Georgia Manufacturing Is Winning Again

This week’s Courier Herald column:

It was the fall of 1989 and I was finishing my last quarter at the University of Georgia. I had made a drive to North Georgia to interview with a major textile company. I knew much of the textile industry was already moving overseas, but this particular company had been used as an example in several of my management classes as an American manufacturer that was adapting and modernizing.

Countering foreign competition in manufacturing is not a new concept or fear. In the eighties, we were all worried about the mighty industrial fortress of Japan. Then they were quite the worthy competitor, far from today’s empire of permanent negative interest rates.

The company had a reputation for employees having great longevity. As I was being given the plant tour, I was introduced to a lady working on the shop floor. I was told her name and her life’s story. She had worked for the company for more than two decades. She had several relatives and her own son working there too. I was told many positives about her and her people. She instantly felt like family.

As we got out of earshot, the plant manager leaned over to me and said, “It’s a shame about her. She and a couple of dozen others are going to be laid off next week.” I was confused. This was a successful and growing company. She was like family. To several of her coworkers, she was family. And after the glowing intro buy the manager, a cold and stark “her time is up”.

The problem was she was among the lowest skilled workers. While the mill had more business than it could handle, the processes were being mechanized. Her job function was no longer needed. She would be costlier to retrain for the jobs that remained than a buyout would be. The personal affection the managers had for her would not overcome the harsh realities of economics.

A friend of my family spent much of the first half of his career moving textile equipment from mills in the southern US to Central and South America. He spent the second half moving the same equipment from those mills to Asia. Much of the clothing end of textiles has a history of capitol flowing to where labor is the cheapest and least regulated.

It was with this background that I was a bit surprised to see that Georgia was selected last week as the location for the first U.S. factory for Adidas to make shoes. The location is a equally surprising – Cherokee County, in suburban Atlanta. The northern Atlanta suburbs have a tight labor market, and are not known for large quantities of affordable unskilled labor. They are, however, an epicenter for skilled technical labor.

The factory illustrates not only how manufacturing, but manufacturing jobs, are changing. According to the Atlanta Business Chronicle, the Adidas facility will use a “Speedfactory model, which relies on automation and production robots.” Thus, the 160 people that will make up to a half million shoes per year won’t be unskilled. Even though they will work in manufacturing, much of their skill will be required for the high level of automation deployed in a modern factory.

Much of our current political debate is focused on returning jobs to the US that disappeared in manufacturing. These jobs didn’t necessarily go overseas. Many of them just went away, with capital replacing labor. The remaining jobs require skills that manage capital to create the value added in production to justify wages for an American standard of living.

America’s job and wage problem isn’t that we don’t make things anymore, but that too often our education system doesn’t create real skills required by today’s employers. Seventy percent of jobs available in America don’t require a college degree, but we spend a disproportionate amount of our higher education dollars on university level courses.

If we want to get serious about “winning again” with respect to manufacturing, we need to get serious about understanding what a manufacturing job is in this millennium. Programs such as the recently launched German Apprenticeship program in Newnan are a good start.

The American dream is still available for those willing and able to work. To unlock our potential, we’re going to have to do a better job of ensuring that Americans have the right skills needed for the winning jobs of today and tomorrow.