Factory employment has fallen nearly 34% in the last 15 years. Above, Manuel Espinoza works on guitar bodies last year at the Fender plant in Corona. (Matt York / Associated Press)
On July 15, 2014, Tiffany Hsu writes in the Los Angeles Times:
California manufacturers really can do more with less.
The output of state factories has surged 73% during the last 15 years — twice as fast as the rest of the nation — even as the sector bleeds jobs, according to a new report from the Los Angeles County Economic Development Corp. Employment declined nearly 34% during the same period.
The surge in production owes itself to innovations in machinery and materials, digitization and computing power, along with a strong network of industry clusters.
Under pressure from automation, offshoring and aggressive cost-cutting, the state’s manufacturing workforce shriveled to 1.2 million in 2012 from 2.1 million jobs in 1990 — a faster rate of decline than the nation as a whole.
The difference exceeds the total number of current manufacturing positions in all of Southern California.
“The composition of manufacturing is going to change and has been changing,” LAEDC economist Christine Cooper said. “It’s becoming more advanced and technologically intensive. And it’s more lean.”
Key California industries such as aerospace, biomedicine and fashion benefit from having entire supply chains in the same region or even within a few square blocks, encouraging innovation and boosting efficiency, according to the report.
Nationwide, manufacturing accounts for three-quarters of private sector research and development and the majority of patents issued, Jason Miller, special assistant to President Obama for manufacturing policy, said in a Brookings Institution presentation last week.
In 2013, manufacturing entrepreneurship grew at its fastest pace in 20 years, Miller said. That’s due in part to new technological advances, such as 3-D printers and digital production, which lower the cost of manufacturing and reduce the time required to make prototypes and commercialize new items.
“Manufacturing is inextricably linked to our country’s ability to innovate, and therefore linked to our future economic growth potential,” Miller said. “We like to say manufacturing punches above its weight.”
As of 2012, the largest group of California manufacturing jobs were those producing semiconductors and other electronic components. The cluster, largely in Northern California, accounts for more than 7% of the state’s manufacturing jobs, according to the LAEDC report.
Southern California hosts the second-largest category of workers, which makes navigational and control instruments for aerospace companies, according to the LAEDC report. That sector claims a 6.6% share of state manufacturing employment.
Overall, the lower half of the state accounts for two-thirds of total manufacturing employment in the state, with more than 814,000 workers.
In May, the U.S. Commerce Department announced that Southern California would be one of the first dozen U.S. regions to receive federal support to lure more manufacturers. The program will try to increase local manufacturing capacity by luring private investment and boosting exports.
Participants will have access to experts in 11 federal agencies and $1.3 billion in funding.
Los Angeles County had more than 365,500 manufacturing jobs in 2012, making up 9.2% of total countywide employment and nearly 30% of all manufacturing jobs across the state. As a producer, the region is most competitive in the fashion and aerospace industries.
But as California’s economy diversifies, manufacturing is becoming a less dominant part of the state’s economic identity.
Manufacturing now accounts for 10.7% of the total value of all goods and services produced in the state, compared with 11.6% in 1990.
The sector suffered more intensely during the recession and recovered more slowly than many other sectors of the state economy. Employment in other California industries soared 22.5% since 1990 as the measure sank for manufacturers.
Most of the manual labor that was used to create high-volume, low-margin products has shifted abroad, said Jim Watson, president of California Manufacturing Technology Consulting. The nonprofit consulting firm in Torrance commissioned the LAEDC research.
“As technology begins to increase productivity and innovation begins to take hold, you’ll begin to see some manufacturing growth, which will lead to some jobs,” he said. “But I don’t believe that many of the jobs that have been lost are going to come back, and if they do, they won’t be the same kinds of jobs.”
People will always continue to invent tools to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive––the core function of technological invention. Most changes in the productive capacity of the world since the beginning of the Industrial Revolution can be attributed to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in binary economic terms, does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, free-market forces no longer establish the “value” of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.
Productivity, as a result of the non-human factor of production is becoming increasingly more productive (not labor), keeps growing, as do profits and incomes produced by corporate owners (ultimately vested in individual persons). But jobs and wages are not growing and cannot grow without substantial economic growth, which means more investment in the non-human factor of production––productive capital. The ONLY viable solution that protects the principles of personal private property ownership is to spread the productive capital gains more widely by broadening personal ownership going forward. Otherwise, without EVERY citizen empowered to acquire wealth-creating, income-producing capital with the earnings of capital, our economy will not be able to generate enough demand to sustain itself, and our society will not be able to maintain enough cohesion to keep us together.
The composition of jobs has improved little over recent times. Businesses still looking for flexible, low-cost labor continue to rely on temporary, part-time, and low-wage workers, resulting in the disconnect between above-consensus top-line job creation and stagnant wage growth. Businesses also to stay competitive are constantly changing their ways of thinking and their ways of doing as they embrace technological innovation at an exponential rate. Such tectonic shifts in the technologies of production will continue to destroy jobs and devalue the worth of labor. In a society with such a narrow focus on JOBS only, without wage pressures and income growth, consumers remain constrained, growth remains limited and the Federal Reserve remains on hold indefinitely. The consumer will continue to be restrained by limited spending, with a Q2 GDP forecast of near 2 percent––an anemic rate. By shifting our focus to productive CAPITAL OWNERSHIP individual and family income growth would be unconstrained and the economy could achieve GDP growth of at least 15 percent. How, by adopting the platform of the Unite America Party and the Capital Homestead Act.
Words of wisdom: “I don’t believe in a law to prevent a man from getting rich. It would do more harm than good, So while we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else.” Abraham Lincoln
“I see in the near future a crisis approaching which unnerves me and causes me to tremble for the safety of my country. Corporations [narrowly owned] have been enthroned and an ear of corruption will follow and the money power of the country will endeavor to prolong its reign by working on the prejudices of the people until the wealth of the country is aggregated in a few hands and then the Republic is destroyed.” Abraham Lincoln
http://www.latimes.com/business/la-fi-california-manufacturing-20140716-story.html
