Import Chinese factory workers now!

Here’s a Yahoo article discussing the growing problem of finding skilled factory workers in America:

U.S. factories are creating many new jobs. But owners are hard pressed to find skilled American workers to fill them.

There is a “critical shortage of machinists,” a common and crucial position in factories, said Rob Akers, vice president at the National Tooling and Machining Association. “Enrollment in this field in technical schools has been down for a long time.”

The problem comes at a terrible time. Domestic contract manufacturers — known as “job shops” — are seeing a boom in business.

In the case of Win-Tech, a Kennesaw, Ga., manufacturer, orders are coming in fast and furious from its customers in the defense and aerospace industries.

But the company’s owner Dennis Winslow is more concerned than elated.

Winslow’s been trying to add 12 more workers to his staff of 42 to meet the increased demand, but he’s struggling.

“I’m facing a real conundrum,” he said. “There are so many unemployed people in the country. But I can’t find the skill sets that I need. I would hire tomorrow if I could.”

.   .   .

He said he may be forced to hire people who are not fully skilled, and then train them.

“I am coming to the conclusion that this [situation] has become the new normal,” said Winslow. “Being a machinist once was considered a respectable trade. But young Americans just don’t consider manufacturing to be a sexy vocation.”

He noted that most people possessing the skill sets he needs today are baby boomers, many of whom work at his factory.

As the United States outsourced its manufacturing jobs over the last few decades, the country lost a significant chunk of its manufacturing talent pool, said Mitch Free, CEO of MFG.com, an online directory that matches businesses with domestic manufacturers.

“Now, as manufacturing is slowly coming back, we just don’t have this talent quickly available,” said Free, a machinist by training.

.   .   .

It takes about a year in trade school to become a machinist, followed by a few years of apprenticeship at a manufacturing facility, said Free.

Machinists make about $60,000 a year. But with many logging overtime lately, Free said that income can get close to $100,000 a year.

“This is also a highly technical craft,” he said. “It requires knowledge of computers, programming, even geometry. You can’t hire someone off the street and turn them into a machinist.”

Mark Engelbracht, owner of Omni Machine Works in Covington, Ga., is trying to hire just three new machinists. He, too, is having a hard time, a situation that will worsen as his older machinists retire.

“Finding more work isn’t the problem for our business,” he said. “Getting the worker is becoming a problem.”

.   .   .

“I’ve been trying to hire for a year,” he said. “It’s not that people aren’t applying. But many are claiming to be machinists when they aren’t exactly.”

We need to do two things:

1.  Allow thousands of skilled machinists to migrate to America.  This will boost our manufacturing sector, and allow for the employment of lots more less skilled workers in factories.  Those $60,000 to $100,000 salaries will seem quite appealing to Chinese workers.

2.  Have the Fed boost AD so that Americans can find jobs in the service sector, where most work, and most seem to want to work.

PS.  Here’s an article on how Chinese factories are moving back to America.  If we accepted more Chinese workers we could speed up this process.

PPS.  And here’s a Chinese entrepreneur who brought candle-making jobs back to America.  While we’re at it, import more Chinese entrepreneurs too!


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39 Responses to “Import Chinese factory workers now!”

  1. Gravatar of Luis Enrique Luis Enrique
    16. February 2012 at 06:04

    “He said he may be forced to hire people who are not fully skilled, and then train them.”

    the horror!

    If firms need skills, firms need to train workers rather than expect trained workers to fall out of the sky.

  2. Gravatar of dwb dwb
    16. February 2012 at 06:23

    maybe, i dont know why limit it to China (GM is moving a factory from Mexico back to Maryland to build electric cars. yes, i did not write that backwards – News from the Ministry of Huh?).

    Job retraining should be a mandatory part of unemployment comp. If you are 99 weeks unemployed, you could have taken two years worth of classes in a (new) trade. Yes, i know looking for a job can be a lot of work. But having held down school, a job, and a family at the same time I just see no reason why it can’t be done. Yes, one should also be made to prove one is getting decent grades too. I have no problem with unemployment-comp-as-a-”scholarship” program. Maybe I’m old-fashioned or a hard-a$$ in that regard.

