The United States has lost millions of high-paying manufacturing jobs to China, and salaries for the profession are primed and ready for retention in India. Meanwhile, the U.S. economy is sliding toward a possible recession, and the jobless rate last month spiked to 5 percent.

A new survey by human resources consultancy Watson Wyatt says the manufacturing and engineering industries in India are expected to make salary increases of 16 percent this year. Last year, manufacturing salaries increased 12.5 percent.

The survey was based on interviews with more than 146 companies in India, including multinational and Indian business houses, as well as on compensation budgets fixed by companies for this year.

India’s Business Standard reports of the survey:

The manufacturing industry, which has traditionally been conservative about offering hefty salary hikes and has lost out to IT and business process outsourcing in the bargain, is returning with a vengeance… .

In the report, Watson & Wyatt India country head Anita Belani underscores the importance of this industry-wide increase: “Manufacturing growth has matched overall economic growth and the industry has realized that it cannot lose people to other high-growth industries. That’s why it is paying more.”

This is good news for the manufacturing workforce in India and elsewhere in Asia.

The same may not be said for those competing globally with that region of the world.

Peter Navarro, a business professor at UC Irvine and author of The Coming China Wars, recently wrote for The Detroit Free Press:

As the U.S. economy slides inexorably toward recession, China continues to boom. A major reason for this stunning divergence in fortunes is the ongoing transfer of millions of American manufacturing jobs to China. To restore the health of the American economy, it follows that we must resuscitate our once dominant manufacturing sector and reclaim those jobs.

Navarro has a lot to say on this, as written in a recent “open forum” piece at The San Francisco Chronicle piece, in which he offers some food for thought directly related to manufacturing attrition rate and how it can be reduced in the United States. One thought hinges upon China’s economic boom:

America has lost millions of high-paying manufacturing jobs to China. This has vastly improved the fortunes of workers from Beijing and Shanghai to Guangzhou and Chongqing. However, the middle class of American heavy-industry cities such as Akron, Ohio, Detroit and Gary, Ind., have been hollowed out and are on life support. It’s not just the “rust belt” suffering. From Silicon Valley’s high-tech manufacturing and the South’s textile mills and furniture factories to the Northeast’s electronics industries, the China effect is taking its heavy recessionary toll.

Indeed, a front-page piece in today’s Washington Post reports that “an unusually large share of workers have been out a job for more than six months even as overall unemployment has remained low, a little-noted weakness in the labor market that analysts said threatens to intensify the impact of the unfolding economic downturn.”

The Washington Post lead continues:

In November, nearly 1.4 million people — almost one in five of those unemployed — had been jobless for at least 27 weeks, the juncture when unemployment insurance benefits end for most recipients. That is about twice the level of long-term unemployment before the 2001 recession.

The U.S. economy is sliding toward a possible recession, and the jobless rate last month spiked to 5 percent. As such, according to the Washington Post, “the already high rate of long-term unemployment is likely to grow, as it has during past slowdowns, a prospect that has spawned calls in Congress and on the presidential campaign trail to extend unemployment benefits and expand tax cuts to protect jobs and fuel the economy.”

“Unfortunately,” Navarro wrote in his Detroit Free Press column, “the importance of U.S. manufacturing as an anti-recessionary tool has been totally lost on both Washington policymakers and our bumper crop of presidential candidates.”

If the U.S. were to resuscitate its manufacturing sector, would this be enough to stave off a recession and retain jobs? One could argue that it worked wonders for the steel industry, which “has increased its productivity by more than 50 percent in the course of the last decade while adding $350 billion to the economy and more than a million jobs,” according to The San Francisco Chronicle, which went on to say this:

To restore America’s manufacturing might, we need well-funded education reforms to produce the skilled workers needed for American industry. We need precision-targeted tax policies to boost productivity; cost-cutting reforms that dramatically bring down health care, legal and regulatory costs; and a long overdue national energy policy that ensures plentiful and inexpensive energy.

These ideas always look good on paper. Executing them is an entirely different animal, however, especially with a looming recession in the U.S. How can manufacturers expect to remain competitive with their workforce in this type of economic environment?

Watson Wyatt’s numbers on India’s salaries would certainly seem off base in the U.S. manufacturing sectors. Simply consider the state of General Motors: “The world’s biggest carmaker aims for cheaper employees to replace older staff and reduce its U.S. cost base by $5 billion a year,” UK’s The Times is reporting online.

If the national economy, the mood of the country and workers’ attitudes and expectations all have a significant impact on a country’s growth trajectory, where does the U.S. stand among global competitors?

For much more on the state of global competitiveness, check back for tomorrow’s e-newsletter on the daily blog.

Resources

Mfg to Match IT Pay Hikes: Watson Survey
by Surajeet Das Gupta
Business Standard, Jan. 19, 2008

Highly Skilled and Out of Work
by Michael A. Fletcher
Washington Post, Jan. 21, 2008

It’s the Economy, Comrade
by Peter Navarro
San Francisco Chronicle, Jan. 20, 2008

Fix Economy with Manufacturing Jobs
by Peter Navarro
Detroit Free Press, Jan. 16, 2008

General Motors Set for Another Restructuring Round to Bring Down Costs
by Suzy Jagger
The Times, Jan. 21, 2008

Indians Seek Respect & Clarity of Role on Work Front: Survey
by Malini Goyal
Economic Times, Jan. 7, 2008