Closing US manufacturing trade deficit would create 1.3 million jobs, says Tech Think Tank
ITIF, a leading tech-policy think tank, finds in a new report that trade pressure and faltering US. competitiveness was responsible for more than two-thirds of the 5.7 million manufacturing jobs lost between 2000 and 2010. And rather than entering a “fourth industrial revolution,” US. manufacturing productivity growth is actually near an all-time low. In light of these facts, ITIF concludes that U.S. policymakers should aim to close the country’s trade deficit in manufactured goods by fighting foreign mercantilism and pursuing a national competitiveness agenda that hinges in part on boosting manufacturing productivity rates. The report estimates that successfully closing the manufacturing goods trade deficit this way would create 1.3 million jobs.
“We keep hearing from economists and pundits that the United States has lost the bulk of its manufacturing jobs to automation, so there’s nothing we can do to get them back. But that’s simply not true,” said Adams Nager, ITIF’s Economic Policy Analyst and the report’s author. “It’s time to stop blaming manufacturing job losses solely on robots and start recognizing the impact of America’s lagging competitiveness and other countries’ unfair trade practices. The good news is there’s something we can do about both issues. If policymakers focus on rolling back foreign innovation mercantilism, especially in China, and develop a robust national competitiveness and productivity agenda, then America can close its manufacturing trade deficit and create manufacturing jobs.”
The report points to two main areas in which statistical evidence belies the false claim that automation and productivity growth were the biggest causes of the major manufacturing job losses seen in the early 2000s. First, while productivity growth in manufacturing compared to the rest of the economy was fairly consistent from 1990 to 2010—25.8 percent in the 1990s and 22.7 percent in the 2000s—job losses in the latter decade were 10 times greater than in the former.
Second, government statistics significantly overstate manufacturing productivity growth. Government data shows an astonishing 179 percent increase in computer manufacturing output from 2000 to 2010. But companies actually produced fewer computers during this time, not more. The discrepancy is explained by the fact that the massive growth in productivity represents increasing computer processing speeds. The mismeasurement of this subsector of manufacturing significantly skews manufacturing statistics overall, masking decline and leading many analysts to erroneously conclude that productivity had to have been the driver of employment losses. Indeed, controlling for this massive overstatement, it turns out that real value added from U.S. manufacturing grew just 6.4 percent since 2000, not the reported 19.3 percent.
Instead of attributing manufacturing job losses primarily to automation and productivity, ITIF argues that global competition contributed to upwards of two-thirds of the manufacturing jobs lost from 2000 to 2010. During this time, rapid growth in imports, particularly from China, reduced US. output in 12 of 19 manufacturing sectors. Simultaneously, China ramped up its mercantilist polices—from currency manipulation to forced intellectual property transfers and government subsidies—all of which hurt US. manufacturing employment.
Nager warns that continuing to embrace the false narrative of vibrant manufacturing productivity growth distracts attention from the need to get tougher on foreign mercantilism and boost US. manufacturing productivity. Indeed, while manufacturing productivity grew 24 percent from 2002 to 2006, it only grew a dismal 1.5 percent from 2012 to 2016—hardly evidence of a so-called “fourth industrial revolution.”
“Unless US. manufacturers can accelerate their productivity growth, it will be difficult for them to compete with manufacturers in other nations,” said Nager. “Productivity stagnation is a major reason why the manufacturing trade deficit has ballooned 53 percent since 2010.”
The report concludes that if the United States enacts policies and eliminate the manufacturing goods trade deficit, in part by more effectively countering foreign mercantilist policies and improving US. productivity, this would create 1.3 million US. manufacturing jobs across the country.
“Manufacturing is all over the news these days because President Trump has made revitalizing the sector a centerpiece of his agenda,” concluded Nager. “But pundits and economists continue to paint a highly misleading picture, not only about what happened to US. manufacturing, but also about what is happening now. We need to get the facts straight so Congress and the administration can enact much-needed reforms to grow manufacturing output and employment.”
