Two headlines from top of the fold in the Monday, Oct. 28, issue of the Dayton Daily News:
Ohio Income drops;
1 in 6 lives in poverty
Could these be symptoms of the same disease?
Email message from Ohio Senator Sherrod Brown:
“How do we create good paying jobs, boost our economy, and strengthen the middle class?
“One word: Manufacturing.”
Could this be another symptom of the same disease?
Doesn’t seem, on the face of it, as though those headlines and Brown’s email missive are related, but let’s look closer.
Politicians of all stripes and ideologies have touted manufacturing as the answer to reviving America. Manufacturers have, for their own reasons, responded, although their response is tailored to their individual circumstances.
Manufacturing has, in fact, grown pretty strongly the last several years (growth has dropped recently), but it hasn’t produced all that many new good jobs. Manufacturing has slowly begun to repatriate in the United States over roughly that same period, but hasn’t produced all that many new good jobs either.
Why is this so?
Perhaps a visit to a show dedicated to manufacturing offers some insights. So last week, I drove to just such a show exhibiting the latest manufacturing wares at the now-too-grandly-named Dayton International Airport. One of the defining features of the show, from my point of view, was it was free. Show up at the registration desk, give the friendlies working their computers a little information, obtain a badge, and voila, you are in.
If you’ve ever attended an industrial trade show, the scene at the Advanced Manufacturing Technologies Show (ATMS) is familiar. A large open hall unhindered by pillars for roof support, exhibitors in booths hawking their wares — those in larger booths with working examples of their products — a quiet businesslike atmosphere, men (mostly men anyway) posing quick but friendly questions to see if you qualify for more intensive attention.
Chicago’s McCormick Place on a smaller scale.
Missing from all but one of the booths were beautiful but inadequately clothed women beckoning you to a booth about which the majority of men at the show have zero interest aside from that of ogling said women.
The technology — let’s just go right ahead and call technology machines, because in this context that’s what technology means — is pretty impressive. A guy at one booth showing off a milling machine asked if I needed a bottle opener.
I didn’t, but how can you resist a freebie like that? The machine, after all, was already hard at work on a bar of aluminum, the mix of cooling water and lubricating oil was flowing freely, metal chips were accumulating, something was beginning to emerge, and the guy assured me it would be only a few more minutes. He also pointed out "it was all in the math."
Thus I am today the proud owner of a strangely beautiful bottle opener. It was milled from solid aluminum and includes a handy loop on one end to run allow fastening to your key ring or whatever, and a round section milled out and corrugated on the sides to allow use on stubborn beer bottles or other such inconvenient and possibly hard to remove bottle caps.
I’m not kidding about the beautiful part. It truly is beautiful, a simple example of how a machine designed and built to crank out industrial objects can do amazingly complex operations that result in a useful (if redundant) item for my kitchen.
But it also illustrates the problem in citing manufacturing as a cure to unemployment ills.
Picture in your memory a manufactory. My memory evokes a grimy space, smoky from burned or aerosolized oil. Smelly from scorched metal, various solvents and sweat. Men in teeshirts and jeans wearing boots with oil-resistant soles. Stuffed with intimidating machines open so those sweaty men can reach inside to place stock into place and pluck finished product out. Noisy. Sometimes more than a little chaotic. At least at first sight.
Nearly everything is different now, Shops are clean. As the guy who made my bottle opener said, the floors are “clean enough to eat off of.” That’s a little exaggerated — clean enough to eat off of if you don’t mind eating random crap on the floor deposited by shoes — but it’s a good point. Most of the machines are enclosed now, with handy plastic-covered portals that allow viewing work in progress.
Because they’re enclosed, and because the old lubricating oils have been replaced by less burnable substances, the workplace is no longer smoky, the stock is not scorched and sweat is much less evident on the workers.
Also because they are enclosed, reaching inside is no longer necessary; stock is conveyed inside on automatically actuated worktable surfaces. Production workers don’t have to reach inside incredibly dangerous mechanisms to place and pluck.
Also because they are enclosed, much less noisy, although noise will be a feature of manufacturing until such time as technologists and manufacturers figure out how to, for example, produce a milled piece like my bottle opener by immaculate conception, which seems a little far fetched.
But who can say for certain that it will never happen?
A 56-page brochure I picked up at the Southwestern Industries booth states the employment problem right up front, page 1, even as it promotes having a good workforce.
The Compelling Case for Productivity, it says, continuing A focus on people makes good business sense.
