Siemens U.S. CEO Eric Spiegel on how innovation can contribute to the revitalization of the U.S. manufacturing sector

The following is a statement by Eric Spiegel, President and CEO of Siemens Corporation and CEO of the U.S. Region.

Last month President Obama invited business leaders to the White House to discuss strategies for reversing the terrible tide of outsourcing that has battered American manufacturing for more than a decade. I was honored to be one of them.

I told the president that I believed the conventional wisdom about manufacturing's inevitable decline was wrong. For too long, we've operated under the assumption that because labor is cheaper elsewhere, and because no company, however well-intended, would choose to build something for more when they could build it for less, manufacturing here was more or less doomed.

But that conclusion assumed a couple of things that have turned out to be wrong: First, that cheaper wage rates would always translate to lower production costs. And second, that the products of the future, like those of the past, would essentially be commodities, the kind that could be built of equal quality, with equal technology, anywhere in the world.

These assumptions were right when it came to making lower-technology products that require little innovation on the front end, and minimal precision on the back end. If you're manufacturing blue jeans, your highest cost is probably the wages you pay, making it difficult, if not impossible, to compete on a global scale by manufacturing them in America.

But they are largely wrong when it comes to high-end products. High-end products require skilled workers, precision assembly, intensive research, and complex technology. If you're in the business of building high-technology products, the wage rates you pay are usually a much less significant line-item on your income statement. That's especially true when you consider that U.S. workers are, on average, three times as productive as Chinese workers. Together, this makes it possible to build them in America, as cost-competitively as anywhere else, because access to innovators is far more important than access to cheap labor.

But there is, as always, a catch. If we can't improve the products we build here, through each new generation, we won't succeed. Constant innovation is the only way to stay ahead of competitors, the only way to prevent products from becoming commoditized. Sometimes products get to a point where you can't make the next generation any better than the last. You can certainly try: you can add an internet connection to an alarm clock or a remote control to a trash can, but at some point, what you've got really is as good as it's ever going to get.

When you reach that point, your competitors catch up with you, and once they do, they can build what you build, just like you did, but for less. That means that success in American manufacturing will require us to build technologies that we can constantly improve; it's the only way we can compete, the only way we can keep our competitors a few steps behind.

That's why there's such a strong push by companies like mine to build things like wind turbines, clean coal and smart grid technologies in the United States. With the right army of innovators, each of these products will have constant room for improvement.

For example, we just opened a plant in Charlotte where we build the world's most advanced, most efficient natural gas turbine. And we built it in America because each new generation of the turbine will need to be better than the previous one. That's how you leverage America's strength. That's how you make manufacturing work in America. And with the Labor Department reporting a 136,000 job increase in the sector last year--the first year-over-year growth since 1997--I'm hopeful we've begun to turn the corner.

But I don't want to paint too rosy a picture. The truth is, though innovation is still happening in America, it isn't happening only here. The major advances being made right now in wind and solar technology are being made in Europe. The major advances being made in biofuels are all happening in Brazil. The same can be said for batteries in Asia.

Too many of the advances forward are happening elsewhere. If we keep taking a back seat on innovation in such critical new industries, there will be a point where we are no longer the leader in innovation. When that happens, when we don't have a competitive advantage to leverage, we'll be outmatched on the global stage, without recourse.

To prevent that from happening, we must all work together to make the right kind of investments, right now--in STEM education, in research, in infrastructure--to ensure that companies can do the work of rebuilding America's manufacturing sector, and creating jobs on the scale our economy needs.

If we get this right, the story of the next decade won't be another one about the decline of manufacturing. It'll be about how American manufacturing, once again, saved America.

SOURCE: marketwatch.com

A recent commentary published by Moody's Analytics on the Canadian economy suggests that stagflation -- the combination of low or negative economic growth with high inflation -- is a looming possibility in Atlantic Canada. The report’s author believes higher inflation in the region will be driven by a lack of supply in the labour market rather than in upward demand for goods and housing.

In 2011, we see signs pointing towards this trend. In New Brunswick, real gross domestic product (GDP) is thought to have risen by only about 0.5 per cent while the inflation rate rose from less than 2 per cent in 2010 to 3.3 per cent in 2011.

As is increasingly the case, it is important to carve out Newfoundland and Labrador from the rest of Atlantic Canada. That province may also face upward pressure on prices in the coming years but it will not be coupled with weak economic growth.

Mark Hopkins, the senior Canadian economist for Moody's in the U.S., concludes that “persistently high unemployment has also encouraged outmigration and discouraged investment, limiting long‐term growth prospects. As a result, the Atlantic provinces face an increasing threat of stagflation, with rates of unemployment and inflation among the highest in the country."

How is it that Atlantic Canada can have “persistently high unemployment” and a lack of supply in the labour market at the same time?

The Moody’s commentary highlights a chronic problem for the region saying “[w]orkers are leaving the Maritimes for jobs out west, but that is contributing to a shortage of the supply for the skilled jobs that do exist in the region, which raises inflation.”

As well as shortages in skilled workers, I would go further and argue an even larger problem is the growing labour market shortages in semi- and low-skilled jobs.

As an example, Tim Horton’s has been recruiting for bilingual workers in North Africa for its Moncton stores because of the difficulty of finding local people to work. There are retail and food services establishments all over the Maritimes that are beginning to use immigrants to address work force shortages.

I am a big fan of immigration but I believe it is just as important to focus on addressing the structural challenges in the existing labour market.

The example of Britain provides a warning for Canada. In a Bagehot column this week, the Economist magazine summed up the position of the current Cameron Conservative government which believes Tony Blair and Gordon Cameron’s Labour party is guilty of “lazily allowing foreigners to take millions of jobs during the boom years rather than improving the employability of native workers”.

