Why manufacturing is growing — not declining — in Georgia

This content was submitted by Roy Bowen on behalf of the Georgia Association of Manufacturers to the  Atlanta Business Chronicle    in response to the story “Georgia State Study Tracks Decline in Manufacturing Jobs”.

Roy Bowen

The number of Georgia manufacturing jobs has been steadily growing and the future is bright.

Manufacturing employs over 385,000 Georgians, contributes greater than $52 billion to the economy, accounts for 11 percent of the state’s GDP, and creates wealth for hundreds of communities across Georgia. The number of Georgia manufacturing jobs has been steadily growing and the future is bright.

However, one would think the opposite after reading a recent Georgia State University study about Georgia manufacturing reported in these pages (“Georgia State study tracks decline in manufacturing jobs”, Atlanta Business Chronicle Aug. 4, 2016) that concluded manufacturing jobs will inevitably decline to much lower levels and Georgia should question its emphasis on attracting and retaining manufacturing jobs. We disagree!

In addition to the impacts described above, the average reported compensation for Georgia’s manufacturing employees in 2014 was $66,725, versus an average of $46,859 for non-manufacturing jobs. In 2015, Georgia manufacturers exported $35.6 billion of products out of state, comprising 92.3 percent of all exports from the state of Georgia. Exports from Georgia manufacturers have grown nearly 35 percent in the last five years, another sign of the increasing strength and diversity of our manufacturing sector and the quality of Georgia products. Sustaining this economic growth should be a top priority of our public policy leaders.

Fortunately, Georgia has exhibited visionary leadership by promoting manufacturing investment. Gov. Nathan Deal, the General Assembly, the Georgia Public Service Commission and other state agencies deserve recognition for encouraging the expansion of manufacturing jobs through tax reform, the adoption of competitive energy rates, promotion of infrastructure, commitment to skills training, and other measures designed to encourage new manufacturers and retain existing investment. In the last few years, Georgia has attracted better than $3 billion in new manufacturing investment. Georgia is well positioned to continue to attract manufacturing investment and growth, with abundant natural resources, competitively priced energy, world-class technical college and university systems, Quick Start, the busiest airport in America, and the fastest growing port in the United States in Savannah.

The GSU study makes pessimistic assumptions about manufacturing job loss over the next 20 years, relying heavily on the overall rate of job loss between 2000 and 2014, a period distinguished by disproportionate losses in the textiles, apparel and computer electronics product industries. The job growth trend now is advancing in a sustainable manner for a variety of reasons, including the diversification of Georgia’s manufacturing sector. In fact, we have seen steady growth of nearly 50,000 manufacturing jobs since the trough of the Great Recession in 2010.

Manufacturing jobs also are increasing because it is becoming more competitive to make products domestically. Economists have identified an increasing “re-shoring” effect – the return of jobs to America from overseas. Many factors are driving this resurgence in American manufacturing, including rising wages in other countries, better logistics and transportation in the U.S., competitive energy costs, superior technology and innovation, and the increasing recognition of the superior quality of American-made products. Deloitte Touche concluded earlier this year that the U.S. had increased its rank to 2nd in the world, up from 4th in 2010, and is expected to move past China into 1st place by 2020.

There are several public policy reasons to continue the state’s emphasis on manufacturing in Georgia. First, manufacturing produces the largest “multiplier effect” of any sector of our economy. The National Association of Manufacturers has determined that for every $1 spent in manufacturing, an additional $1.81 is added to the economy. Manufacturing also supports jobs in non-manufacturing industries that service and support manufacturers. Although the amount of this “job multiplier” effect varies by industry and location, a conservative estimate is that for every manufacturing job created there are two non-manufacturing jobs created and supported. This means that well over a million Georgians depend on manufacturing for their livelihood.

Manufacturing creates wealth for Georgia citizens and communities. We have seen the dangers of assuming the U.S. can simply be a service economy and the economic stagnation that can occur when societies stop making things and simply recirculate existing wealth. In addition, Georgia manufacturers have created an innovation engine that has delivered new technologies that have enhanced the quality of life, our nation’s security and America’s leadership in the global economy.

We agree with the GSU study that Georgia should emphasize workforce development. The NAM estimates that over the next decade there will be demand for an additional 3.5 million manufacturing jobs. However, we face a potential crisis in terms of finding qualified, skilled workers to fill all of these positions. Manufacturers are actively engaging with educational institutions to better communicate the skills needed to keep their businesses growing. State government also plays a role in mitigating the talent shortage by emphasizing programs featuring industry-recognized curricula, promoting opportunities for work-based learning and encouraging these relationships with educational institutions. Gov. Deal, Lt. Gov. Casey Cagle and others have exhibited tremendous leadership in this area. GAM will continue to do its part to focus awareness on the skills gap and educate students, parents and teachers on the well-paying, challenging and diverse manufacturing jobs available to our high school and technical college graduates.

We should reject unsupported pessimism and outdated thinking about the future of manufacturing jobs in Georgia. Manufacturers will continue to invest and create jobs thanks to the inherent advantages and forward-thinking leadership Georgia offers. We believe this trend will continue and Georgia will remain an attractive destination for manufacturing investment. Simply put, manufacturing — the backbone of our economy — is about more than just machinery and production. Manufacturing is about people whose jobs do matter and who contribute daily to ensuring that “MADE IN USA” is much more than a marketing label.