#457. The Magic Job Multiplier of Manufacturing

Posted on | The Agurban

The Magic Job Multiplier of Manufacturing

With our primary business focus on the manufacturing sector, we always keep a keen eye out for data on the “multiplier effect” of manufacturing jobs, compared to jobs in other sectors. We found a great report, with the above title, that provides a very reassuring future for manufacturing due to the Multiplier Effect. Below is The Huffington Post by Jerry Jasinowski:

We are seeing growing evidence that manufacturing supports far more jobs in other sectors than previously thought.

I came across that item in “The Multiplier Effect: There Are More Manufacturing Related Jobs Than You Think,” by Keith D. Nosbusch and John A. Bernaden of Rockwell Automation. Their point is that even those of us actively engaged in touting the importance of manufacturing to our economy have been understating its true impact. As manufactured products and processes become more complex and productive, they give rise to a host of skilled paraprofessional and professionals in nonmanufacturing jobs such as logistics and transportation, customer service, technical support, regulatory and safety specialists, distribution employees trained in use of information driven tools for receiving, storing and picking, the list goes on and on.

Over my many years as head of the National Association of Manufacturers and later the Manufacturing Institute, we made much use of our study showing that the average manufacturing multiplier is 1.58. This number actually understates the true multiplier impact of manufacturing jobs. “As factories get ‘smarter’ and more advanced,” Nosbusch and Bernaden wrote, “the multiplier increases significantly. In some advanced manufacturing sectors, such as electronic computer manufacturing, the multiplier effect can be as high as 16 to one, or 16x, meaning that every manufacturing job supports 15 other jobs.”

All is not sweetness and light on the manufacturing front. Nosbusch and Bernaden report that while the U.S. produces 20 percent of the world’ manufactured goods, and remains the world’s largest manufacturer, we rank only 13th among the top manufacturing countries in terms of exports. In other words, pound for pound, the Chinese and Germans are still running rings around us on the export front. That is a key reason why we need to convey the real significance of manufacturing jobs to legislators and policy makers.

Boston Consulting expects up to 800,000 manufacturing jobs to be added in the U.S. by mid-decade, and estimates that a 4x multiplier means they will create another 2.4 million jobs. If Nosbusch and Bernaden are right, and I believe they are on to something, the total employment impact will be much greater.

But this bright future will not just happen of its own accord. We need sensible policies for attracting capital investment, training a new generation of manufacturing workers and encouraging exports to make it happen. Growth and job creation should be our primary objectives. A growing economy will enable us to overcome any number of our more vexing challenges, and manufacturing is the key.

We continue to be encouraged by this and other reports on the future of manufacturing in the United States. Stay tuned…

To view entire report, click here. Scroll down to Our Viewpoints and select The Multiplier Effect.