We could see this happen in Atlantic Canada as well. Instead of attempting structural reform to the Employment Insurance (EI) program, it may be easier and more convenient to plug labour market holes with immigrant workers. Instead of addressing significant skills deficiencies among a significant segment of the population, some would suggest we should just bring in immigrants who already have the needed skills.

This is short sighted. Having a large part of the population left behind chronically dependent on EI, social assistance or other transfer payments as a primary source of income to provide for their families is neither a good outcome for the individuals or for society as a whole.

Government, industry and community leaders need to address this issue now before it becomes a much more significant problem.

SOURCE: theglobeandmail.com

Perdue said Wednesday that two state grants are partially responsible for Caterpillar's decision to expand in Johnston County.

Upon completion, the Clayton facility will be the world source for several models of small wheel loaders. In addition, engineering and design work for building construction products will take place at a new engineering and test facility near Caterpillar's Clayton manufacturing plant.

The overall average wage for the new jobs will be more than $41,000, plus benefits. The average annual wage in Johnston County is more than $31,000.

SOURCE: canadianbusiness.com

A pilot course giving students a taste of what various trades jobs are like just wrapped up at Vanier Secondary School.

Open to Grade 11 and 12 students, Introduction to the Trades differs from other trades courses because it encompasses a wide variety of trades skills rather than focusing on one.

"I'm not making tradesmen out of them, they’re basically being introduced to each of the trades that’s involved — carpentry, plumbing, drywall, electrical, finisher, floorers, painters, the whole nine yards," said teacher Dave Munro.

Students learn the basics of all these skills, then at the end of the course they construct a fully functional bathroom mockup to test their knowledge.

Along the way, local trades people come in to give 'tricks-of-the-trade' advice, and offer information about the required schooling, wages, and local and provincial employment climates for each of the trades.

One of the inspirations for the new course is Munro's prediction of a shortage of skilled trades workers due to the provincial shipbuilding contracts.

"It’s going to suck all of the current trained tradesmen out of the industry and it’ll be our responsibility to offer the opportunity to these guys to go in and backfill," said Munro. "Any way you slice it, there will be a huge advantage in the very near future for anyone considering the trades as a career."

But even if these students don't choose a career in the trades, Munro said the skills taught are invaluable.

"And if they don’t go down the trades they’re going to be homeowners one day," said Munro. "The skills they’re taking away from here are definitely going to be lifelong skills."

Student Tristan Pinal realizes the importance of the skills he's learning.

"It's a fabulous program. You learn a lot of stuff," said Pinal. "And it's definitely going to help me in life."

With a class made up of mostly teenage boys, Munro said he tries to make to it fun while keeping safety a No. 1 priority.

He gave an example of how he teaches: "Just as they’re finishing up drywall, getting ready for painting, I went around with a hammer and I punch a hole in the work they’ve done," said Munro, adding that after students close their dropped-open mouths, he teaches them how to repair the hole.

"'You’re going to see this at a party in about year, if you haven’t already seen it, somebody’s going to get all hammered up and put a fist through the wall, now you know how to fix it before Mom gets back on Monday,'" he told the students.

In his many years of teaching various trades programs, Munro said this course has had the best student response so far.

"Attendance is awesome; I don’t have kids skipping my class at all," said Munro. "I’ve never seen a class so engaged for a full semester, there’s been very little down time, very little class management having to be done at all."

SOURCE: comoxvalleyrecord.com

Want a recipe to create jobs in British Columbia? Here it is: bold political commitment to a job-creating program that makes both environmental and fiscal sense. We need to create jobs, but we need to fight climate change just as urgently. The fact is, the two can go hand in hand. Two sectors in our province’s economy have real potential to create green jobs: retrofitting energy-inefficient buildings and public transit infrastructure investments.

The easiest and fastest way to reduce B.C.’s energy consumption — and diminish climate-altering greenhouse gas (GHG) emissions — is to improve the energy efficiency of buildings. Families, businesses, public agencies and not-for-profits all occupy buildings that consume energy and emit around 7,700 kilotons of carbon dioxide per year, more than B.C.’s entire manufacturing industry.

Retrofitting energy-inefficient buildings is a green jobs strategy that could start immediately. No lengthy planning or approval processes are needed, and the techniques and methods are simple: insulation, high-performance windows and doors, weatherstripping, high-efficiency heating and cooling systems. Of the 1.8 million households in B.C., 800,000 were built before 1984. These have significantly higher average emissions than more recently constructed buildings. Retrofitting 100,000 homes a year in B.C. would keep 14,000 to 30,000 tradespeople employed, including electricians, heating/air conditioning installers, carpenters, insulation workers, building inspectors and others.

Retrofitting homes results in energy conservation and can save homeowners thousands of dollars and dramatically reduce greenhouse gas emissions. A report by the Columbia Foundation shows that at current energy prices, a homeowner can double his or her `return` — over $12,000 on an average $6,000 investment in energy efficiency over 25 years — by making simple changes like upgrading hot-water tanks and home heating and cooling systems, and improving weatherization and home insulation.

Naturally, the upfront costs — ranging from $5,000 to $10,000 — are a barrier to financing retrofits, even if the energy savings generated over time will actually exceed this amount. A David Suzuki Foundation report, Property Assessed Payments for Energy Retrofits, shows how upfront retrofit costs can be eliminated through innovative financing arrangements: loans provided to homeowners by municipalities, financial institutions, utilities or other funders can be paid back gradually through small payments on property taxes or utility bills. The financing obligations are included on a property tax bill as a surcharge until completely paid off, even if the property changes owners in the interim.

