I used to joke about my own little leading economic indicator, the JEI ... or my “Junk E-Mail Index.” I sometimes called it the FEI too, replacing “junk” with “forwarded.” In the 1990s, when e-mail was new and unemployment was incredibly low, my JEI was incredibly high. I attributed this partly to the novelty of it all. Pushing just a single button to send a message instantly was just so cool, so why not forward junk around and press that button even more? But I think there was another reason too: People sitting in the cubicle farms of the day also had time to waste.
Then in 2001, my JEI dropped abruptly. The dot-com bubble had burst and companies were downsizing. My employed friends were too busy to fire off those time-wasting emails. Still, the JEI climbed slowly through the decade; again, people had time to waste. Then in 2009 it just dropped off a cliff. The only junk emails I get now are advertisements, not forwards from friends. We’re all just too busy.
This is a good thing, really. For most of the past few years, corporate earnings have skyrocketed largely thanks to cost cutting, not top-line growth. Many of us have found faster, better ways to get the job done, and because of it, our companies are getting more work. This includes manufacturers that have been winning back previously outsourced work.
An article in Canada’s Globe and Mail trumpeted this fact. “The image of a prostrate American manufacturing sector being obliterated by Chinese competitors doesn’t correspond to reality,” it said.
The article quoted Benjamin Tal, deputy chief economist at CIBC World Markets, who said that stateside manufacturing “is actually booming. It’s expanding at a rate we haven’t seen in many years. I think there are major opportunities in this space which the market has overlooked.” He cited that manufacturing sales to China and emerging markets have surged 45 percent since the beginning of 2009.
Now I’m a born skeptic, and I figure many benchmarks have surged a number of percentage points since the beginning of 2009, when so much economic activity was at historic lows. Still, I hope Tal’s comments represent a harbinger, especially this one: “Years from now, when the fog clears, it will become apparent that the big recession gave birth to a profound change in the structure of the U.S. manufacturing sector--a process that is currently in full swing,”
While Tal is optimistic, many aren’t, especially when it comes to the broader economy. In a rare interview on “60 Minutes” yesterday, Fed Chairman Ben Bernanke defended the central bank’s quantitative easing--its plan to buy $600 billion in Treasury bonds to lower interest rates and spur economic growth. The unemployment rate is just too high, and according to Bernanke, the economy isn’t growing fast enough to be self-sustaining.
I can understand why some manufacturers may be scratching their heads at this one. It’s as if the Fed is trying to buy its way to a good economy. Besides, manufacturers today are dealing with is something that can’t necessarily be fixed just by monetary policy. It’s structural unemployment.
I keep turning back to this BusinessWeek article, which quoted Narayana Kocherlakota, president of the Minneapolis Fed. Earlier this year he estimated that this country’s job opening rate is 2.3 percent. That’s a lot of jobs, and filling all of them would reduce the country’s unemployment rate significantly, perhaps down to 6.5 percent.
Manufacturers need pragmatic, engaged employees. Granted, I’m basing my opinion just on conversations with shop owners, not on reams of economic data. Still, many fabricators have told me that, when it comes to hiring, experience isn’t everything. Sure, people need to have a basic mechanical aptitude, and vocational education helps. But some of the most successful shops I’ve visited offer in-house training anyway. The key is finding people who can be trained quickly, become engaged, and generate new ideas.
Impulse Manufacturing, a fabricator north of Atlanta, is an example. Every shop floor worker starts as an entry level employee and is trained in-house. Sure, experienced personnel may jump the ranks quickly, but the important thing is that everyone starts at the same place. What matters doesn’t seem to be experience, but one’s ability to learn and, after gaining the knowledge, to question the status quo. This applies to shop workers as well as those sitting in cubicles in the front office.
And today’s cube dwellers certainly don’t spend their days forwarding a bunch of emails.