Below the head on the right side of the page is copy that argues the best way to improve productivity is to hire and train the right people for the factory floor and then raise their productivity to reduce hourly costs.
The chart and figures on the left side of the page illustrate the hourly costs of running the company’s K-3 EMX, a machine called a knee mill equipped with Southwestern Industries EMX CNC (computerized numerical control) system. This is not the perfect example of the modern machine, but it is pretty good.
Here they are:
TRAK K-3 EMX (with options and freight) -- $20,585
Lifetime maintenance estimated $500 per year x 7 years -- +$3500
Less value on disposal (25%, typically a lot more) -- -$5146.25
Total lifetime cost -- $18,395.75
Cost per year over 7 years -- $2705.54
Cost per hour at 2000 hours / year -- $1.35
Machinist hourly wage -- $17.50
Payroll overhead (25%) -- $4.38
Plant overhead (25%) -- $4.38
Cost per hour -- $26.26
A category omitted, Cost per hours at 2000 hours / year -- $52,520
(Sorry I couldn't line up the figures in neat rows. I bold-faced the most relevant figures instead.)
The figures are certainly arguable, but notice a couple of things: The machine with sophisticated controls costs about the same as a mid-range compact car with a couple of nifty accessories. Maintenance costs are roughly similar to what you’ll pay for oil changes, new brakes and tires every so often, and mostly unexpected repairs to such things as air conditioners, headlight bulbs, or worn drive belts. And unlike a car, it's likely to still be pretty valuable when it's time to sell on the pre-owned market. The machine is CHEAP.
The labor costs (and $17.50 for a really skillful machinist seems a little low to me, but maybe that is the prevailing wage) are, by contrast, HUGE.
Southwestern Industries, at least in this brochure, aims for the market of small lot milling and turning. Its pitch to potential customers largely builds on the premises of the time and motion studies from Frederick Taylor (time) and Frank and Lillian Gilbreth (motion), which evolved into a discipline known as methods engineering.
Combine time and motion with numbers as presented above and you end up with an analysis similar to that presented by Southwestern. This kind of analysis using the real world of hours worked and wages paid leads to the simple conclusion that a company has only one rational way to reduce its costs and sell its products with no price increases to earn a greater profit or, in some cases, simply survive as a going operation.
It is that kind of analysis and related action on the manufacturing floor, combined with leaps and bounds improvements in state of the art automotive engineering, that makes it possible to buy a new Honda, or Toyota, or Ford, or Chevrolet, or Dodge for the price similar to a knee mill like the one described in the Southwestern Industries brochure. Good for us! Cheap, reliable, safe, well-built cars for next to nothing in the larger scheme of things.
They literally don’t build them the way they used to, and thank God for that.
But bad for us, too, because good engineering combined with excellent, cheap. highly productive machines creates few openings in the marketplace for very many workers. This is especially tough on the young. A major concern expressed by participants at the show was that young people show little interest in manufacturing. More on this in a later post.
How does Dayton play into this? It can be argued — I’m making the argument here — that Dayton, Ohio, was from the 1940s through the 1970s, the national capitol for the tool and die business. Hundreds of engineering shops in and around Dayton designed, tested, built and sold the massive tools used to work metal into contortions for most of the products made from various kinds of metals. They designed, tested, built and sold dies for molding products made from materials that could be melted and poured or injected under high pressures into those dies. The shops were as nasty and smelly and dangerous as described above.
My Dad, a self-taught man, worked 30 years at one of those places. Years after his retirement, following my Mom’s death, he found another job in a tool and die shop. At 77, he could still do the work.
Today, those shops are mostly gone. The losses began in earnest in the late 1970s. That was about the time manufacturing began its great shift from relying on sweaty men in teeshirts and oil resistant boots to relying more and more on computers, computer designing, and computer-controlled machines.
To circle back to those headlines and Sherrod Brown’s assertions at the top of this article —
Poverty is higher — because there are fewer jobs than before. No surprise there.
National budget deadlock — leaving aside ideologies and the natural clashes between Republicans and Democrats, this may well be the result of either party lacking so much as a clue about what to do to bring more jobs into being.
Manufacturing is the answer — probably not, and even if it is, how do you go about growing it? See item above about budget deadlock. See, also, the massive former General Motors/Delphi plant across the street and about a quarter-mile south of the ATMS site, now a riot of abandoned buildings and weed-infested parking lots.
Three genuine problems, all in one way or another looking for solutions from the past. No solutions in sight.
More to come.