B.C.’s existing energy efficiency retrofit program, LiveSmart BC, primarily benefits single-family homeowners, not low- and moderate-income people who tend to live in rental housing and in multi-unit buildings. This needs to change. It is vital to offer people at all income levels an opportunity to reduce their energy costs.

It is also time to get our economic and environmental priorities around transport straight. B.C.’s transportation sector accounts for 40 per cent of our province’s total GHG emissions. That’s rising every year because of increased use of road freight and SUVs. Passenger vehicles and heavy-duty diesel vehicles now account for 87 per cent of road transportation emissions.

The best way to reduce vehicle emissions is to offer viable public transport alternatives and pursue regulatory and incentive systems to encourage transit demand, such as pay-as-you-go auto insurance that links insurance fees to distance driven, encouraging pedestrian and cycling-friendly infrastructure, and investing in transit expansion.

The economic need for transit is evident: It reduces congestion, spurs community development and encourages greater urban density.

The scandalous truth, though, is that the Lower Mainland’s transit authority, TransLink, is cash-strapped. Municipalities must scramble to cover TransLink’s funding shortfall through increased property and gas taxes. Meanwhile, the provincial share of TransLink’s funding has dropped to 35 per cent of the total from 47 per cent in 1999. That trend must be reversed. The B.C. government should listen to municipal leaders and other who argue that carbon tax revenues should be dedicated to long-term transit funding.

A survey of Canadian transit-system operators shows that a $7-billion to $9-billion capital investment is needed in B.C.’s public transit systems in the next four to five years, including bus and rapid bus system expansion and light rail. Investing in public transport makes economic and environmental sense: Transit and ground passenger transportation creates an average of 18.5 direct and indirect person-years of employment per $1 million invested. This compares favourably with employment from the oil and gas sector (1.8 person-years per $1 million invested) or forestry and logging (seven person-years). Sadly, Premier Christy Clark’s B.C. Jobs Plan similarly focuses on capital-intensive industries such as mining that generate comparatively few jobs for the money invested.

To those who balk at investing in infrastructure to generate jobs, we say remember that the government is already engaged in a hefty stimulus exercise: spending $10 billion for a new Port Mann Bridge, a new South Fraser perimeter road, a new roof on BC Place, and upgrades to BC Hydro’s infrastructure.

Why do we lack the vision to invest that kind of money in programs that will be both environmentally and economically beneficial? It’s time for a plan that fights climate change and boosts B.C.’s economy by creating good, green jobs.

SOURCE: vancouversun.com

The College Problem

One of the major issues in education today is the growing cost of a four-year college education. Numerous articles and studies have explored how the cost of attending college has not only outstripped inflation, but lapped it many times over in recent decades. This is putting education further and further out of reach for more and more people without resorting to loans, and increasing the student loan debt burden to an almost unsustainable degree.

Now comes the second part of the college problem. As affordability is declining, so to is the utility of some degrees. Simply put, there just aren't enough jobs in the U.S. today that pay enough to legitimize borrowing $50,000, $100,000 or $250,000 to attain a bachelor's degree in English, history or education. Even apart from the poor employment prospects for over-supplied liberal arts degrees, there is the matter of how those who do get jobs manage to get by - many employed recent college graduates find that even with Spartan lifestyles (living with their parents, for instance), they are very nearly overwhelmed with repayment obligations for their student loans.

A Failed Premise?

In some respects, the advocacy for a collegiate education and white collar work harkens back to past bubbles in the financial markets. In the 1970s Michael Milken discovered that high-yield bonds (junk bonds) were undervalued relative to the actual experience of default. He made a fortune for himself and his employer from this discovery. As time went on, though, others noticed this and began getting involved in high-yield bonds. Soon, the supply was running thin and Wall Street went into action to create more supply - inducing companies to issue junk bonds to pursue dubious acquisitions and expansion plans.

This fundamentally altered the market, and the original discoveries and insights of Milken were no longer valid because the bonds and bond market were so different. Something very similar happened with subprime mortgages and the housing bubble - early participants noticed that there was real value there, but that value vanished as everybody else crowded into the market.

Perhaps the same thing is happening to higher education. There certainly was a time when a college degree was relatively rare, and only a privileged few could hope to pursue it. As time went on, though, the greater earnings potential of white collar work was identified as a good thing for the country, and large numbers of people were encouraged to pursue post-secondary education - perhaps too many. Now, the situation seems to be one where many people with four-year degrees have to settle for jobs where basic tasks and responsibilities simply don't require post-secondary education (or its attendant debt).

The Blue Collar Case
One of the interesting aspects of the recent recession has been the unevenness of unemployment. There has definitely been high unemployment in service jobs and low-skill manufacturing jobs, but many industrial companies ((including Caterpillar (NYSE:CAT) and Boeing (NYSE:BA)) have complained that they cannot find enough skilled workers for their needs. In other words, there are shortages in skilled blue-collar trades like welding and machining.

It's not hard to see how this shortage has come about. Many high schools have dropped vocational education, altogether, in the quest to boost the reported number of graduates going on to four-year colleges. At the same time, blue collar work has been largely devalued and scorned in the culture with expressions like "work smart, not hard."

Supply and demand is working as it should, though. An increasing number of jobs that nominally require four-year degrees are paying wages that don't economically support the pursuit of those degrees, because there's such an over-supply of college-educated workers. On the other hand, pay for skilled vocational trades is in some cases 50% higher than these jobs, and doesn't require the same level of expensive schooling - welders have recently seen median pay climb above $50,000, with wages sometimes doubling that in certain circumstances (like the labor-starved markets in energy-rich areas like the Bakken and Marcellus).

