THE UNITED STATES MAKES, THE WORLD TAKES

Leading 21 Century Manufacturing and Exports

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Paid for by Cory Booker for Senate.

THE UNITED STATES MAKES, THE WORLD TAKES: LEADING 21ST CENTURY MANUFACTURING AND EXPORTS INTRODUCTION The recession may be behind us, but Americans, and New Jerseyans in particular, are still hurting. New Jersey was dead last among the 50 states to start adding jobs following the recession, and Americans across the country are finding that the jobs that are coming back arent as good as the ones that were destroyed during the recession. In fact, jobs at the middle third of the pay scale good-paying jobs that can support a family accounted for 60 percent of job losses during the worst part of the recession.1 But of all the jobs that have been created in the recovery, lower wage jobs have accounted for 58 percent of them.2 Thats the source of economic insecurity that so many New Jerseyans feel. In order to not only continue growing, but to grow the right way, it will take focused strategies strategies that support sectors where America can compete and win globally, and ones in which good-paying jobs are plentiful. In these regards, there are few more promising corners of our economy than manufacturing. Manufacturing jobs pay more 17 percent more than non-manufacturing jobs.3 Manufacturing jobs are available over 80 percent of U.S. manufacturers are looking for Americans to fill their skilled production jobs.4 Manufacturing has room to grow it represents only 12 percent of the U.S. economy, but 60 percent of total U.S. exports, with a world looking to buy more quality American products.5 A sector that pays its workers well, has abundant job vacancies, and shows potential for
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The Low-Wage Recovery and Growing Inequality, National Employment Law Project, (August 2012), http://www.nelp.org/page/-/Job_Creation/LowWageRecovery2012.pdf?nocdn=1. 2 Id. 3 The Benefits of Manufacturing Jobs, U.S. Department of Commerce: Economics and Statistics Administration (May 7, 2012), http://www.esa.doc.gov/Reports/benefits-manufacturingjobs. 4 Boiling Point? The skills gap in U.S. manufacturing, Deloitte, (2011), http://www.deloitte.com/assets/DcomUnitedStates/Local%20Assets/Documents/AD/us_PIP_2011SkillsGapReport_01142011.pdf. 5 U.S. Manufacturing in Context. Manufacturing.gov, (accessed July 15, 2013), http://www.manufacturing.gov/mfg_in_context.html.

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robust growth deserves our full attention and imagination. And the Obama Administration has made important strides, strides that have yielded real results. Consider, though, the deep hole from which they started and the 5.8 million manufacturing jobs that were lost in the U.S. between 2000 and 2010 - 3.4 million jobs in the seven years before the recession and another 2 million jobs during the recession. Since then, the sector has added back half a million jobs. Recently, though, growth has slowed. The Administrations work must be sustained and expanded. And the fact is we would be closer to our goal if there had been more action to support manufacturing in Congress. Globally, the skills gap could grow to 40 million by 2020, and if we act now, the U.S. can lead the world in meeting this demand for workers.6 We can go further, and we can do better, but to do so we must both expand upon our commitment to supporting manufacturing innovation and growth, and establish new systems to train our workforce to meet the evolving needs of industry. I. SUPPORTING INNOVATION AND GROWTH IN MANUFACTURING EXPANDING THE NATIONAL NETWORK FOR MANUFACTURING INNOVATION Throughout the 20th century we dominated industries ranging from information technology to aerospace because we invented the technology that made them possible.7 But innovation has lagged in recent years. American engineers are now playing catch up in cutting-edge industries like solar and offshore wind.8 The manufacturing innovation institutes proposed in the Presidents 2014 budget can help reverse this trend. Each institute would focus on a different challenge, from capitalizing on 3D printing technology to building more efficient batteries for electric cars. For many small- and medium-sized manufacturers, resource-intensive applied research is prohibitively expensive. By pooling resources and expertise, these innovation institutes can find solutions that benefit entire industries, create jobs, and help the United States remain a global technology leader.
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Manufacturing the future: The next era of global growth and innovation, November 2012, http://www.mckinsey.com/insights/manufacturing/the_future_of_manufacturing. 7 James Manyika, Daniel Pacthod, and Michael Park, Translating innovation into US growth: An advanced-industries perspective, McKinsey & Company, http://www.mckinsey.com/insights/public_sector/translating_innovation_into_us_growth_an_adv anced-industries_perspective (May 2011). 8 Id.

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We should not be fighting over whether to approve the Presidents proposed $1 billion investment to establish manufacturing institutes that bring together industry, government labs, and universities to tackle common manufacturing challenges. We should be debating how much to fund these institutes beyond the Presidents current budget proposal. The 15 proposed innovation institutes are a good start, but we must do more. In Germany, over 60 research centers, most charged with very specific areas of focus, are developing cutting-edge solutions to todays greatest manufacturing and technology challenges.9 Here in the U.S., there are 24 diverse manufacturing industries identified by the North American Industry Classification system, and each is critical to long-term economic competiveness. We should create a minimum of 24 innovation hubs, with robust oversight to ensure their work yields results so that each of these American industries, ranging from textile production to semiconductor manufacturing, have the applied research capacity they need to be world leaders. An initiative of this scale would require an additional $600 million on top of the Presidents current proposal, but the return on investment could power our economy far into the future. SUPPORTING LOCAL INNOVATION We need to encourage and harness the energy, innovation, and local know-how of cities and metropolitan areas by creating a competitive grant program to fund manufacturing action plans.10 There are countless hurdles that need to be removed and unleveraged opportunities ripe for the pickingmany specific to localities, regions, or industries that require focused coordination, and in some instances, resources. We should implement a competitive grant program that rewards cities and metro areas that address top manufacturing priorities, like enhancing workforce development, streamlining regulation, and using existing infrastructure more efficiently. Even where challenges and their solutions present uniquely local textures, many of the lessons learned from this program will be broadly applicable. REASSESSING GOVERNMENT EXPORT ASSISTANCE Ninety-five percent of the worlds consumers live outside our borders. We must reorganize the various government agencies associated with export regulation and assistance, with an eye towards better meeting the needs of our manufacturers. Separately, these agencies do good work, but if they arent under one roof, with focused leadership at the top, they wont be able to function optimally for U.S. exporters. Bureaucratic intransigence and Congressional turf battles arent good reasons for failing to take this common sense action. Streamlining processes and cutting through red tape at the nineteen
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Fraunhofer Institutes and Research Establishments (accessed on July 14, 2013), http://www.fraunhofer.de/en/institutes-research-establishments.html. 10 A similar proposal by the Brookings Institution calls for an average of ten $15 million grants per year. Bruce Katz and Peter Hamp, The U.S. Must Race to the Shop to Spur Economic Growth, (February 12, 2013), http://www.brookings.edu/research/opinions/2013/02/12-race-tothe-shop-ideas-lab-katz-kamp.

