Industry Market Trends
AMT President Douglas Woods Speaks Out on the State of American Manufacturing
June 19, 2012
Douglas K. Woods, head of the Association for Manufacturing Technology, provides insight into ThomasNet.com's Industry Market Barometer research. Despite a recent renaissance that is driving the United States' economic recovery, American manufacturing is at a critical juncture as it faces a shortage of skilled workers and tough global competition, says Association for Manufacturing Technology (AMT) President Douglas K. Woods, who continues to urge the federal government to form a cohesive national manufacturing strategy. In a recent one-on-one discussion with IMT that touched on hot-button issues confirmed by results of ThomasNet.com's latest Industry Market Barometer (IMB) survey, Woods offered an update on AMT's Manufacturing Mandate. "Call it Manufacturing Mandate version 2," Woods says. "The first Mandate explained the problems. Everyone knows them now. Now the effort is to drill down to the next level and give tangible solutions." The Manufacturing Mandate was drafted three years ago by a coalition of manufacturing industry associations, including AMT, to jump-start a national policy by Congress and the White House that incentivizes manufacturing innovation and R&D, frees up capital and reduces tax burdens on manufacturers, nurtures development of a skilled workforce and induces collaboration between government, academia and industry. According to AMT, the lack of a policy has hurt American competitiveness and led to excessive offshoring in the last few years. But Woods says all the pieces for the policy exist and just need to be put together. Now that Washington realizes the "importance of having a strategy," Woods says he is encouraged by recent federal developments. Woods notes the $500 million Advanced Manufacturing Partnership initiated last year by President Barack Obama to bring together the private sector, universities and the government to work on emerging technologies and create manufacturing jobs. He also points to Michael Molnar's appointment to the newly created position of chief manufacturing officer of the Commerce Department's National Institute of Standards and Technology. Molnar is serving as a liaison to the White House and other federal agencies on manufacturing policy issues and initiatives. There is also progress in pro-manufacturing tax policy. "They're starting to look at removing business taxes on manufacturers," Woods says. "We're talking to Capitol Hill, increasing dialogue. Republican or Democrat, it doesn't matter. We're making huge inroads." While Woods and AMT continue to work with Washington, perhaps the most pressing matter for American manufacturing is a widespread labor skills gap. There is currently a dearth of qualified workers who can fill open positions on the factory floor and operate equipment many manufacturers either already have or intend to acquire. Indeed, 83 percent of 1,600 manufacturers that responded to ThomasNet.com's IMB survey said they are investing in capital equipment and facilities to increase capacity because they see growing future demand for their products. But they are frustrated by not being able to take on new orders, customers or opportunities because they cannot find enough skilled personnel. In the IMB survey, nearly half (48 percent) of manufacturers are looking to hire, with openings for line workers and skilled tradespeople like CNC machinists. Almost six of every 10 IMB respondents said this is a key business challenge, and many called for reform of the education system. Besides the IMB survey, numerous other reports - notably a study by Deloitte and the Manufacturing Institute - similarly paint an alarming picture. "No question we're seeing manufacturers having a difficult time hiring and keeping production levels up," Woods says. "Everyone I talk to has open positions to fill, and lots of veteran skilled workers are retiring." He says machine tool and manufacturing equipment makers, which constitute most of AMT's membership, have helped stem the tide by producing equipment that can automate standard processes, but notes that industry must get to the root of the skilled-labor problem soon. And that is happening. Across the U.S., manufacturing organizations have been collaborating with universities, local colleges and vocational schools to create workforce training and development programs that appeal to students and young adults. Many are being privately sponsored or funded by local, state or even federal agencies. "Clusters of manufacturers and business groups are getting together to tackle the problem, teaming up with local schools to create programs with associate's degrees," Woods notes. "Their backs are against the wall, and they have to do something to solve the problem. They are not waiting around for the government." Echoing many respondents in the IMB survey who said that the manufacturing sector sorely needs a reinstatement of technical training and science, technology, engineering and mathematics (STEM) curricula in schools and an "image makeover," Woods wants a return of apprenticeship programs in education - but don't call them that. Woods says that young people don't have positive associations with the word "apprenticeship," but prefer degree programs. "They want internships. So let's go to two-year associate degree programs with internships and hands-on training," he explains. "Let's go to schools and community colleges with curricula in CAD, metrology, CNC and ERP. And let's give them employable skill sets." AMT itself is aiding the cause through its MTUniversity, which is part of the group's overarching workforce initiative called Smartforce. MTUniversity consists of education partnerships on several fronts, including ToolingU, an e-learning provider serving the manufacturing industry, and the National Coalition of Advanced Technology Centers, a group of 150 community colleges across the country. AMT is also working with Project Lead The Way, an organization that specializes in creating STEM programs for U.S. middle and high schools. And it is continuing to work with the National Institute of Metalworking Skills (NIMS) on a nationally accredited set of skill standards and training methods. The goal of MTUniversity is to link candidate students with schools that can train and develop them to work in positions that manufacturers need to fill. There are, however, signs that Washington is taking action to stimulate job growth and boost the competitiveness of U.S. manufacturers compared to counterparts in the rest of the world, especially China. Earlier this month, the American Manufacturing Competitiveness Act, attached to which is the development of a national manufacturing strategy, was approved by a House subcommittee. Representative Dan Lipinski (D-Ill.), one of the bill's bipartisan co-sponsors, said that American companies are operating at a disadvantage against foreign competition backed by coordinated government manufacturing policies. "We need to recognize this reality and bring the public and private sectors together to develop a national manufacturing strategy for optimal tax, trade, research, regulatory and innovation policies," Lipinski said. If passed, H.R. 5865 would create a bipartisan Manufacturing Competitiveness Board, made up of 15 members from the private and public sectors, to conduct an analysis of the U.S. manufacturing sector, covering everything from trade issues to taxation, regulation and new technologies. The board would devise a comprehensive strategy to achieve the goals determined from its analysis, first in 2014 and then 2018. The bill, which also seeks an action plan to promote the image of American manufacturing, is part of a much bigger agenda called Make It In America that includes a slew of other manufacturing, jobs and tax reform bills. President Obama has signed six Make It In America bills into law since 2010, including one that prevents offshoring of U.S. jobs by closing tax loopholes that encourage firms to send jobs overseas. Another major theme that emerged from ThomasNet.com's IMB survey respondents was recapturing business lost to foreign competition, or reshoring. In recent months, there has been a pervading sense of restoring national pride in the manufacturing sector and American-made goods. The "call to arms" has especially intensified as China has been experiencing rising manufacturing labor costs. Woods says beyond pride, reshoring is occurring because it makes economic sense again for companies to manufacture their products - and often high-tech goods - in the country. "China being the low-cost leader is no longer valid," according to Woods. "Wages there are up 17 percent this year; it's pure mathematics that companies that were outsourcing are bringing business back to the States. But there's always been pride in 'Made In America.'" In an election year, the president of AMT says manufacturing issues have become "en vogue" among politicians, giving constituents from the industry a golden opportunity to be heard on matters of concern to them and their businesses. Noting that Washington knows that manufacturing has been a driver of the U.S. economy, he urges, "Get involved by picking one or two keys in the Manufacturing Mandate that's dear and champion them with your local congressman or senator." "We want to turn the heat up," Woods continues. "The Mandate can't be all about government, though. It won't solve all problems. It's incumbent upon businesses to collaborate with academia to foster innovation and growth."