The Bottom Line

There is no such thing as a career path that guarantees employment, as even PhDs in life sciences are seeing unemployment as a byproduct of government funding cuts. It may be case, though, that the argument for pursuing a four-year college degree has gone too far and reached a point where there are too many people pursuing degrees with low expected `return`s. While the best and brightest in any discipline will always find a way to make a living, there's simply a limit to how many undergraduates with degrees in political science, communications or biology the market can absorb.

This is not an argument for dropping out or de-prioritizing school. Rather, it's an argument that those who are inclined towards skilled vocational trades should not be mocked or belittled for it. America will always need welders, plumbers and electricians and those jobs cannot be outsourced. Better, then, to be a happy welder than an under-employed and dissatisfied cube-worker trying to pay off college loans in a job that really doesn't challenge or reward those skills honed in college.

In the supposed battle between blue collar and white collar, the only color that should really matter is where a particular person can find the most green for them.

SOURCE: SFGate.com

To West Tool and Design owner Evan Westra, finding a machinist with a two-year degree and who is proficient at setting up and programming his tool-making machines is like finding gold.

Unfortunately, the Fergus Falls-based manufacturer doesn’t find gold often.

“It is always difficult to find trained and skilled people,” said Westra, president of machine and fixture manufacturer West Tool and Design. “We find ourselves bringing in people who know the basics and (training them).”

Westra is not alone in his desire for skilled workers. A recent survey of manufacturers across the United States found that as many as 600,000 jobs are vacant due to a shortage of skilled workers. The poll, conducted by Deloitte and The Manufacturing Institute, declared that factories are experiencing a moderate to severe shortage of qualified workers.

That shortage is definitely felt in Fergus Falls, where a recovering economy has generated a demand for the city’s manufacturing businesses. As of fall of 2011, around 1,000 manufacturing workers were employed in the area. Finding more people has been difficult for some businesses.

It’s especially difficult for his company, Westra added, because most manufacturers just need one person to program their machines, while the rest of the employees can work at less-specialized (but still hard to hire for) positions.

“I have a shop full of that one person,” Westra said.

He believes one reason behind the shortage of manufacturing workers is false perceptions.

“My theory is, about 10 years ago, we were told, ‘All manufacturing is going to China. Don’t get into manufacturing; it’s dead,’” said Westra.

That didn’t turn out to be the case, and manufacturing is now seeing growth in the U.S. Unfortunately, said Westra, the doom and gloom scared off a lot of college kids.

“Now we have a demand that’s higher than anticipated,” he said.

Schools like Dunwoody College of Technology in Minneapolis can’t graduate students from their manufacturing programs fast enough to meet employers’ hunger for talent. Last spring, several of the school’s manufacturing training programs placed 100 percent of their students with employers.

In his State of the Union speech this week, President Obama echoed that concern – a lament heard in factories across Minnesota.

“If you don’t have the skilled workforce that can make quality parts over and over again, you lose your customer,” Ness said.

Steve Hine, the state’s head labor market analyst, said if skilled manufacturing workers were scarce, companies would have more job openings and offer higher wages.

“It seems that offering higher wages would be a natural response,” Hine said.

SOURCE: fergusfallsjournal.com

New York Times examines Apple, one of our nation's great corporate icons, and discusses why the company had no choice but to produce their best-selling gadgets overseas.

What I found most interesting about the article was that, according to Apple executives and other experts briefed on the matter, neither one of those political arguments carries much weight. The reality is that Apple, adhering to a sound business model, strives to make the best products possible at a quality level that is second to none. Unfortunately, the workforce and infrastructure in the United States is not up to the task.

I was surprised that there was no mention of a greedy corporate culture choosing to rely on slave labor, nor was there mention of organized labor making it impossible to have a flexible work force. The reality is that Apple simply could not find enough skilled labor in the United States to make the complex technical products that are the reality in today's gadget-hungry marketplace. When Steve Jobs told President Obama that "those jobs aren't coming back," it was not because Apple couldn't make a profit manufacturing in America, it was because America simply did not have the labor and capital resources to build an iPhone.

According the article, more than 8,700 industrial engineers are required to oversee the iPhone supply chain. In the United States, it would have taken nine months to find that many engineers. In China, it took 15 days. That is a damning indictment of the American education system if a company cannot find enough skilled workers to build an iPhone. Skilled workers are supposed to be America's strength, while the common explanation is that our lack of unskilled workers and uncompetitive wages are the real problem.

While a lack of American skilled labor is a hindrance, it is our nation's lack of infrastructure that makes managing a fast-paced, flexible, and highly technical supply chain extremely difficult. According to Apple executives quoted in the article, "Asian supply chains have surpassed what's in the U.S." The result is that, "... we can't compete at this point." That has left America to rely on its service sector, which can provide steady jobs; but it relies too heavily on domestic consumption, does not provide upward mobility, and doesn't require technical skills to add innovation to the economy.

Putting the political rhetoric aside, our nation has some soul searching to do if it really intends to compete in a globalized economy. If America's leaders want to see us regain our manufacturing dominance, the answer is not as easy as "right-to-work" laws, a changing tax code, or currency manipulation. Germany, for example, has proven that it can make quality exports and still pay decent wages and benefits to its workers.

“The perception is that the United States doesn’t make anything when the reality is that there are almost 300 manufacturers in Sonoma County,” said Dick Herman, Petaluma resident and president of 101MFG, a private alliance of Northern California manufacturers.

Why is that important news to high school students? Because those companies represent opportunities for jobs.

To connect high school students to careers in manufacturing, involve the school community and develop a skilled workforce for the future, 101MFG created the “100-in-100” job shadowing program with a goal of 100 Sonoma County companies hosting students in job shadows and internships for 100 days.

“During job shadowing, students and employers will get exposure to one another. The employers are going to be pleasantly surprised with how capable the students are. And the students will come away knowing what a business is,” Herman said.

