in her video presentation linked below points to data showing that overseas wages and transportation costs have gone up while U.S. wages have remained flat. The mechanics of operating overseas and dealing with foreign regulatory environments is another negative. As a result companies are bringing jobs back home. Manufacturing job growth in the U.S. in the last couple of years has exceeded non-manufacturing job growth, and it has been over 30 years since that has happened. The U.S. auto industry and domestic energy sectors are particularly promising, according to Sonders. Sonders says that while we all know of “offshoring” and “outsourcing” we will soon hear the terms “insourcing” and “onshoring.”
See http://www.youtube.com/watch?v=rs53uv_ZRmg
Getting back to the question which started this post, it’s not so much that the rest of the country is coming around to the "correct view" about the low wages you get stuck with in a “service” economy. It’s not a shift of ideas back to a better view of industrial work. It’s more a matter of simple economics. Manufacturing jobs are coming back to this country because with expenses going up overseas manufacturing here just makes economic sense. Workers are happy to take these industrial production jobs because they pay more than low wage service jobs.
But if you read the last post you will see that MEC has been ahead of the game, and has been creating U.S. jobs for some time now even during recession years, and long before Liz Ann Sonders decided to take note. I can't explain how the MEC success story fits into the theories of these experts. I'm just grateful for it, and for the people who have worked hard to make it happen.
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