Manufacturing reborn?

If we do things right, the United States could see a renaissance in manufacturing, says PPG's CHARLES F. KAHLE

Reprinted from the Pittsburgh Post-Gazette


Will manufacturing in the United States experience a long-term rebound?

There are promising signs. The Boston Consulting Group recently predicted a surge in American manufacturing that by 2020 could create as many as 5 million American factory and service jobs and reduce unemployment by 2 to 3 percentage points.

This is good news for our nation's economy and for companies with a major manufacturing base in the United States, such as PPG Industries. But there are pressing problems to be resolved before American manufacturing can reach its full potential.

For example, there is a widening gap between job requirements in manufacturing and people with the skills needed to fill them. In fact, an estimated 600,000 advanced manufacturing jobs are available right now but they go unfilled because there simply aren't enough Americans with the necessary skills.

One challenge is that our primary- and secondary-education systems are not keeping students in key science, technology, engineering and math programs -- the so-called STEM disciplines. What's more, not enough students are entering community colleges, technical institutions and universities that support the needs of advanced manufacturing.

A second challenge is one of perception. Far too many parents and their children regard manufacturing as dirty, declining and not exciting or sophisticated. Actually, the opposite is true. Modern manufacturing plants are highly technical facilities that include automation, robotics, software engineering, material science and design, among other exciting technological advances.

Manufacturing today offers high-tech, innovative and rewarding careers. The average annual salary of the manufacturing workforce, according to the National Association of Manufacturers, is more than $77,000, including benefits. Right now, some of the highest-paid college graduates are chemical engineers.

Beyond perception and workforce issues, America needs to revisit policies that make the country a less viable option for manufacturing.

For example, the United States has the highest corporate tax rate among major industrial countries. The effective tax rate of American corporations is also generally higher than that of companies headquartered outside our country. A more competitive corporate tax rate could help to level the playing field, encourage companies to keep their operations here and spur economic expansion.

Next, 70 percent of federal research and development tax-credit funds go for salaries of highly skilled R&D workers, and NAM estimates that strengthening the credit would create some 162,000 new jobs. It should be strengthened and made permanent.

It's important to remember that approximately 95 percent of consumers reside outside the United States. This means the United States needs a global trade policy that opens international markets, enhances competitiveness and reduces regulatory and tariff barriers.

We stand at the threshold of the next manufacturing renaissance in America. Making it happen is limited only by our imagination and determination.

Charles F. Kahle is vice president for research and development (coatings) and chief technology officer for PPG Industries Inc.