According to research conducted by 101MFG, more than half of the manufacturers in the nine Bay Area counties plan to increase their local production workforce by 15 percent or more. For Sonoma County, that would result in 1,300 new jobs in five years.

Adding to the demand for skilled workers is that almost one-third of the regional manufacturing workforce is nearing retirement age.

“I knew experientially that there was an issue with the future workforce and the research quantified how much of a problem and how much of an opportunity there is,” Herman said. “Manufacturers need to make an outreach to the best and brightest students coming up, to develop their ‘farm teams’ to use a sports analogy.”

Herman found support for offering the program to Sonoma County high schools at the Sonoma County Office of Education. They recognized that students need to be engaged about manufacturing as they are determining their career paths. “The biggest hurdle is kids – and sometimes even school counselors – not knowing about manufacturing,” said Herman.

The 100-in-100 program is currently taking applications from high school juniors and seniors for job shadowing in February and March. To date, almost 50 Sonoma County manufacturers including Labcon, Triformix, Agilent Technologies, PNI Sensor, Bijan’s Protective Equipment and SRC Cables have signed up to participate in the program.

The program offers students two selection tracks: trade; and two-to-four year technical or college prep/engineering and science. Herman says there is significant demand in both areas.

“Many manufacturers are seeking workers with a specific skill set such as mechanical or electrical with hands-on experience. Employers want people who can touch a machine and diagnose it,” Herman said.

For students studying science and math, “There are probably more software jobs in Northern California working for manufacturers than in traditional software companies,” Herman said. He adds that English, communication and finance majors also should consider the opportunities offered at manufacturing companies.

In a limited number of cases, students will have the chance to work on a short-term unpaid project that matches their career track. Herman says that a select number of students may even have an opportunity to work in a paid summer internship.

The shadowing program came out of Herman’s work with Dan Sunia, chairman of the industrial technology department at Petaluma High School and president of California Tooling and Machining Apprenticeship Association.

“CTMAA is a model for career tech training and I am a big supporter of that program. Dan had a state grant to research the need for shop classes in California. I extended the research to survey Bay Area manufacturers. When you look at the national and Sonoma County numbers, manufacturing is the bright spot.”

SOURCE: petaluma360.com

The rising Chinese middle class, along with rising fuel costs, creates a perfect storm.

Revisiting the role of China

As the middle class in China has grown, so too have the salaries that skilled workers demand. Back in 2000, U.S.-based companies could set up factories in costal Chinese towns where they could count on paying workers just $0.50 per hour. By 2015, BCG says, the average worker will be demanding nine times the salary, at $4.50 an hour.

That may sound like a small salary, but when any company has the cost of an input increase in value by a factor of nine in the span of 15 years, things are bound to change. Over the next few years, BCG sees the average salary for a Chinese worker increasing 8.5% per year. They didn't venture beyond 2015 -- which was probably a wise choice -- but there's no telling how much Chinese salaries could be ramped up over the next decade.

And the labor situation is evolving. According to the report, Apple supplier Foxconn International, "which employs 920,000 people in China alone, doubled wages at its immense Shenzhen campus following a string of worker suicides."

All in all, where there once was a 25% cost savings to doing business in China, today's multinationals enjoy a much smaller 16% cost savings today. And that's without taking into consideration supply chain costs, which we'll tackle next.

Energy costs

A rising tide in China raises more than just salaries for workers. Industry in China eats up 74% of all electricity consumed, and prices have grown an astounding 15% since just 2010.

Industrial real estate is no longer as cheap as it once was, either. The national average is $10.22 per square foot, but prices in coastal cities with a large industrial presence are much higher: In Shenzhen, it costs $21.00 per square foot of land. The average cost of real estate in the southern states of Alabama, North Carolina, and Tennessee -- the states BCG says could benefit the most -- ranges from just $1.30 to $7.43 per square foot.

And then, of course, there's the price of shipping products overseas to get back to the United States. With oil prices on the rise, and the average transit time coming in at about 21 days from China to the United States, there are obvious benefits to moving production back to the U.S.

Of course, multinational corporations could try to move their factories to inland China, where real estate and labor are cheaper. But the supply of skilled labor is far scarcer there, and the infrastructure is nowhere near as efficient for transporting goods as it is in coastal cities.

What this means for China, and the U.S.

But if you think this means that there'll be a drop-off in manufacturing in China, you're wrong. The Chinese middle class -- as well as that of several Asian countries -- is growing. It pays to be able to provide services to the region. The factories that are there will likely stay, but their products, instead of being sent to North America, will serve those Asian economies.

That means that products for North American consumption will likely be produced in North America. There are several real-life examples that the trend is taking hold:

• Ford is bringing 2,000 jobs back to the States after the UAW allowed for a $14-per-hour wage.
• NCR will be moving production of some of their ATMs back to Georgia, employing over 800 people by 2014.
• GlobalFoundries, which is a joint venture between Advanced Technology Investment Company and AMD, will be building a $4.2 billion state-of-the-art plant in New York to manufacture silicon wafers.

And then, of course, there is the possibility that manufacturing will get more personalized and local as time goes on, led by 3-D printers. I've already highlighted this revolutionary technology, and its two industry leaders -- Stratasys and 3D Systems -- which you can read about here.

The trend might just be a trickle now, but that's how all movements start, and this could bode well both for American companies and for our stubbornly high unemployment rate.

If you're interested in American companies with a global presence, I suggest you take a look at our special free report: "3 American Companies Set to Dominate the World." All three companies are staples of American consumerism, and their growth in emerging markets is just starting. Get your copy of the report today, absolutely free!

SOURCE: msnbc.msn.com

Approximately 75,000 jobs were created in the oil and gas sector under the Obama Administration between 2009 to 2011, according to analysis of data from the Bureau of Labor Statistics.

