Ever since a bunch of sharp MBAs armed with their spreadsheets determined that deep cuts in direct labor costs could be gained through chasing low wage geographies, a reaction set in to convince companies and the US government that shipping jobs overseas was bad economics and bad for the economy.
A chunk of my responsibilities for several years in a manufacturing firm was analyzing and recommending ways to cut costs. I didn’t have responsibilities on the growing revenue side of the equation; rather I was charged with helping boost profitability through cutting direct costs. By the way, back then cutting labor cost wasn’t worth the effort.
I have had conversations for several years with The Reshoring Initiative. A 50-year manufacturing industry veteran and retired President of GF AgieCharmilles, Harry Moser founded the Reshoring Initiative to move lost jobs back to the U.S. For his efforts with the Reshoring Initiative, he was named to Industry Week magazine’s Manufacturing Hall of Fame in 2010..
The Reshoring Initiative’s 2018 Reshoring Report contains data on U.S. reshoring and foreign direct investment (FDI) by companies that have shifted production or sourcing from offshore to the United States. The report includes cumulative data from 2010 through 2018, as well as projections for 2019. The numbers demonstrate that reshoring and FDI are major contributing factors to the country’s rebounding manufacturing sector.
“We publish this data annually to show companies that their peers are successfully reshoring and that they should reevaluate their sourcing and siting decisions,” said Harry Moser, founder and president of the Reshoring Initiative. “With 5 million manufacturing jobs still offshore, as measured by our $800 billion/year goods trade deficit, there is potential for much more growth. We call on the administration and Congress to enact policy changes to make the United States competitive again. Our Competitiveness Toolkit is available to help quantify the impact of policy alternatives, including a stronger skilled workforce, continued corporate tax and regulatory reductions as well as a lower U.S. dollar.”
In 2018 the number of companies reporting new reshoring and foreign direct investment (FDI) was up 38% from 2017. The combined reshoring and related FDI announcements totaled over 145,000 jobs. Including upward revisions of 36,000 jobs in prior years, the total number of manufacturing jobs brought to the United States from offshore is over 757,000 since the manufacturing employment low of 2010.
Allowing for a two-year lag from announcement to hire, the cumulative announcements since 2010 have driven 31% of the total increase in U.S. manufacturing jobs during that period and 3.3% of total end-of-2018 manufacturing employment of 12.8 million.
The Reshoring Initiative largely attributes the increases to greater U.S. competitiveness due to corporate tax and regulatory cuts. Similar to the previous few years, FDI continued to exceed reshoring in terms of total jobs added, but reshoring has closed most of the gap since 2015.
Although China topped Germany for the greatest number of FDI jobs announced since 2010, China announced 12% fewer in 2018 than in 2017. I’m betting that 2019 will see a greater decline given the current trade war unless something works out.
Quality, freight cost, and total cost make up the top offshore drivers of the trend.
Proximity to market, government incentives, supply chain optimization, higher productivity, skilled workforce, and brand image/made in USA serve as the top domestic drivers.
Reshoring has been increasing at a similar rate as FDI, indicating that U.S. headquartered companies are starting to understand the U.S. production benefit that foreign companies have seen for the last few years.
I’m still reflecting on Trillion Dollar Coach plus three weekends of youth sports. Most executives don’t even have coaches, even though they could really use one. The variety of coaching skill and ability at the youth sports level is staggering. So many coaches need coaching at that level. That’s the role of the leadership of a good club. Often doesn’t happen.
What makes for a good coach.
Begin with empathy and trustworthiness. If the coach lacks these character traits, then anything further is hopeless.
A coach must have a set of knowledge and values. Good coaches have experience, but they are seldom the greatest. They are the ones who have been there but had to reflect on their development and experiences. They’ve studied the game and know the skill sets required for success.
A coach is observant. This ability means a coach can see each player or client, their strengths, and their weaknesses. They can pick out the next skill each player/client needs to develop to succeed at this level in order to progress.
A coach can teach skills. Of course, the player/client must be teachable. It is a two-way interaction.
A coach can devise practice for student to repeat until learned. This is the same idea for a 9-year-old beginner or a 29-year-old pro. Knowing you need to move slightly to the left more or knowing how to field a ground ball does nothing without the drill to make the skill part of “muscle memory.”
A coach provides appropriate feedback. This makes practice more valuable and helps adjust skills to the situation.
The end result consists of increased confidence and character development.