  3. Gravatar of orionorbit orionorbit
    16. February 2012 at 06:34

    I imagine the author of the article you cite has data showing the salaries of employees in possetion of these rare skills skyrocketing rather than anecdotes about some guy who makes lots of money?

    Sorry, but the article gives a job description that applies to skilled workers with a higher academic degree, the US could already hire chinese workers under the present system if they wished to, so I don’t see why a US company would pay 100K to attract a local worker rather than spend half the money to hire a Swedish guy with a MSc in engineering.

  4. Gravatar of foosion foosion
    16. February 2012 at 06:37

    In most of the stories I read about the problems finding skilled workers, it turns out that the employer is not offering enough compensation.

    Immigration is a good idea, but it should be much broader. For example, more doctor immigration (and training) would do a lot to help reduce healthcare costs. Too many policy proposals introduce more competition for lower paid workers while continuing to protect doctors, lawyers and other high paid workers.

    @dwb – who pays for the job retraining?

  5. Gravatar of foosion foosion
    16. February 2012 at 06:52

    Karl Smith has a longer version of my comment about paying more: http://modeledbehavior.com/2012/02/16/note-to-us-manufacturers-prices-clear-markets/

  6. Gravatar of StatsGuy StatsGuy
    16. February 2012 at 07:47

    @Luis Enrique

    My sentiments exactly!

    BTW, Scott, this post is very much evidence in support of the structural impediments argument.

  7. Gravatar of B B
    16. February 2012 at 07:49

    Luis, I noticed the same thing.

  8. Gravatar of foosion foosion
    16. February 2012 at 07:52

    When the economy was booming, there were lots of people switching jobs and industries and no talk of structural impediments. Now that the economy is slow, many are claiming there are structural impediments.

    If you didn’t see structural impediments in times of high AD and reasonable NGDP growth, but see them now, the problem isn’t structural impediments, it’s the economy.

  9. Gravatar of Mike Sax Mike Sax
    16. February 2012 at 08:07

    ” Allow thousands of skilled machinists to migrate to America. This will boost our manufacturing sector, and allow for the employment of lots more less skilled workers in factories. Those $60,000 to $100,000 salaries will seem quite appealing to Chinese workers.”

    That might seem counterintuitve to some people. I guess the idea is that by hiring skilled Chinese to do American jobs at some point the boost to the companies will enable them to hire unskilled Americans for unskilled jobs?

    The one thing you don’t suggest is education-the trouble is that qualified students don’t think about manufacturing. Recruiters should go out to high schools and explain that now the sector is growing again and there are highly skilled well paying jobs.

    Obama in his Jobs bill last year had suggested as part of umemployment to have unemployed workers attend training at workplaces-it was on the government dime. The GOP had at one time liked the idea but as it could possilby help the economy in some way and Obama was President they didn’t like the idea aaanymore.

  10. Gravatar of Jason Odegaard Jason Odegaard
    16. February 2012 at 08:08

    Luis, I had to agree. Wasn’t on-the-job training is a big part of repurposing humans to another skill-set. I suspect we’re not *quite* at that level of growth where employers truly feel enough pull to bring on less-experienced workers. But I’m sure unemployed workers can re-tool – getting the boost to AD will help.

  11. Gravatar of Becky Hargrove Becky Hargrove
    16. February 2012 at 08:21

    The last really significant work a lot of our talented machinists had was utilized as seed knowledge, for other countries getting their factories up and running. It’s too bad this opportunity hadn’t come about a bit sooner, when more of them were still in the game – albeit sometimes in machinist shops struggling to remain open. Sure, it’s not hard to train a basic machinist. But not everyone has the additional aptitude for programming – not to mention the ability to think on an engineer’s level, that some of these jobs require.