That’s roughly 69,000 more jobs than would be created by construction of the Keystone XL tar sands pipeline.

The figures, reviewed by the Center for American Progress, show that overall employment in oil and gas (extraction, field support, pipeline construction and transportation, and petroleum refineries) increased by 13% in the last two years.

The figures do not include categories such as gasoline stations, fuel dealers, asphalt paving, or lubrication production.

This strong increase in American fossil fuel jobs contradicts the arguments made by supporters of the Keystone XL tar sands pipeline, who have attacked the Obama Administration for denying the initial permit for the pipeline due to environmental concerns.

The oil and gas industry claims that Keystone XL will create up to 20,000 direct and indirect jobs. But more careful research of those jobs claims — analysis that is backed up by the State Department, Cornell University and TransCanada, the company building the pipeline — has shown that the number is closer to 6,000 jobs.

Armed with these inflated figures (which are still about 55,000 less than jobs created in the last two years), Keystone XL supporters have argued that the tar sands pipeline will be a panacea for job creation in America. In response to today’s news that the Obama Administration would reject the Keystone XL permit and ask TransCanada to file for another, Keystone supporters lined up to lambaste the President.

Chamber of Commerce CEO Tom Donahue said it proves “that creating jobs is not a high priority for this administration.”

And Republican Presidential front-runner Mitt Romney laid it on thick: “If Americans want to understand why unemployment in the United States has been stuck above 8 percent for the longest stretch since the Great Depression, decisions like this one are the place to begin.”

But here’s the deep, dirty little secret not mentioned by fossil fuel champions who falsely claim the Administration is killing oil and gas jobs: Since Obama took office, oil production has increased substantially — with more drilling rigs being deployed in America today than at any time since the mid 1980′s.

This increase in production has already resulted in 12 times the jobs that would be created to build the Keystone XL tar sands pipeline. Do you hear any mention of that from political candidates or the fossil fuel lobby? Absolutely not. And you never will.

These jobs figures prove once again that no matter how aggressively this Administration promotes oil and gas — alienating the environmental base in the process — political opponents will attack Obama in any way they can.

SOURCE: thinkprogress.org

Insourcing seems to be at the top of the trending list for 2012. But, how do we make reshoring—bringing jobs back from overseas—a real phenomenon? For America to have a thriving economy and lower unemployment, we need to create more good-paying jobs. And to do that, we’ll have to win back some of the jobs that have been shipped overseas for the past decade.

President Obama, to his great credit, gathered about a dozen businesses and many more experts at the White House to strategize on how to bring manufacturing jobs back to America. Within the past year, major consulting firms have published a litany of reports urging businesses to take a look at reshoring. This week, the White House issued its own report.

There is no doubt that some progress has been made. American manufacturing jobs have grown over the past two years—the first time that’s happened in more than 15 years. Our nation gained 23,000 manufacturing jobs in December alone. Other manufacturing indicators—sales outlook, growth in output—have also been in consistently positive territory. The Center for Automotive Research predicts that the auto industry and its suppliers alone could add 167,000 American jobs over the next three years.

Here are five things the President should highlight in the State of the Union address to ensure that the significant trickle of reshored jobs becomes a genuine trend:

1. Adopt insourcing tax incentives, such as extending a domestic manufacturing tax credit for clean energy and enlarging a deduction for U.S. manufacturing activity. Also, improve the research and development tax credit by making it more generous for innovation that is actually made in America. Finally, adopt a federal tax incentive for companies that reshore high-paying jobs.
2. Work to balance our trade account by continuing aggressive trade enforcement, where a major hat tip should be given to the Obama Administration for supporting domestic industries, such as the U.S. tire sector. But, the Administration must also work to stop China’s currency manipulation and lower our record trade deficit with that nation.
3. Invest in infrastructure to make our economy more efficient, our businesses more competitive, and to create some new demand for manufactured materials.
4. Apply Buy America laws to make sure that our manufacturers get a reasonable preference for federal procurement on everything from commemorative wristbands to major bridge reconstruction. The Department of Transportation does a good job of applying the Buy America laws on the books, but other agencies need to step up, and loopholes need to be closed.
5. Invest in our workers to ensure we have skilled human capital on the factory floor, in the research lab, and in the executive suite. Our educational system is built towards guiding every child into a four-year college and every MBA onto Wall Street. That shouldn’t be the case. We must rebuild our vocational education system from the ground up, or we will never make manufacturing great again.

There are also factors beyond our control that can help—or hurt—these efforts to reshore jobs, namely the value of the dollar, shipping costs, and consumer preferences. But, if you think we can’t be a manufacturing powerhouse as a high-wage nation, then think again. Germany, where average manufacturing wages are in some cases double that of American wages , has balanced trade with China (whereas we have an annual $272 billion deficit) and over 20 percent of its economy in manufacturing (while we have only 11 percent).

It’s clear from the job numbers, as well as voter sentiments, that Made in America is starting to make its way back. But we want reshoring to be more than a slogan—we want it to be our national policy.

SOURCE: manufacturing.net

Gov. Nathan Deal today announced the launch of a new skilled labor advancement initiative, Go Build Georgia. As a product of the Governor's Competitiveness Initiative, Go Build Georgia will address the skilled labor shortage in our state through public outreach designed to educate young people and the public at large about the wage, lifestyle and employment benefits in the skilled labor trades.

"This initiative to help Georgia's skilled trade industries will open new opportunities for our students and Georgia's job seekers," said Deal. "Go Build Georgia brings together education and business stakeholders to further develop our workforce which will make our state more competitive nationally."

Over the next year, 16,500 projected jobs will become available in the industries that rely on skilled labor. This program will assist in getting Georgians the skills they need to fill employment opportunities.

