By Zachary Karabell

Jan 17 (Reuters) – Few topics have been more fraught than
the fate of U.S. manufacturing. The sharp loss of manufacturing
jobs since 2008 has triggered legitimate concern that America’s
best days may have passed.

Even as recent leading indicators suggest more economic
momentum, job growth remains at best sluggish and manufacturing
has seen only marginal gains – having shed more than two million
jobs in 2008-2009, and millions more since the peak in the late
1970s. Manufacturing accounted for slightly less than 20 million
jobs at the peak in 1979. Now it’s barely 11 million.

The picture is even bleaker considering the population,
since the labor force is considerably larger today. This has led
to a widespread conviction that the core of the potent U.S.
economy is being hollowed out.

So it is not surprising that Washington’s latest
highly-touted initiative seeks to rejuvenate American
manufacturing and restore lost jobs. President Barack Obama
unveiled an initiative Wednesday in North Carolina designed to
foster high-tech manufacturing for the long term.

With money from the Energy Department, the Raleigh-Durham
area – already home to several leading universities that are
part of what is called a research hub – will develop an
innovation institute to foster high-tech manufacturing, such as
semiconductors. The promise is that such manufacturing and its
attendant jobs are vital to competing in today’s global economy.
Though the administration can fund a number of these without
Congress acting, the White House has called on the legislature
to pass funding for an additional 45 such centers around the
country.

The assertion that the United States, or any nation,
requires continued investment in the technologies that will
drive future production is indisputable. On that score, at
least, the Obama White House is fighting the proverbial good
fight.

The contention, however, that these technologies and the
factories that harness them for production will be sources of
well-paid, solidly middle-class jobs, is flawed. In our
political debates, we maintain the comforting fiction that a
manufacturing revival can and will go hand-in-hand with a jobs
revival. Yet, as Obama’s initiative shows, the two can be – and
increasingly are – uncoupled.

The issue is not the hollowing-out of manufacturing as
defined by less production. Yes, many less expensive, simpler
products are now made more cheaply elsewhere and are unlikely to
be made in the United States anytime soon – even with the
“on-shoring” of manufacturing. Though China ceases to be the
place of low-cost production, Vietnam, the Philippines and who
knows where else (even Mexico) will be more attractive for
apparel, furniture, electronics and anything plastic for a long
time to come.

The high-end production that these new U.S. innovation hubs
seek to promote is indeed in demand around the world. It is
something where, as yet, China and other low-cost manufacturing
centers have not excelled. This is why China actually imports
considerable billions of higher-end equipment – particularly
from Japan and Germany. So it is true that the United States
could have a competitive advantage, especially given the
plethora of research universities and the wealth of
highly-educated talent that can be used for just this type of
production.

But all this is not the same as a job creator for a
workforce of at least 120 million and counting in nation of more
than 320 million people. These high-tech factories might employ
hundreds of people in conjunction with industrial robots, using
sophisticated software systems for design and production. These
factory workers bear little resemblance to the 1950s line
workers doing rote tasks. They are more like Silicon Valley
engineers or lab technicians. These are high-skill jobs – and
not nearly as plentiful as the factory jobs of the past.

That is, of course, no reason to dismiss the importance of
cultivating these centers. Promising that they will be job
engines, however, is dicey at best, and disingenuous at worst.

Even hundreds of centers of innovation that focus on 3D
printing, bespoke semiconductors and technology-laden products
will not spell a revival of the manufacturing workforce
commensurate with what many hope or expect.

It is instead likely, even with the reinvigoration of
American manufacturing, that job creation is almost
non-existent. It is likely as well that output as measured by
gross domestic product goes up along with the revival – without
producing a job renaissance.

Again, this is not an argument against these endeavors. They
will indeed generate income and revenue and enhance productivity
in the U.S. They will not, however, solve the conundrum of our
structural unemployment challenges.

Over time, of course, as more people develop the skills
required for this new wave of manufacturing, it is possible that
the economic system overall generates a next wave of prosperity.
Education and innovations, tethered to products, ideas, services
and even entertainment, has no clear limit to growth.

In the interim, however, a generation ill-prepared for that
change is likely to continue to struggle mightily.

So we should embrace these endeavors, absolutely. But we
should do so with a clear sense of what they can do long-term
and what they cannot do in the short term. They cannot bring
back lost jobs or industries. They also cannot solve the
employment challenges for millions who have been displaced over
the past few decades.

Obama’s plan can solve those for the next generation – but
not for portions of an older generation now adrift. We should
not fool ourselves about what can be done.

A lost generation may require years of support before the
next is ready to carry the weight of the future. This is only a
negative, however, if we pretend that an easy fix is on the
horizon.

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