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We still make stuff

  Twenty years ago, Rochester’s Big Three-Eastman Kodak Co., Xerox Corp. and Bausch & Lomb Inc.-boasted nearly 60,000 local employees. A little more than a decade later, their job count here had fallen to 34,000. By the end of 2010, local employment at those iconic companies had dropped to roughly 15,500.

 Kodak remains the largest of the three-but with 7,100 workers here, its Rochester employment is down nearly 55,000, or 89 percent, since peaking in the early 1980s.

  Without a doubt, the local economy is undergoing a transformation. As Kent Gardner details in his Policy Wonk column elsewhere in this edition, manufacturing employment has declined—dropping from 19 percent of direct employment in 2000 to 12 percent a decade later—while jobs in education and health services have risen sharply.

  Yet a surprising fact emerges from a close look at local economic data: While Rochester has fewer and fewer industrial jobs, manufacturing output has held relatively steady.

  In other words, as Rochester shed tens of thousands of manufacturing jobs-including nearly 17,000 at Kodak alone-local industrial output actually increased until the global economy tanked.

  This fact is less surprising in the context of all U.S. manufacturing. Contrary to the notion that we no longer make "stuff" anymore, American manufacturing output remains No. 1 worldwide-and by a sizable margin. And aside from recessionary periods, it has grown consistently.

  How can this be? The answer, in part, is a shift away from labor-intensive, low-tech goods. The stuff at which we excel—big-ticket and sophisticated products—typically does not show up on the shelves at Wal-Mart.

  Even more significant is increased productivity resulting from technological advances. Simply put, it takes fewer manufacturing employees to produce the same value in goods.

So U.S. manufacturing by no means is doomed. The challenge ahead is to boost both output and jobs, which happened nationwide in 2010. To sustain that trend will require a relentless pursuit of innovation, applying knowledge work to help manufacturers produce new and better stuff.

3/11/11 (c) 2011 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.

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