With a rapidly retiring workforce, many companies that require skilled labor will face a severe labor shortage in the coming years. Go Build Georgia aims to educate young people on the opportunities in the skilled trades to help companies create and maintain a strong workforce for years to come.

Mike Rowe, executive producer and host of Discovery Channel's "Dirty Jobs," is partnering with Go Build Georgia and will appear in the initial advertisements for the campaign. Rowe partnered with the Alabama Construction Recruitment Institute (ACRI) on its Go Build Alabama program, launched in August 2010. Go Build pairs well with his mikeroweWORKS.com initiative, which calls attention to the growing skills gap in the trades while providing a comprehensive resource for anyone looking to investigate a career in the skilled trades.

"When we launched Alabama I said I wanted to go down the alphabet and challenge every state in the nation to send the message that America needs young people willing to master a trade and help us build our future," Rowe said. "I've had a front row seat to all different kinds of work, and I can tell you that there's nothing more important to our country than skilled labor. I applaud Georgia for sending that message to people across the Peach State, even if they're not next in line alphabetically."

Go Build Georgia is a private-public partnership designed to increase Georgia's competitiveness. Mapping the employer opportunities with employees equipped with the right skills is the key to solving Georgia's workforce challenges.

"Go Build Georgia is designed to bring statewide attention the needs of many Georgia companies and foster growth of skilled labor in our workforce," said Tricia Pridemore, the executive director of the Governor's Office of Workforce Development.

SOURCE: wltz.com

The jobs of the future are likely to be in health care, computer technology and the skilled trades, experts say, given an aging population, growing global demand for resources and Canadians’ love affair with electronic gadgets.

Several large Canadian companies cut jobs this week, putting hundreds of mobile phone call centre employees, airport security screeners and contract hydro staff out of work.

Up to 1,800 jobs in the Greater Toronto Area disappeared at Bell Mobility, Toronto Hydro and Garda Security Solutions, which serves Pearson International Airport, the companies confirmed.

But overall employment in Canada is growing, albeit slowly, and there are bright spots in certain sectors, geographic regions and specific skills.

The trick is finding qualified candidates that meet employers’ criteria, said Geoff Bagg, chief executive officer of The Bagg Group, a leading Toronto-based staffing agency.

“It is hard to find people, across the board, we find it challenging to find good people. It’s one of the most difficult things to explain. You keep hearing everybody’s out of work. And then you talk to companies and they say they can’t find people. There’s obviously a bit of a gap between what the market is demanding and what the labour pool is providing,” Bagg said in an interview.

Employers tend to prefer candidates with a proven track record because hiring mistakes are expensive, he said. “It’s especially apparent in IT (information technology). Our recruiters are very busy trying to find qualified candidates.”

The ideal candidate would have the right technology background, good communication skills and project management experience, Bagg said, adding that job applicants who have all three “are getting multiple offers.”

It’s difficult to predict which occupations will be in demand in future, given the uncertain impact of economic conditions, technological developments, demographics and consumer behaviour.

But most experts say an aging population, growing global demand for oil and consumers’ love affair with new gadgets make sectors like health care, skilled trades and computer technology fairly safe bets.

Still, local demand can differ from regional and national trends, said Gervan Fearon, dean of the G. Raymond Chang School of Continuing Education at Ryerson University

Kindergarten teachers will be in higher demand in Ontario as the province moves to full-day kindergarten classes, while the condo boom in downtown Toronto is fuelling higher than average demand for construction workers, Fearon noted.

As well, new banking regulations along with companies’ heightened concerns about cyber-terrorism have created demand for experts in data management and security.

The Ontario ministry of colleges and skills training predicts job growth will be strong in health care (including doctors and nurses), information technology (such as software engineers and information systems analysts), and other trades and services (including plumbers, electricians, child-care workers and dental hygienists).

Job-seekers with college or apprenticeship training are expected to get 35 per cent of the new jobs, followed by university graduates, at 26 per cent. High school dropouts are expected to get just 8 per cent of the new jobs, the provincial study also showed.

Employment growth in Canada is expected to remain soft in 2012 after the economy added 199,200 jobs in 2011, Statistics Canada said last week. That was a gain of 1.2 per cent over the previous year.

However, some sectors grew faster than others, including natural resources (up 7.5 per cent) accommodation and foodservices (up 6.2 per cent) and professional, scientific and technical services (up 6 per cent).

Utilities were already in a tailspin (down 9.5 per cent). Financial services fell 2.8 per cent. And transportation and warehousing were down. 1.8 per cent.

Oil-rich Alberta saw the biggest gains, up 4.9 per cent, while Ontario ranked 5th among the provinces, up 1.4 per cent.

SOURCE: thestar.com

Less than a month ago, we heard that the James River Valley could be in trouble because a lack of workers in the region could stymie economic development.

During a presentation to the Mitchell Rotary Club, local development director Bryan Hisel said we’ve hit an economic wall, and that it will take a concerted effort — luring and training workers and the like — to successfully crash through that invisible but very real barrier.

This week, Gov. Dennis Daugaard essentially said the same thing during his annual State of the State address. The governor has asked lawmakers to support his plans to reduce a shortage of workers in various occupations in South Dakota. He wants to expand college programs to train more doctors, physicians’ assistants and health-care workers, as well as expand technical school programs to better churn out trained welders and machinists.

The problem is our unemployment rate. At present, South Dakota’s rate is 4.3 percent, which is about half the national average. On the surface, that’s an enviable number; deeper down, it may prevent future development because businesses may choose not to come to South Dakota out of fear there won’t be enough workers to fill jobs.

We agree that the state needs more doctors and various health-care workers. We suspect the towns in our region would agree, too.

