Monday, April 01, 2013

Manufacturing is dead, long live manufacturing!

So here are two very different perspectives on the very same topic.

The PG has the story folks like to hear: Heard Off the Street: Report optimistic on comeback of manufacturing in economy

Yet last week there was this in the WashPo's WonkBlog: Goldman Sachs: Sorry, U.S. manufacturing isn’t coming back

Which version to believe?  The two stories are pretty much saying the exact opposite, at least when it comes to employment.  Which version has more data backing it up?  If you want to dig into it further, the WashPo added the sobering graphic: This chart will change how you think about manufacturing. Even the WSJ today seems to be coming down on the nabob side: Signs of Factory Revival Hard to Spot.

The only thing I will add is that no matter what happens across the nation, it is even more problematic to be projecting a lot of employment growth in manufacturing sectors locally. The industries we are most likely to ever see much rebound in are industries that are so productive that there just can't be large employment numbers generated.  Then remember all the prognostications of all the pipe manufacturing that shale development was going to bring to the region.  Well, of late that trend in Pittsburgh is working in reverse at best. Seriously, as much as some headlines feel like blasts from the past these are not headlines from 30 years ago

Yes, there are some positive stories such as the note today about 11 new steel jobs in Cecil. Think about what it means that 11 new steel jobs are considered newsworthy in Pittsburgh! Note the bigger local employment gains mentioned in that story are pretty far afield from heavy industry. As for other secondary impacts everyone is sure will be located here, you get a very different picture of where that development is likely to occur by reading the news(point for referencing the Graduate).


Anonymous BrianTH said...

The methodology in the report referenced in the P-G article is rather strange. They start with the headline result they want to see and then figure out what else you would need to assume is happening in the overall economy in order for that result to occur. They then waive at some broadly described policy changes they assert would help turn those assumptions into a reality, but as far as I can tell there is no serious attempt to show that the described policies actually would have the necessary effects.

Anyway, as implicitly suggested in some of the other materials, you can easily assume some sort of significant "resurgence" in terms of manufacturing production, export levels, or so on (albeit one likely falling far short of the report's aspirations), and still not do much to change the trend in manufacturing employment as a share of overall employment, due to ongoing productivity gains. And I would bet on that more or less being the outcome.

Monday, April 01, 2013 2:04:00 PM  

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