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Poll: Outsourcing blamed for job loss

The most recent Bureau of Labor Statistics data show fewer than 60,000 people in metropolitan Rochester work in manufacturing. That number compares with nearly 80,000 a decade ago and roughly 120,000 a quarter-century ago.

More than half of respondents to this week’s RBJ Daily Report Snap Poll blame trade deals and outsourcing of jobs to lower-cost countries for the decline in manufacturing jobs over the last 25 years.

A large factor in the decline of local manufacturing jobs is employment losses at Eastman Kodak Co., which employed roughly 45,000 people 25 years ago and today has fewer than 2,000 workers in Rochester.

The change in manufacturing employment here parallels the trend nationwide, which has declined more than one-third since the early 1990s. At the same time, inflation-adjusted manufacturing output generally has trended upward due to increased productivity.

Slightly less than a third of respondents—31 percent—say technological change is the primary cause of the decline in industrial jobs; automation has enabled manufacturers to produce more with fewer workers.

Two percent say the trend chiefly reflects the growth of the service sector in an evolving economy.

Most readers agree, however, that rebuilding the manufacturing job base is essential to the future of the Rochester-area economy. Many people think rebuilding the manufacturing job base is necessary to reduce poverty and ensure the region’s long-term economic health, while others believe Rochester should focus on “new economy” jobs such as information services.

Nearly 700 respondents participated in this week’s poll, which was conducted Oct. 17 and 18.

In your view, what is the primary cause of the decline in manufacturing jobs over the last 25 years?
Trade deals and outsourcing of jobs to lower-cost countries: 55%
Technological change and automation: 31%
Growth of the service sector: 2%
Other: 13%

How important is rebuilding the manufacturing job base to the future of the Rochester-area economy?
Very important: 57%
Somewhat important: 36%
Not very important: 6%
Not at all important: 1%

COMMENTS:
Our country has lost its way when it comes to manufacturing. We pay little attention to technical training starting at the high school level. Regulations can be very onerous with little help from government to comply. We can bring manufacturing back to this country, but we must get serious beyond lip service.
—Michael Tedeschi

You have to build, outfit and maintain manufacturing facilities as well as staff them. As long as it is cheaper, it will be done overseas and the U.S. will suffer the loss of those jobs and the personal revenue. God help us if those foreign factories are retooled in a time of war and we no longer are able to manufacture our own weapons and other products. We should not forget history or we may suffer the same fate again and again.
—Mark Williams

Labor costs and taxes. If you could produce something cheaper and make more profit by outsourcing, wouldn’t you? Corporations want to make a lot of profit. Their shareholders want to see profits. There are enough tax loopholes that make outsourcing and moving your headquarters to another country beneficial. All these loopholes need to be closed up. Taxes and labor costs need to be reduced in a meaningful way so that it will become beneficial to stay in the U.S. to produce their products.
—Jennifer Apetz

We have not stopped being a consumer economy. What we buy was made somewhere—just not here so much anymore. Look at the goods you have around; pick up anything. How many say “Made in China” —especially electronics? These trade deals like NAFTA and the TPP don’t help us at all!
—Marjorie Campaigne, Margie’s Green Home Consulting

We need to understand the German apprenticeship program. We need to do whatever it takes to have an adequate supply of trained workers. Note, Germany’s trade surplus with China is comparable to our deficit! It is possible to be competitive and pay very high wages!
—David Rubin

Decades ago, I received a degree in industrial engineering from Stanford. Among the courses I took were several that dealt with “improving workplace efficiency”—getting more work done with fewer people. I recall an article we read for an industrial psychology course in which a reporter at a future date (maybe 2010 or so) was writing about the need for meaningless, unnecessary work to be assigned to people in order to keep them busy and feeling productive, since by then machines would be doing much of what needed to be done. The reporter concluded his article with the observation that his job, too, probably was unnecessary and meaningless. Whether or not many manufacturing jobs have been shifted to other countries (and they certainly have), technological “improvements” account for a large fraction of manufacturing job loss. As I write this, I do hope that my own service-sector job isn’t unnecessary and meaningless. If it is, please don’t tell me.
—Steve Hooper, president, Health Economics Group Inc.