We also maintain that more welders and trained, skilled workers are needed, which Daugaard mentioned during his speech.

He told lawmakers that South Dakota “does not have enough welders” and announced a proposed welding program at Mitchell Technical Institute as part of a larger workforce initiative called WINS — a 20-point, four-category plan to get more people in South Dakota trained and ready to work.

The MTI proposal is included in the category “Training for skilled jobs.”

It’s still early. Although MTI President Greg Von Wald acknowledged that he knew in advance Daugaard may mention MTI, Von Wald still has heard no concrete numbers on how the state plans to financially help MTI rev up its welding program. Maybe cash would come from the Governor’s Office of Economic Development.

If it happens, Von Wald said he hopes it’s a “hefty sum.”

So do we.

The Mitchell region needs skilled workers, and especially the kind who can weld on trailers and piece together suspensions. Our manufacturing sector depends on these workers, and according to Hisel, future economic development may be at stake.

We are very interested to see what becomes of the governor’s proposals, and especially those that directly affect Mitchell Technical Institute.

SOURCE: The Daily Republic

College-Educated Workers Gaining Jobs, High School Grads Losing Them

Still don’t believe us when we say that college is worth it? Just look at the latest jobs numbers.

In December, workers with bachelor’s degrees or other post secondary educations gained jobs. On the other hand, the number of workers with high school diplomas or less who were employed fell.

Here are the numbers:

Source: Bureau of Labor Statistics

Workers with at least some higher education have been doing better than high school grads for a while now, too.

Over the last year, an additional 1,068,000 bachelor’s degree recipients have found work, for example, while the number of employed workers with no more than a high school diploma fell by 551,000.

Interestingly, though, the least-skilled workers have also added jobs over the last year. The number of high school dropouts who had jobs rose by 126,000 from December 2010 to December 2011:

Source: Bureau of Labor Statistics

It’s not clear why those with the very least education would be doing better than those with high school diplomas.

The numbers do support David Autor‘s argument that the work force is hollowing out, producing very low-skill service jobs that generally cannot be done by machines or workers abroad (like food services) and higher-skilled jobs that require greater schooling (like medical jobs).

 

SOURCE: nytimes.com

New skilled trades jobs needed for near future: QUEEN'S PARK

Boeing has announced that more jobs will be added to its Oklahoma City operation as it prepares to close a plant in Wichita, Kan.

Boeing has announced that more jobs will be added to its Oklahoma City operation as it prepares to close a plant in Wichita, Kan.

British Columbian employers are among an increased number from across the country to add full-time, permanent workers in 2012, led by hiring in information technology, according to a survey conducted by online job site CareerBuilder.ca.

In all, 34 per cent of employers said they plan to add to full-time staff, up from 32 per cent in 2011 and 29 per cent in 2010. Ten per cent plan to cut staff, and another 48 per cent anticipate no change.

“Even as the global economy continues to struggle, Canada is expected to add jobs at a steady pace in 2012,” said Brent Rasmussen, president of CareerBuilder North America.

The hiring will be concentrated in fields such as information technology (37 per cent), engineering (27 per cent) and administrative positions (32 per cent) that improve efficiency, Rasmussen said.

The survey will come as good news to job seekers following a marked slowdown in Canada’s labour market in the latter part of 2011, which saw 54,000 jobs lost in October and nearly 19,000 in November. Over that period, the unemployment rate climbed to 7.4 per cent from 7.1 per cent.

In B.C., the unemployment rate rose to seven per cent in November from 6.6 per cent the previous month.

Darren Butterworth, a Vancouver-based independent recruiter working with SAP, said the survey results mirror his own expectations of the B.C. job market in 2012, particularly as it relates to a growth in IT jobs.

“We are not a bricks-and-mortar type city with insurance companies and banks. We have IT shops here, whether it is software development companies or telecommunications, that seems to be Vancouver’s niche,” he said.

Provincewide, Butterworth said engineering is also likely to see strong hiring, with growth in industry sectors such as energy, mining, transportation and innovation.

Jock Finlayson, executive vice-president of the Business Council of B.C., agreed the province is showing “pockets of strength” in a few areas.

But he cautioned the overall job market is likely to be “fairly soft” as a result of muted economic growth, expected to be around two per cent after inflation over the coming year. He estimated an increase in total employment of 1.5 per cent.

“Having said that, many employers in B.C. are concerned about the loss of skilled workers, as the baby-boom retirement wave accelerates. This may cause some employers to add staff in advance of an actual upturn in business,” Finlayson wrote in an email to The Sun.

He said hiring in mining, health care and transportation will remain positive, as will construction jobs tied to infrastructure development and major project activity.

Don Prior, a principal with Watson Advisors in Vancouver, said job seekers may want to research B.C.’s smaller and innovative companies, which will also be looking to hire in the new year.

“Great companies are getting formed in these challenging economic times, some of the great companies that we will be talking about 10, 15 or 20 years from now are here. We just don’t know about them,” he said.

Telus, B.C.’s largest private-sector employer, also expects to be expanding in 2012.

Shawn Hall, Telus spokesman, said the company will add several hundred full and part-time positions to its current B.C. workforce of about 8,200. Hall said the new hires will run the gamut of professional skills from customer-care roles in call centres to field technicians and office workers.

Last year, Telus hired about 1000 new people across the country. In B.C., more than 300 positions were created at call centres in Burnaby and Prince George.

Hall said the hiring is being driven mainly by customer demand for optic television and wireless services.

The CareerBuilder survey was conducted by Harris Interactive. A total of 292 hiring and human resource managers were interviewed in November through early December. The survey has a margin of error of plus or minus 5.74 per cent.

It is the third year in a row the survey has shown a positive hiring climate in Canada.

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