Think of the coaches that you’ve had. Think of the impact of the good coaches on your development. Then the bad ones where you learned nothing. Or, perhaps the bad teaching or negative comments set you back years.
Become a good coach. You do that by practice, of course. That means finding a young person who is coachable. Start slowly. Build rapport. Then try with another. Make yourself valuable to your organization and find your own fulfillment by bringing along the next generation. Works for engineers, managers, executives, whomever.
Go make a difference.
Director of hiring to job candidate, “Congratulations. I would like to offer you this position. Can you start Monday?”
Candidate, “First, before I accept, my mother must interview you.”
She didn’t get the job.
Have you fund an increasing number of job applicants unable to stand on their own?
I’ve written, probably many times, about my experiences assigning soccer referees to games over the past 25 years.
I’ve tried “Rachel needs to call” or “Jeremy must go to this website and fill out the form” or whatever.
That’s too subtle. Mom never gets it, and sometimes is offended that I suggest that her precious darling actually show some initiative to get the games. After all, I’m expecting them to be professional arriving at the site, making decisions, helping manage the game.
Earlier this season there was a young, new referee who obviously didn’t want to be there. Probably was told there was money to be made. I wouldn’t be surprised if I found out that dad or mom did the online course work before the classroom session.
Then I was told about the “snowplow” parent who goes beyond hovering like a helicopter into the territory of removing all obstacles. Researching that term, I discovered another term–“lawnmower” parenting. Same idea.
This does the kid no good. It’s a good way, I guess, to breed dependency. But that’s a bad thing. Who wants a society of weak, dependent people?
I guess they never took to heart the ancient story of the butterfly.
A child brought a cocoon to a wise guru. “What is this?” The guru told him. And he continued, “Watch this cocoon and soon you will see a beautiful butterfly come out. But you must not help it when it is leaving the cocoon.”
Later the child brought the cocoon and a dead butterfly to the guru. The guru said, “You helped the butterfly get out, didn’t you? You see, child, the butterfly must struggle and beat its wings against the walls of the cocoon in order to gain enough strength to leave the cocoon and fly.”
So it is with us. It is in the facing and overcoming of obstacles and challenges that we become stronger–physically and spiritually.
Again, I ask, are you having trouble with applicants or new hires and their over-protective parents? How do you handle it?
There is an equally critical factor for success in companies: Teams that act as communities, integrating interests and putting aside differences to be individually and collectively obsessed with what’s good for the company. Research shows that when people feel like they are part of a supportive community at work, they are more engaged with their jobs and more productive.
Thus begins the book that you should read next. Trillion Dollar Coach: The Playbook from Silicon Valley’s Bill Campbell, by Eric Schmidt, Jonathan Rosenberg, and Alan Eagle. (The three authors were senior leaders at Google / Alphabet–and coached by Bill.)
Bill Campbell’s journey took him from head football coach at Columbia University, to the top sales and marketing job at Apple, to CEO of a couple of technology companies (Intuit and GO). Then he became a coach. He coached Steve Jobs at Apple. The three leaders and then many more at Google. And more than 80 other Silicon Valley CEOs and leaders. And his middle school football team that he coached at the same time.
He was most likely the most influential and respected man in Silicon Valley.
And his values and teaching are appropriate to all of us no matter the organization we’re with.
For example, he let everyone know his blocked time for coaching his football team of 13- and 14-year-olds. He wouldn’t answer his phone if you tried calling. One person, though, would ignore the time and call. Bill would pull his phone out of his pocket and look at the caller ID. The kids around him would look, also. They would see the name Steve Jobs, and then see Bill decline the call. They all knew that when Bill was with them, he was with them.
Read this book–and put the principles into practice in your life. You may not be building the next Google. But you can be the determining influence in someone’s life.
There are some things that drive me up the metaphorical wall. Especially concerning discussions of automation and jobs. I’ve contemplated this issue for years. Lately there was an issue of the Axios Future newsletter. I rather like the editor, Steve Levine, even if he is an economist turned journalist. But there are times when he stops at a macro level with no understanding of underlying facts. That’s a common problem with both economists and journalists.
- Confusing robots and automation
- Not understanding the jobs that were replaced
- Advances in manufacturing that greatly enhance the quality of jobs
- Confuse correlation with causation
Unlike people who grab high-level statistics, run the numbers through a variety of mathematical equations, and then show some sort of correlation, I started at the factory floor. First working on the line. Then figuring out ways to build better machines and put robots in places to take on physically debilitating or drudgery work. I tend to be inductive rather than deductive in my approach.