Everyone should read Martin Ford’s “The Rise of the Robots.”
—Maggie Symington

A better use of resources, both human and financial, would be in retraining and equipping our workforce for the economy of the 21st century. Manufacturing jobs that are highly sensitive to labor costs and are not likely to be competitive with countries whose labor rates are far lower than ours. Conversely, the U.S. is highly competitive in those jobs that require innovation, entrepreneurship and intellectual capital. That’s where our resources should be directed.
—Alan Ziegler, Futures Funding Corp.

Aside from security (national) and law and order (local), private-sector job creation (and retention) is the single most important task for government. Of course we need safety nets and infrastructure—our “government” is feeble in both categories. Note how our “leaders” told us we had “shovel-ready projects” in 2009 and yet, here in 2016, our roads and bridges are an absolute mess. The big picture is for government to get out of the way.
—Jim Bongard

It’s not that I don’t think rebuilding the manufacturing job base is important, I just don’t think it’s possible. The manufacturing jobs simply aren’t there anymore. This isn’t happening only in Rochester—I’m in Syracuse almost daily and there are many closed industrial operations there as well. We need to focus on the areas where jobs are growing if we want to improve the economy. The world is a different place today. The days of getting a factory job right out of high school and staying there till retirement are long gone.
—Debby Emerson, Central NY Library Resources Council

Rochester could do well to take back the apparel manufacturing business, which used to be a cornerstone of the local economy. Apparel manufacturing is still high-touch and high labor, with skill requirements that can be readily taught to a broad base of Rochester’s out-of-work residents.
—Gary Graziano AIA, The Goddard School

A thriving economy, both in Rochester and the rest of the country, requires abundant middle-skills careers. We just need to make sure we’re building toward the jobs of the future rather than trying to restore the lost jobs of the past.
—Mike Bergin, Chariot Learning

All of the above have contributed. Due to outside pressures often artificially inflating wages, the cost of maintaining manufacturing jobs has risen here in New York and the U.S. as a whole. This has pushed these jobs to nations where those pressures do not exist. The high overhead has also led to innovations in tech and a push toward cost service sector companies.
—Matthew Connolly

Manufacturing jobs are critical for the Rochester area. Those who can’t afford college or simply decide higher education is not for them need a place to work. Manufacturing can be a starting place for those who can learn the job and get promoted into higher-paying jobs. It is a job that people can take pride in when making a quality product. It is a good job for those who don’t want to sit behind a desk and want to be physically active.
—Mike Hogan

The biggest reason is technological change and automation. The second biggest reason is that we are not preparing our students to learn to adapt to technology in the manufacturing labor force. When our high school graduation rates are less than 40 percent, how do we expect our 20-, then 30-, then 40-year-olds to learn technology or anything else except to ask if we want fries?
—Jay Birnbaum

Americans want more goods. The price of all these goods is quite costly if made in the U.S.A. If a “good” can be manufactured elsewhere and the purchase price to the consumer is significantly lower than a product made here, the product made here doesn’t have a chance. I think that manufacturing jobs are leaving because Americans want to pay less for their goods.
—Mark Anderson

The cost of doing business in New York State is too high.
—Brian Snyder

We need to do more to encourage small business as well as larger businesses to come to or stay in Rochester. We need a reason for people to come downtown more than just Jazz Fest and Fringe Fest. We have a city that needs to follow Buffalo’s lead! They have done so much to revitalize their city and we need to do the same!
—Aimee Gasparre

The quality of workmanship in flipped homes in city neighborhoods is very poor. The city needs inspectors with degrees or professional licenses in construction and architecture, not employment history with experience in business. The neighborhood where I live, Huntington Park, is an area of beautiful historic homes, but many have been flipped two, three or more times and over a very short time. They are in worse condition now than when originally flipped. The city needs to concentrate on getting owner occupied residences and getting them into the hands of owners who know how to take care of them. That one move alone will improve the existing housing stock in my neighborhood and others and would provide great homes to people in manufacturing jobs who really can’t afford to live in the suburbs.
—Andrea Hryhorenko, RCSD

Government interference—including high taxes and overregulation—at the state level have done just as much damage as federally implemented trade deals.
—John Midolo, RCM Strategies

Manufacturing costs are a combination of material, energy, labor, shipping and taxes. Material and energy are fairly uniform around the world. Shipping to the U.S. when made in the U.S. not a problem. Labor costs are a small percentage of overall costs in the highly automated plant. The greatest differentiating factor is taxes.
—Bill Pollock

