Category Archives: International

U.S. Factory Jobs are Gone?

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JANUARY 30, 2014

bmwThe headline in the latest BusinessWeek article (Jan.27-Feb. 4, 2014) reads: Factory Jobs are Gone. Get Over It. The magazine writes: “Politicians think creating millions of high-tech manufacturing jobs is the answer. It isn’t.”  Over the past 60 years, U.S. GDP increased from $2.6 trillion to $15.5 trillion, which means that absolute manufacturing output more than tripled. Those goods were produced by fewer people. The number of employees in manufacturing was 16 million in 1953 (about a 1/3 of total nonfarm employment), 19 million in 1980 (about a 1/5), and 12 million in 2012 (about a 1/10). Service industries have taken up the slack. Even much of the value generated by U.S. manufacturing involves service work—about a 1/3 of the total. More than 1/2 of all people still employed in the U.S. manufacturing sector work in such services as management, technical support, and sales.

Over the past 30 years, manufacturers have spent more on labor-saving machinery and hired fewer (but more skilled) workers to run it. From 1980 to 2012 across the whole economy, output per hour worked increased 85%. In manufacturing output per hour climbed 189%. The proportion of manufacturing workers with some college education has increased from 1/5 to 1/2 since 1969.

Developing countries have taken over much of the low-skilled, low-capital production once done in the U.S. Consider the garment industry or tire manufacturing. Such low-tech work is even more mind-numbing and poorly paid than it was when the work was done in the U.S. through the 1970s. Many of the workers killed in the recent Rana Plaza garment factory collapse in Bangladesh earned just $3 a day. Some politicians have regretted the loss of similar jobs in the U.S. The question is: Do we want such jobs here now?

For every $1 spent by the federal government on retraining workers and helping them find jobs after they lost theirs to trade competition, the U.S. spends about $400 on Social Security and disability payments for those who exit the workforce rather than seek new work. So perhaps retraining programs are the solution.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

Britain Promotes Apprenticeships to Help its Industrial Base

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JANUARY 20, 2014

British apprentice learning high-integrity weldingDespite relatively high unemployment in Britain, especially among young people, there is a marked shortage of skilled manufacturing workers, writes The New York Times (Jan. 20, 2014). The problem is so acute that the government and industrial companies are behind an unprecedented push to get teenagers into apprenticeships to close that gap. The British government is trying to catch up with Germany and Switzerland, which have retained their competitive edge with the help of well-honed apprenticeship programs.
 
A third of employers across Europe say that the lack of skills is causing major business problems in terms of higher costs, insufficient quality and lost time. 27% of the 2,600 companies surveyed by McKinsey note they have left an entry-level vacancy unfilled over the past year because there were no eligible applicants. Statistics like that, and the fact that about a quarter of people under 25 are jobless in Europe, prompted Britain to act, committing £1.57 billion to apprenticeship training last year. About 2.7 million new jobs in British manufacturing are expected by 2020, of which 1.9 million will require engineering skills. Companies will need to double both the current number of qualified recruits and of apprenticeships to fill those positions.

Britain is among the worst in the developed world at equipping its young people with numeracy and literacy skills. The career aspirations of high school students showed them to be heavily skewed toward jobs in acting, media and professional sports. Part of the challenge for Britain is turning around the bad reputation that apprenticeships can have, often being associated with dull, menial tasks that evoke images of Oliver Twist, the Dickens character who faced life as an apprentice to a chimney sweep. Britain has a record of apprenticeships back to medieval times, when boys were hired as young as 7 and often worked in brutal conditions.

 
 
This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

Trying to Close French Factories Can Lead to “Boss-napping”

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JANUARY 14, 2014

Workers set tires on fire at this French Goodyear plant where 2 execs were held hostage

Negotiations broke down last week at a Goodyear tire factory scheduled for closing in northern France, so employees kidnapped the bosses. Hundreds of employees held two senior executives captive, threatening to detain them until the company agreed to pay out “huge amounts of money” to nearly 1,200 workers about to lose their jobs. The revival of the French unions’ “boss-napping” tactic clearly causes concerns of multinationals about France as a place to locate, reports The New York Times (Jan. 8, 2014). “This happened because workers were desperate,” said a French prof. “But it is still an act that will underline the perception that it’s difficult to do business in France.”

Tension at the Goodyear plant flared last year after Maurice Taylor, CEO of an American tire company, Titan International, rejected a government appeal to step in and buy the plant. Taylor described French workers as loafers of minimal productivity. “In the U.S., we call this kidnapping,” he stated. “These people would be arrested and prosecuted. But in France, your government does nothing — it’s crazy.”

France’s rigid labor market and the influence of labor unions has long been a source of aggravation to employers. The country’s 3,200-page labor code embodied what the government acknowledged was a “cult of regulation” that choked business. Procedures for shedding workers when economic conditions deteriorate are lengthy and expensive, and businesses pay high taxes to help fund France’s social welfare system. For an employee earning 1,200 euros a month, employers pay an additional €1,000 in tax and pension costs. Unions at the Goodyear plant had been demanding severance packages of €80,000 ($110,000) plus €2,500 for each year worked.

In recent years, French employees took executives of Caterpillar hostage when talks over revamping the company’s operation broke down, trapped the CEO of the group that owns Gucci, while bosses at 3M and Sony were held in an attempt to get bigger severance packages.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.