    Bringing additional seed knowledge from China right now is actually a good idea. Even if this work opportunity had come about ten years sooner, many boomers already had mobility issues. Someone needs to tell Obama that if he is providing more than lip service to manufacturing right now he has to focus, and focus very hard on this. Our talented machinists gave a number of countries a leg up on manufacturing, and China could really help us out now. However some states have issues with regulations and that also has to be addressed.

  12. Gravatar of dwb dwb
    16. February 2012 at 08:23

    who pays for the job retraining?
    1 year at a state school (tuition only, in-state, no room and board) is in the neighbothood of 11k (which varies greatly my school) for about 15 credits towards a B.S. most people borrow much more for a car loan, and i know people still paying off student loans 20x that size. even if the employer paid all of it plus a minimum wage rate (to clean floors or something, surely something usefull) in return for the promise of future employment (companies i have worked for subsidize education including law school and MBA in return the employee has to stay with the company for a set time) – the employer is paying 40k annually in overtime for some employees.

    does not sound like cost in this case is a real issue.

  13. Gravatar of Benjamin Cole Benjamin Cole
    16. February 2012 at 08:59

    Millwrights are still busy in Los Angeles, despite a large reduction of our industrial base.

    However, I think it is proper that the private sector train up millwrights. OTJ training strikes me as a very reasonable activity. Apprenticeships make sense.

    We do have to break the idea that a “college eduction” is a sanctified goal.

    Once you go to college, you probably don’t want to “waste” the education and become a millwright.

  14. Gravatar of Scott B. Scott B.
    16. February 2012 at 09:23

    This harkens back to the discussion about the crisis we’re supposed to be having versus the one we are having. Unemployment is being caused by insufficient NGDP. More NGDP would at the very least mean more low-skill service jobs to employ people. Inability to find machinists to hire is, in fact, a structural problem, and based on articles like the one about Apple offshoring manufacturing and a recent Planet Money profile of Greensboro, SC, I think there is a lack of qualified industrial engineers (machinists and other people with associates-level technical education) in this country that is hampering productivity.

    While we should expect companies to do some training or finance people to go to technical schools in exchange for a work commitment, I fear there is a deeper problem in that people aren’t even qualified to go to technical school. If someone is bad at math and never really learned geometry (or especially trigonometry) despite being able to get a HS diploma or GED, it’s not like you can just take them and put them in a one-year machinist course and suddenly have a qualified worker. Unskilled workers in this country are *really* unskilled, not just lacking job-specific skills but lacking basic secondary-education competence that is found in Europe and East Asia.

  15. Gravatar of Cthorm Cthorm
    16. February 2012 at 09:49

    “If someone is bad at math and never really learned geometry (or especially trigonometry) despite being able to get a HS diploma or GED, it’s not like you can just take them and put them in a one-year machinist course and suddenly have a qualified worker. Unskilled workers in this country are *really* unskilled, not just lacking job-specific skills but lacking basic secondary-education competence that is found in Europe and East Asia.”

    A structural problem caused by insufficient competition in K-12 education.

  16. Gravatar of Peter Peter
    16. February 2012 at 09:53

    I actually just applied to the industrial technology/machinist program at my tech school in town, and two days later there was an acceptance letter in my hand without any calls, questions, interviews, or even having received my transcripts yet. It definitely seemed like they were eager to fill their program as quickly as possible.

  17. Gravatar of Philip Crawford Philip Crawford
    16. February 2012 at 09:55

    @Luis Enrique

    So when I hire my next programmer, I _need_ to hire someone with no experience in Ruby and then train them? I don’t understand your use of that word.

    imo, Dennis seems pretty reasonable. He’d like to hire someone with the skills and experience to do the work he has, which seems to have historically been his best option. He’s learning that this might no longer work and he might have to incur the costs of (training, potential damage to machines, damage to customer relationships) from hiring inexperienced people and then training them.