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government agencies that offer export assistance is vital to meeting any ambitious manufacturing target. Manufacturers are blazing new paths in innovation, creating new jobs and advancing our economy. We should also expedite approval for manufacturing technology standards, including continuing to modernize our export control system to prevent other countries from using it as a tactic to discourage the purchase of U.S. manufactured goods, and fast track the designation process for manufacturing-development zones. We must change the way our government does businesswhether through streamlined processes or wholesale reorganization of federal agenciesto further empower the manufacturing sector. II. TRAINING A MANUFACTURING-READY WORKFORCE ESTABLISHING MANUFACTURING UNIVERSITIES We need to fundamentally rethink the way industry and academia interact by rewarding and supporting universities that integrate industry needs into academic offerings. Our colleges and universities represent critical pipelines to industry, but are too often disconnected from the realities of industry demand. With the average high-skilled manufacturing worker now 56 years old, we cannot wait to train the next generation of manufacturers.11 From offering college internship programs to well-paid apprenticeships for doctoral students to regional industry specific curricula, these manufacturing universities can become magnets for companies seeking high-skilled, experienced workers, who are practically trained.12 POOLING SMALL MANUFACTURER RESOURCES TO ADDRESS COMMON LABOR NEEDS Newark is home to over 400 manufacturers that employ thousands of my residents. But these primarily small- to medium-size companies face significant workforce challenges and lack the resources to address their needs. 13 The problem is as simple as it is damaging: No one company is big enough to make the investment of time, energy, or money to engage in meaningful local workforce pipeline reform the concentrated costs for a diffuse industry-wide benefit just doesnt make business sense. But it is vital that
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Tiffany Hsu, Skilled factory worker shortage could multiply by 10 by 2020, Los Angeles Times, (October 15, 2012), http://articles.latimes.com/2012/oct/15/business/la-fi-mo-skilledmanufacturing-shortage-20121015. 12 Creating the Manufacturing University, Brookings Institution, (1/14/13; accessed 7/15/13), http://www.brookings.edu/blogs/up-front/posts/2013/01/14-manufacturing-university-atkinson. 13 Nisha Mistry, Newarks Manufacturing Competiveness: Findings and Strategies, Brooking Institution, (May 28, 2013), http://www.brookings.edu/research/reports/2013/05/28-newarkmanufacturing-mistry-vey-shearer.

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local manufacturers engage in education strategy, curriculum building, in-school training, and apprenticeship programing to develop the skilled workforce that many of them need. Addressing this problem will not be easy, but we can start by designating manufacturing high schools, similar to models found in Chicago and Louisville,14 and going further by compensating employers for their time spent making sector-wide contributions through tax credits for engagement in secondary and post-secondary manufacturing training programs. CREATING NATIONALLY RECOGNIZED CERTIFICATION PROGRAMS The creation of a national certification system for advanced manufacturing skills would help structure training, provide for clear standards and goals, and give employers increased predictability when making hires. Accreditation in skills like welding and automation and control systems have already proven valuable to companies seeking these specific competencies, and have helped aspiring manufacturing workers by giving them a clear idea of what skills they need to acquire to get hired. Community colleges could structure their curricula to teach these skills to help provide students with more defined paths to good-paying jobs. These national certifications could also be used to help veterans who acquired manufacturing skills through their military occupational specialties. CONCLUSION We are approaching a tipping point. For many of our trading partners, the cost of labor is rising as wages increase and safety and environmental regulations improve. In China, for example, labor costs have been increasing by as much as 15 to 20 percent a year15 and its currency has appreciated by about 40 percent since 2005.16 The right investments in the right industries, coupled with smart strategies, can create the right conditions for the United States to manufacture more and more of what consumers in America and around the world want to buy. But we cannot sit back and wait for this to happen. Our actions will determine whether were able to capitalize on these shifting global dynamics.
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Chicago High School Prepares Students for Real-World Manufacturing Jobs, PBS Newshour, (December 1, 2010), http://www.pbs.org/newshour/bb/education/july-dec10/pledge_12-01.html. 15 Made in America, Again, Boston Consulting Group, (August 2011), http://www.bcg.com/expertise_impact/capabilities/operations/lean_manufacturing/publicationdet ails.aspx?id=tcm:12-84591&mid=tcm:12-84473 16 David Leonhardt, Chinas Currency Rises, U.S. Keeps Up Its Pressure, New York Times, (February 15, 2012).

Paid for by Cory Booker for Senate.

It is time to think and invest strategically To connect our manufacturers to one another and to the best research resources in the world To train a workforce for the specific jobs that are waiting to be filled To decide that we can lead the world in quality manufacturing for decades to come.

Paid for by Cory Booker for Senate.