There’s no “quick fix” to America’s manufacturing woes

The new manufacturing worker is a knowledge worker. No longer equipped with a high school diploma and union card, he’s got advanced skills in programming and statistics. That’s what’s needed for a manufacturing renaissance. Here’s the catch: It might take 50 years.

In their new book, released Oct. 16, Harvard Business School professors Gary Pisano and Willy Shih say there is no quick fix but that the sector’s growth is vital to maintaing the US’ competitive advantage in innovation. President Barack Obama has pledged to add 1 million manufacturing jobs over the next four years, which may not be possible, in the eyes of these experts.

“The jobs coming back are different than the jobs that went. So while we are sympathetic to the president’s goal, we think it’s not quite framed properly,” says Pisano.

The US is still the largest manufacturing economy in the world employing roughly 9% of the workforce, down from 31% in 1950. Since 2000, a gap in science and engineering has caused almost 700,000 manufacturing jobs to go overseas.

“The jobs that left aren’t going to come back. They’re different skill bases and they aren’t necessarily the type of jobs we’d want to be driving the economy. They’re much lower skilled and not as high wage, so we don’t think those jobs are coming back,” Pisano says.

Quartz spoke with Pisano and Shih, about their book Producing Prosperity: Why America Needs a Manufacturing Renaissance. Edited excerpts:

In “Producing Prosperity,” you argue that manufacturing work will now be “knowledge work.” Can you explain who is going to be doing this new type of work and what skills they’ll need?

Pisano: These workers need to understand statistics, they need to understand programming. They don’t necessarily need to be college graduates but they need more than a high school education.

I think in the old world, manufacturing was a great sector, 20 or 30 years ago. If you had a high school education and you got a union card, you were all set, you could live a good middle class life. Those are not the kinds of jobs that Americans can compete for now, you need to have more skills.

The “who” is an interesting question because it requires some investment in training people, either earlier in their lives, post-secondary, or some retraining of people who’ve been out in the manufacturing workforce.

Despite the technical training that has to occur, people are working less on the product they’re producing and more on the machines that make the product.

How are companies responding to this change?

Pisano: Just last week I was in Chicago for an alumni event HBS competitive initiative there was a gentleman there from Caterpillar talking about how they are reaching out to community colleges and investing in the training programs.

Shih: It’s not just large companies, but a lot of small companies are partnering with schools so that they can, in exchange for guaranteeing a position in the workforce, the schools will train particular people. One of the areas we’ve seen this a lot is in the southeastern US particularly in the South Carolina North Carolina Alabama region

I was talking to head of Piedmont Community College and they’ve identified particular needs for some of the manufacturers in South Carolina there has been a number of European manufacturers that have come in, like Turbo in machinery and Michelin in tires. The community college will identify specific needs and will take high school graduates—the first thing they have to do is work on remediation, getting their basic skills up to level before the employers can use them. But then work on specific skills and turn them into specific jobs in those factories.

How has Obama done in terms of manufacturing? What should the government do to spur manufacturing in the US?

Pisano: I think where I would give the president high marks is in highlighting the issue—that it matters. There are proposals for national manufacturing institutes to fund research in some new areas and I think that’s an important step. It’s consistent with what Willy and I call for, that the government not try to pick winners, not the traditional industrial policy, “Here’s a sector, let’s target it, let’s give it subsidies.” But the investment in basic and applied research, the research that builds foundations that’s well before commercial.

I think where we would part company a bit with what the administration has done in the last few years is with some of the more targeted subsidies for particular companies in solar energy and loans. We saw how that worked out: it doesn’t work. It doesn’t work in the US and it hasn’t worked in Europe. Governments are not good venture capitalists

Shih: The government should work on those core platform technologies, the technology foundations, than let the market choose the winners. Let the markets decide; some people will get it right and some people won’t get it right.

We haven’t invested aggressively in the core science, engineering, technology and math (STEM) and that’s where we really have fallen off. I would argue that’s part of the commons’ showing more weakness compared to investment overseas because a lot of other countries have recognized the value of building those foundational investments. It’s no surprise to me that a lot innovations in metallurgy, for example, and materials come from overseas because we haven’t kept pace in some of those areas. It takes a broader look at the portfolio in identifying technologies that are really foundations for the next 20 to 50 years.

Pisano: Unfortunately, everybody wants the quick fix, but if you think about American industrial leadership in the post-War period, our strength historically, in things like semiconductors and computer technologies, in the sixties and seventies and a range of industries, it all goes back to the fact that we started making investment in the fifties. In the post war-period, the National Institutes of Health was created, the National Science Foundation was created, the predecessor was DARPA the space program NASA several institutions put in place, policies put in place in the early 1950s. But you don’t sort of invest today and see a transformation tomorrow and that’s the challenge for politically.

I think in the end just like we have business leadership thinking long term, next quarter to next year, the same is true of our government leaders.

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