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Marketing matters: from IBM to Kyndryl
Prior to joining Kyndryl as Chief Marketing Officer, Maria had a 25-year career at IBM, most recently as the tech giant’s CMO where she oversaw all marketing professionals and activities across North America, Canada and Latin America. She has held senior global marketing positions in a variety of disciplines and business units across IBM, most notably strategic initiatives in Smarter Cities and Watson Customer Engagement, as well as leading teams in services, business analytics, and mobile and industry solutions. She is known for her work with teams to leverage data, analytics and cloud technologies to build deeper engagements with customers and partners.
With a passion for marketing, business and people, and a recognized expert in data-driven marketing and brand engagement, Maria talks to Business Chief about her new role, her leadership style and what success means to her.
You've recently moved from IBM to Kyndryl, joining as CMO. Tell us about this exciting new role?
I’m Chief Marketing Officer for Kyndryl, the independent company that will be created following the separation from IBM of its Managed Infrastructure Services business, expected to occur by the end of 2021. My role is to plan, develop, and execute Kyndryl's marketing and advertising initiatives. This includes building a company culture and brand identity on which we base our marketing and advertising strategy.
We have an amazing opportunity ahead at Kyndryl to create a company brand that will stand apart in the market by leading with our people first. Once we are an independent company, each Kyndryl employee will advance the vital systems that power human progress. Our people are devoted, restless, empathetic, and anticipatory – key qualities needed as we build on existing customer relationships and cultivate new ones. Our people are at the heart of this business and I am deeply hopeful and excited for our future.
What experiences have helped prepare you for this new opportunity?
I’ve had a very rich and diverse career history at IBM that has lasted 25+ years. I started out in sales but landed explored opportunities at IBM in different roles, business units, geographies, and functions. Marketing and business are my passions and I landed on Marketing because it allowed me to utilize both my left and right brain, bringing together art and science. In college, I was no tonly a business major, but an art major. I love marketing because I can leverage my extensive knowledge of business, while also being able to think openly and creatively.
The opportunities I was given during my time at IBM and my natural curiosity have led me to the path I’m on now and there’s no better next career step than a once-in-a-lifetime-opportunity to help launch a company. The core of my role at Kyndryl is to create a culture centered on our people and growing up in my career at IBM has allowed me to see first-hand how to prioritize people and ensure they are at the heart of progress in everything Kyndryl will do.
How would you describe your leadership style?
I believe that people aren't your greatest assets, they are your only assets. My platform and background for leadership has always been grounded in authenticity to who I am and centered on diversity and inclusion. I immigrated to the US from Chile when I was 10 years old and so I know the power and beauty that comes from leaning into what makes you different from other people, and that's what I want every person in my marketing organization to feel – the value in bringing their most authentic self to work every day. The way our employees feel when they show up for themselves authentically is how they will also show up for our customers, and strong relationships drive growth.
I think this is especially true in light of a world forever changed by the pandemic. Living through such an unprecedented time has reinforced that we are all humans. We can't lead or care for one another without empathy and I think leaders everywhere have been reminded of this.
What’s the best leadership advice you’ve received?
When I was growing up as an immigrant in North Carolina, I often wanted to be just like everyone else. But my mother always told me: Be unique, be memorable – you have an authentic view and experience of the world that no one else will ever have, so don't try to be anyone else but you.
What does success look like to you?
I think the concept of success is multi-faceted. From a career perspective, being in a job where you're respected and appreciated, and where you can see how your contributions are providing value by motivating your teams to be better – that's success! From a personal perspective, there is no greater accomplishment than investing in the next generation. I love mentoring younger professionals – they are the future. I want my legacy as a leader to include providing value in work culture, but also in leaving a personal impact on the lives of professionals who will carry the workforce forward. Finding a position in life with a job and company that offers me a chance at all of that is what success looks like to me.
What advice would you give to your younger self just starting out in the industry?
I've always been a naturally curious person and it's easy for me to over-commit to projects that pique my interest. I've learned over years of practice how to manage that, so to my younger self I’d say… prioritize the things that are most important, and then become amazing at those things.