The pendulum swings back

The pendulum swings back

A manufacturing renaissance in america... really? In the 1950s, manufacturing accounted for 30 percent of America’s gross domestic product (GDP), which is the value of all goods and services produced in the United States. Today, it comprises about 12 percent of GDP. That’s a big change and it was accompanied by a big shift in employment. In its heyday, manufacturing companies employed about 20 million people in America. Today, that number has fallen to about 12 million.

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For decades, companies moved production facilities away from the United States to countries like China which offered lower manufacturing costs. Now, the trend is beginning to reverse. Lower energy prices and rising wages in emerging countries have companies moving manufacturing back to the United States. However, they’re running into a stumbling block – a shortage of skilled labor. A BBC report asked:

“…will Americans really contemplate going back to work on the factory floor? The companies all worried about a shortage of skilled workers. So, I went to meet students from the University of Tennessee. They told me they didn't see their future in manufacturing. Some wanted to finance those plants while others said that they weren't good enough at mathematics to work in advanced industries.”

The 2015 Manufacturing Institute and Deloitte Skills Gap study confirmed the shortage of skilled manufacturing labor here in the United States and reported little is expected to change during the next decade. Through 2025, close to 3.5 million manufacturing jobs are likely to open but just 1.4 million will be filled because there are not enough workers with the right skill sets. The study found:

· 60 percent of available skilled production positions remain open

· 80 percent of manufacturing companies are willing to pay more than the going rates to attract skilled workers

· 82 percent of executives believe the skilled labor shortage will affect their ability to meet customers’ needs

The Economist was skeptical about a renaissance in U.S. manufacturing. It reported for the industry to flourish, America needs investment in research and development, improved schools and colleges, and changes to the tax system.

Think About It

“Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.”

--Albert Einstein, Theoretical physicist

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After 16 years as a High Net Worth Private Banker I opened my firm in 2011 to create an unbiased and client-centered wealth management firm.

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Sources:

https://www.cs.cmu.edu/~rgs/alice-X.html

http://www.nytimes.com/2015/02/28/business/dealbook/in-europe-bond-yields-and-interest-rates-go-through-the-looking-glass.html?ref=business&_r=0 

http://online.barrons.com/mdc/public/page/9_3063-economicCalendar.html (Click on U.S. & Intl Recaps, then “Equities rally in February,” and scroll down to Global Stock Market Recap)

http://online.barrons.com/news/articles/SB51367578116875004693704580479953380031666 

http://www.bbc.com/news/business-31509223

http://www.economist.com/news/united-states/21645198-talk-renaissance-american-manufacturing-overblown-not-quite-what-it-seems?zid=293&ah=e50f636873b42369614615ba3c16df4a 

http://www.themanufacturinginstitute.org/~/media/B53DE09DB49B48DAA535D3C8BB0CB522/2015_Skills_Gap_and_Public_Perception_Debrief_PPT.pdf

http://www.brainyquote.com/quotes/quotes/a/alberteins125368.html

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