Mar 6, 2017
“How ‘Made in the USA’ can see a renaissance, and what will (and won’t) change”
By Trent Gillies, CNBC
President Donald Trump has promised to bring jobs back to America, but the number of U.S. manufacturing jobs has been on a 30-year decline. Can that entrenched trend be reversed?
A growing number of market experts believe the answer is yes.
“I’m very optimistic,” small businessman Drew Greenblatt told CNBC’s “On The Money” in an interview. “We’re going to see an American manufacturing renaissance”
Greenblatt, chair of the National Association of Manufacturers and president of Baltimore-based Marlin Steel Wire Products, pointed to policies that Trump wants to enact as a potential catalyst to new hiring.
“We’re talking about reducing regulations by 75 percent, cutting our tax rate from 40-something percent to 15 percent,” he said.
“It’s just going to make America more attractive to bring back opportunities to our country,” he added.
However, in industries such as apparel, more than 97 percent of clothing and shoes are made overseas. Given the entrenched economic realities, others are skeptical that any government policy can spark a manufacturing rebound
“There’s not much that can bring most of those jobs back, ” retail consultant Jan Kniffen told CNBC in an interview.
“We haven’t made patterns in America, we haven’t made the product in America forever,” he said.
Kniffen added that the U.S. “would need factories, but those factories would have to be so automated, the jobs would be maintaining the equipment not producing the product.”
That is because “the cost of producing abroad is so low and shipping not that much,” he said.
Greenblatt remained optimistic that at least some sectors could see a resurgence. ” I acknowledge some industries are not coming back here, it makes more sense to do it elsewhere. But things like making airplanes and bulldozers and cars, it’s going to grow here, it’s going to thrive here.”
Greenblatt’s Marlin Steel exports to 39 countries from its Maryland factory. He told CNBC that the company designs and fabricates wire baskets for automotive clients including Toyota Motor and General Motors.
“We make baskets for Caterpillar and Boeing,” he said. “These companies are building factories in America, growing factories in America and they’re poised for big expansion as these policies improve.”
Kniffen, however, sees a longer timeline.
“I think what he just described is a 15- to 20-year program if you could do it in terms of training,” he said.
However, both men cited a significant lack of trained workers to fill available jobs. In a 2015 report, the Manufacturing Institute said that over the next decade, more than 3 million manufacturing jobs would need to be filled as current workers retire or move on to other jobs. However, because of the decline in necessary skills, barely a million of those positions will be staffed, in part because fewer students are receiving the necessary training in schools.
“There is a significant skills gap”, Greenblatt said. “We need schools to be teaching math, English, the STEM [Science, Technology, Engineering and Math] educations. These things are critical to create the talent pool so we can hire these people.”
Another trade change the Trump administration is considering is the border-adjustment tax, as part of an effort to fund a border wall with Mexico. The proposal would place a 20-percent tax on all goods imported into the U.S., but outgoing American-made goods would not be subject to the tax.
Kniffen told CNBC he was “conceptually” is in favor “of a cross border tax,” but cited significant risks. Some experts say a border tax would be passed on to American consumers, and may result in the loss of jobs in certain sectors.
“I think it would bring back jobs, and we would get exports,” he said. “But in the short term the disruption would be enormous, my retailers would all go broke…and we wouldn’t bring those (retail) jobs back. “
Kniffen added it “could be a net positive long term”. But “in the short term, it could be very painful.”