Here, finally, is someone who writes sensibly about automation. Dystopian writers about a robot apocalypse get lots of clicks and attention, but reality will be far different.
Elliot Dinkin, president and CEO of Cowden Associates: What automation appears to have in store for the job market is not massive downsizing, but changes in job description and reallocation of some repetitive chores.
I don’t know how I got on the mailing list of this PR firm, but the following article is worth it.
In late 2017, the McKinsey Global Institute released a report estimating that the relentless march of automation could eliminate up to 73 million jobs in the U.S. by 2030. “Automation is certainly a factor in the future of the workforce,” says Elliot Dinkin, a nationally known expert in actuarial, compensation, and employee benefits issues. “There are indications, however that its effect on downsizing may be less than what has been predicted. The largest corporate layoffs of this century to date, for example, seem primarily to have been caused not by advanced technology, but by market changes, mergers, and plain old bad business decisions.”
This assessment was echoed by participants in a recent conference on the future of the worker held at the Stanford School of Business. In 1950, the U.S. Census Bureau listed 250 separate jobs; of these, the conference noted, only one, that being elevator operator, has been completely eliminated. (And some of the elevator operator’s tasks, like greeting visitors and guiding them to the right office, have been redistributed to receptionists and security guards.) Conferees also pointed out that automation has its limits. Elon Musk, founder and chief executive of Tesla Motors, said, “Excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.”
One reason automation and computerization may loom so large in near-future predictions, industry experts suggest, is the spectacular increase in availability, and decrease in cost, of computer power. Given the capabilities of even an average smartphone, it is easy to forget that the underlying procedures—the algorithms that drive functions like big data and machine learning—have not changed significantly in more than 40 years.
It is also, Dinkin notes, easy to forget that under the right circumstances, automation facilitates business growth and thus stimulates employment rather than threatening it. The Ford Motor Company introduced the auto assembly line in 1913, reducing assembly time from 12 hours per car to about one and one-half hours—and enabling an enormous upsurge in production.5 Since then, the auto industry has continued to embrace automation, along with job-changing concepts like lean manufacturing. It has also continued to hire people; between 2011 and 2017, auto making and auto supplies employment increased by almost 50%, adding nearly 130,000 jobs in the U.S.
Another too often overlooked aspect of the future labor market, says Dinkin, is worker availability. Hal Varian, chief economist at Google, points out that while most popular discussions of technology center around replacing people with machines, current demographic trends point to a coming substantial drop in the supply of labor. According to Varian, the demographic effect on the labor market is 53% larger than the automation effect—meaning that when both are considered, both employment and real wages are more likely to increase than decrease.
“In the future as in the past,” says Dinkin, “workforce reductions will always be a possibility. In the future as in the past, automation will play a role in these decisions—but only as one of a number of factors, all of which need to be taken into account. What matters is to understand the situation, and to handle it in a manner fair to all parties. In our own business practice, we urge both labor representatives and corporate management to approach workforce decisions with as little passion and as much analysis as possible.”
Cowden Associates, Inc., headquartered in Pittsburgh, PA, was created in 2001 by the merger of Halliwell and Associates and MMC&P Spectrum Benefits, which was founded by Jere Cowden in 1986. Currently led by President & CEO Elliot Dinkin, Cowden Associates specializes in helping corporate clients find the best solutions, both for the enterprise and for its employees, with regard to compensation, healthcare benefits, retirement and pension issues, and Taft-Hartley fund consulting. Winning Workplaces and The Wall Street Journal have recognized Cowden Associates as a “Top Small Workplace,” a lifetime designation awarded to executives for their ability to build and lead savvy organizations. For more information, visit www.cowdenassociates.com
McCarthy, Niall, “Automation Could Eliminate 73 Million U.S. Jobs By 2030,” Forbes, November 30, 2017.
Whiteman, Doug, “The Biggest Corporate Layoffs of the Century (So Far),” Moneywise, February 11, 2019.
Snyder, Bill, “Our Misplaced Fear of Job-Stealing Robots,” Stanford Business Insights, March 7, 2019.
Kosko, Bart, “What Do You Think About Machines That Think?,” Edge Foundation, 2019.
Boisset, Fabrice, “The History of Industrial Automation in Manufacturing,” kingstar.com, May 9, 2018.
“State of the U.S. Automotive Industry,” American Automotive Policy Council, August 2018.
“Productivity, Technology, and Demographics,” International Monetary Fund IMF Blog, May 5, 2017.