Old Manufacturing Jobs Won't Return, But New Ones Can Be Created - TheStreet

A great deal of attention has focused on President Donald Trump's stated desire to return manufacturing jobs to the U.S. and his portfolio of strategies to do so.

The decisions to invest in American production by several global manufacturers have certainly jump-started this topic, which will remain a key factor in the new administration's economic plan.

But the idea of returning manufacturing jobs to the U.S. is a dramatically oversimplified description of the issue. As anyone who has studied the migration of manufacturing jobs understands, the offshoring of jobs and the closing of 70,000 factories has occurred against a backdrop of manufacturing growth as measured by output, not jobs, in the U.S.

The reality is that the vast majority of the specific displaced jobs are never coming back because they are low-skilled ones that will always bottom out within the less-regulated, lower-wage industries in countries such as China, Mexico and Vietnam.

Compounding the issue is the acceleration in automation, which has clearly played a significant role in the reduction of manufacturing jobs in the U.S. over the past couple of decades. But the automation factor differs in that it directly benefits the American economy by improving competitive positioning through capacity and efficiency increases that yield cost reductions.

The construction, development, implementation and operation of automated solutions create lasting, higher-paying and higher-skilled jobs.

In fact, the U.S. has undergone this transformation before and on a much more significant level. In the 19th century, more than 60% of U.S. jobs were in agriculture.

Over the next century, as technology continued to develop, the proportion declined in lockstep. Today, the percentage of U.S. jobs in agriculture is considerably lower than 2%.

The actual focus of American strategy, therefore, centers around retaining existing manufacturing jobs and building the kinds of businesses that will develop new manufacturing jobs. This can be accomplished through a two-stage process.

First, manufacturers need to develop and implement better and newer forms of technology through innovation. Second, these manufacturers must leverage this innovative technology to increase their profitable output and revenue growth.

As a result, and indeed to achieve that result, manufacturers and their suppliers will create more jobs, just not the traditional manufacturing jobs.

The bipartisan goals of gross domestic product growth, trade balancing and increasing well-paying manufacturing jobs are the catalysts driving the pursuit of an increasingly business-friendly climate in the U.S. What can't get lost amid the political strife and battling economic theories is the reality of what achieving these objectives will mean to the country and its workforce. 

The author is an independent contributor. At the time of publication, he owned none of the stocks mentioned.