RDA Happenings November 2011
Posted on November 1, 2011 – By Emporia RDA
We are beginning to see the trends locally that business activity of our primary businesses is beginning to pick up. It would be termed cautious optimism by our local businesses. Certain projects are coming together with our existing businesses that may occur in the first or second quarter of next year. The following is a reply to an article in the Emporia Gazette. Hopefully, my reply has been published. If it has, then it is a message worth repeating.
Several weeks ago on the editorial page of the Emporia Gazette was an article concerning economic development growth and “low paying” manu-facturing jobs. It is not the first time that this author has asserted this opinion. However, that opinion has absolutely no basis in fact. At the Regional Development Association of East Central Kansas (RDA) office we maintain and update data on employment and salaries by industry sector. One of our primary sources of on-line data is the KU Institute for Policy and Social Research.
If you go to their website http://www/ipsr.ku.edu/ksdata/ this is a data link to the U.S. Census Bureau “County Business Patterns”. The employ-ment data for 1998 and 2009 for Lyon County, Kansas, was analyzed. Here are the facts:
The average salary for private sector employment in 1998 for Lyon County was as follows:
-Average of all jobs – $21,644
-Manufacturing employment average salary – $26,580
-Percent of manufacturing jobs to total workforce 43%
The average salary for private sector employment in 2009 for Lyon County, Kansas, was as follows:
-Average of all jobs – $27,041
-Manufacturing – $37,814
-Percent of manufacturing jobs to total workforce 25%
The only employment industries with higher annual salaries than manufacturing are utilities and information (which is the telecommunications industry). Those employment levels did not grow.
Here is an interesting fact: in 1998 there were 6,431 manufacturing jobs in Lyon County, and then in 2009 the number of manufacturing jobs had declined to 3,008. However, the average annualized salaries have increased from $26,580 in 1998 to $37,814 in 2009.
The trend is that low-skilled and low-wage manufacturing jobs are gravitating to the low-cost labor markets. The higher-skilled and high-paying jobs in some instances are staying in the USA or “reshoring” to the USA. A promising trend that manufacturing will continue to return to the U.S. is in a recent report issued in August 2011 by the Boston Consulting Group, entitled “Made in America, Again Why manufacturing will return to the U.S.” In their executive summary, the Boston Consulting Group stated the following:
“China’s overwhelming manufacturing cost advantage over the U.S. is shrinking fast. Within five years, a Boston Consulting Group analy-sis concludes, rising Chinese wages, higher U.S. productivity, a weaker dollar, and other factors will virtually close the cost gap between the U.S. and China for many goods consumed in North America.”
In a recent New York Times article dated October 12, 2011, entitled “A Company Grows and Builds a Plant Back in the USA”, they interviewed Paul Fichter, founder of the Taphandles, which produces beer marketing products for breweries. His primary reasons for bringing back the manufac-turing of their products to the USA was labor costs and logistics costs.
Emporia and Lyon County are well positioned to continue to grow their manufacturing base. We need the local workforce to increase their skill levels. Manufacturing is not a “blue collar” lunch bucket occupation. Four-year degrees are required in engineering, chemistry, marketing, account-ing, management and business; two-year diplomas in manufacturing technology with expertise in commercial wiring, HVAC systems, programma-ble logic controls (PLC’s), and computer numeric controls (CNC) for machining. If a future employee wants to be competitive in today’s job market, then they need to attend post-secondary institutions such as Emporia State University and the Flint Hills Technical College to obtain competitive skills. Emporia continues to position itself to be ready to be competitive with “on-shoring” and Kansas is just beginning to see the era of growth and expansion.