In this highly contentious election year, one of the major drivers among large portions of voters is frustration with the economy, particularly the manufacturing sector. Donald Trump rode a wave of discontent especially strong among blue collar workers by pushing his populist message, all the way to winning the Republican primary. Core to that message was telling those workers that he understood their feeling of disenfranchisement, that the economy was indeed terrible, that China was “eating our lunch,” and that only he could save the day. For workers in middle America who felt marginalized, it was a message that resonated.
However, if you talk with a global economist, they’ll remind you that the financial crisis of 2007-08 was a worldwide phenomenon, and explain that the United States came out of it better than or as well as any other nation. Compared to nearly every other country, the US handled the crisis as well as it could, and is arguably doing as well as it could be right now, despite any remaining challenges.
In fact, just this week, Vladimir Putin — President of Russia, a country that most certainly did not come out of the global economic crisis in great shape — was speaking at the St. Petersburg International Economic Forum and said, “America is a great power; today probably the only superpower. We accept that.”
Meanwhile, both China and Hong Kong are experiencing a slowing economy and reduced spending. Increasingly, China’s financial health is uncertain. And yes, this includes the manufacturing sector.
Recently, Deloitte and the US Council on Competitiveness published the 2016 edition of the Global Manufacturing Competitiveness Index. This report is based on survey responses from more than 500 chief executive officers and senior leaders at international manufacturing companies. The study found that the United States is currently the second most competitive manufacturing nation in the world, right behind China, but that by 2020 the US would surpass China for the top spot.
“How could this be?” you are asking. “What happened to that lunch of ours they were eating?”
Part of the answer is innovation and advanced technologies. The US invests heavily in research and development, and also in an innovation ecosystem that includes American colleges and universities as well as venture capital and entrepreneurship. (A good companion study is the late-2015 report Advanced Technologies Initiative: Manufacturing & Innovation, also from Deloitte and the US Council on Competitiveness. It focuses explicitly on global innovation ecosystems and the role of technology in manufacturing, with special emphasis on the United States.)
The other part of the answer is talent: there is a worldwide talent shortage and widening skills gap, but comparatively speaking the US has developed a lot of smart, well-trained people and is considered one of the top three countries in terms of manufacturing talent.
So then how to explain all those unemployed American workers who feel the US economy is in the doldrums even as it is becoming increasingly strong in its recovery from that global crisis?
The aphorism that a rising tide lifts all boats is, unfortunately, not true. Not all of them do. Many of the American workers who have failed to see any benefits from this resurgence in manufacturing are generally not the ones skilled in the innovation and advanced technologies driving that resurgence. It may be too early, and too callous, to suggest that changes in the industry have passed them by, but there may also be some reality in that. Although I truly hope not.
While the talent gap is more pronounced elsewhere, it still exists in the US. An estimated two million positions in the US manufacturing industry are expected to go unfilled due to a lack of skilled workers over the next decade. So, on paper, opportunities abound — for workers with the right abilities. But to what extent those workers currently feeling marginalized can re-group and enhance or update their training, and how that could be accomplished, is a big unknown. That’s an issue I’d like to hear addressed in this election cycle.