We had moved from an agrarian society to a manufacturing/industrial society and now our area, like many others, has moved from manufacturing to service. I believe this has been especially influenced by a more educated workforce that seek higher pay and prefer jobs that are less physically demanding.
—Thomas Schnorr, president, RE/MAX Realty Group

Efficiencies gained by automation will always threaten jobs. Even more so in a state like New York where high labor costs and especially hidden costs (Workers Compensation, Triborough Amendment, Scaffold Laws, high property taxes, ambulance-chasing lawyers, etc.) prevail. But unfair trade deals with cheap labor countries, and foreign governments manipulation of their currency are also major factors. That is an area where something can be done. Level the trade playing field; at least some manufacturing jobs will stay. Most Americans are price shoppers and that will never change.
—George Thomas, Ogden

You cannot have it both ways: lots of good-paying jobs and more and more cheap, inferior stuff to buy. Americans have abandoned made-in-American quality goods for throw-a-way junk. The world cannot support this model.
—Eve Elzenga, Eve Elzenga Design

There is more than just one reason for the loss of manufacturing jobs, including technology, however the tremendous amount of government regulations is as much a cause as any other.
—J.A. DePaolis, Penfield

Not going to happen as long as current political climate exists.
—Jim Weisbeck, Bloomfield

Governments should not be giving preferences to certain industries over others. Rochester should focus on creating a more hospitable business climate for all rather than trying to pick businesses and industries to favor at the expense of others.
—C.J. Healy

The job creators have always been the workers and middle managers who see opportunities in markets and products, missed by the so-called “job creators” that have been (mistakenly) touted by their shills, parroted by the media. Like the digital (Kodak) camera; like the GUI interface (I used one at Xerox in the late ‘60s to send documents to Fuji and Rank); like the Ethernet spec for the internet (another Xerox fumble). Like so many other ideas that have met the blockheaded recalcitrance of the rich-but-not-too-bright elites in our economy. It’s not the big idea that stabilizes our economic prowess but the multitude of smaller, yet answers to an existing market need that drives our excellence. When will we ever learn to appreciate steady vs. flash in the pan? The “gods” have demonstrated their ineptitudes. The press needs to stop printing press releases and do some in-depth reporting.
—Art North, Penfield

I was so happy to buy a T-shirt made in America with an American flag on the chest! Yes! I later looked at the back of the tab to see that it was printed in Mexico? That is not a good thing, and what did that cost to ship twice—and how many jobs were lost?
—Daniel Mossien

Why are there half as many manufacturing jobs in the Rochester area as there were 25 years ago? There are several reasons. Politicians chose to ignore a trade strategy alternative that would have balanced trade with a single constraint. The strategy was reviewed by Rep. Louise Slaughter and others. A copy of the well-conceived and well-written (trade strategy) proposal from (University of Rochester) Professor Julian Keilson (who died in 1999) is available in LinkedIn, under Chuck Masick, summaries section. The proposal was based on green stamps and can be implemented today, somewhat like bitcoin. Politicians were satisfied with donations from the donor class and the donor class was satisfied with the political inaction. The politicians and the donor class do not care about the American people as much as they care about themselves. The donor class preferred alternatives like outsourcing rather than balanced trade and the American people were satisfied with cheap imports despite fewer job opportunities. The American people may have assumed that the interests of the politicians and the donor class were aligned with their interests. In the mid-seventies, the government essentially took intellectual property from Xerox, probably to benefit Kodak in the short-run. Kodak exited the copier business in a little over a decade and, unfortunately, the decree benefitted foreign copier manufacturers more in the long run. Kodak invented the digital camera in the mid-‘70s, but Sony introduced the first digital camera in 1981. Kodak preferred to focus on traditional photography and a blend of traditional and digital technologies during the first two decades of digital photography. In the late ‘70s, Xerox chose to focus on the Star computer system rather than both the Star and something like the Mac, which was introduced a few years later. Xerox invented and owned the technologies used in the Mac, e.g., icons, the mouse, Ethernet, etc. In about 2000, Kodak chose to ignore a proposal from the Nordic Region to put cameras in cell phones. George Fisher was from Motorola, so some joint venture may have been possible. Kodak had the technologies and facilities to manufacture miniaturized cameras from the Disc program two decades earlier.
—Chuck Masick, mit (magic institute of tutoring)

10/21/2016 (c) 2016 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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