    Also, trained workers don’t fall out of the sky. Here in Wisconsin, we have excellent tech programs that teach and create highly skilled machinists. I suspect one of the problems in this market is that (from my personal experience) machinists tend to want to stay where they are currently living. Lots of stickiness in that labor market.

  18. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    16. February 2012 at 11:01

    ‘If firms need skills, firms need to train workers rather than expect trained workers to fall out of the sky.’

    Used to be known as apprentice programs. But, you still need people with long time horizons, willing to invest in themselves by working at low wages for a few years.

    Now it’s called internships and seems confined to affluent college kids.

  19. Gravatar of Floccina Floccina
    16. February 2012 at 11:28

    Not only is Luis correct, if the jobs are to hard to train quickly they can usually be divided up so training is shorter.

    On more point on all this talk of a shortage of manufacturing jobs: Fewer people today want to work on the factory floor.

  20. Gravatar of Morgan Warstler Morgan Warstler
    16. February 2012 at 11:42

    Auction the unemployed and it SOLVES for this.

    People are only interested in the things they know about, and they only know about things they are interested in.

    You find some guys who look trainable on auction you win the bid, and week by week you decide if you want to win them back. Over time, they actually become interested in the work, because they know about it.

    Also, another way to make people interested… if we are going to have corporate taxes, give corporations TAX CREDITS for retraining.

    Like, you run a ten week training every night after close of biz, you get a tax credit of $3K per trainee, you have to hire 1 out of 5 trainees.

    Your taxes go down by $15K, and it creates one job.

    The unemployed are forced to go to training to get UI, and at least the guys who never get hired are having to show up every night, and spending ten weeks at a time learning new shit.

  21. Gravatar of Gabe Gabe
    16. February 2012 at 12:11

    “Whoever controls the volume of money in our country is absolute master of all industry and commerce…and when you realize that the entire system is very easily controlled, one way or another, by few powerful men at the top, you will not have to be told how periods of inflation and depression originate.” – President James Garfield, 2 weeks before his assassination.

  22. Gravatar of ssumner ssumner
    16. February 2012 at 12:21

    Luis, It’s only profitable to train workers if you pay them below market wages. But then when trained they’ll jump to other firms. That what technical colleges are for.

    I agree that workers can be trained on the job for many activities, but the things described here seem a bit of a stretch

    dwb, The headline was just an attention grabber–I’m fine with workers from anywhere.

    orionorbit. I think you’d find workers elsewhere who’d get the job done for less than Swedish workers–for instance Polish workers.

    foosion, Yes, I’ve advocated more immigrants who are skilled workers elsewhere. But I consider workers making $60,000 to $100,000 to be skilled workers. Low skilled workers usually make $10 to $20 an hour. (20k to 40k a year)

    Statsguy, See my reply to Luis.

    It might slightly support the structural view, but these sorts of jobs are a drop in the bucket of the US labor markets. The US economy is mostly service jobs. I think the structural argument is better at explaining why Germany has more good paying factory jobs than US, not more jobs overall. For the vast majority of the past 30 years we’ve had lower unemployment than Germany.

    foosion, Yes, the overall unemployment rate is definitely the economy.

    Mike Sax, And don’t forget all the “multiplier effect” jobs! Doctors to treat the Chinese workers when they are sick, construction workers building houses for them, waiters serving them when they go out to eat, etc.

    B and Jason and Benjamin, See my reply to Luis.

    Becky, Good point.

    Scott B. Good point.

    Cthorm, Good point.

    Peter, That’s good.

    Philip, Yes, I used to know people who went to MATC in Madison.

    Patrick, Good point.

    Floccina, Yes, I’ve noticed that fewer kids want to grow up to be factory workers–can’t blame them.

    Morgan, Replace the minimum wage with a wage subsidy, and get rid of UI. There’s your equilibrium labor market.

  23. Gravatar of Cthorm Cthorm
    16. February 2012 at 12:30

    @Scott

    “Replace the minimum wage with a wage subsidy, and get rid of UI. There’s your equilibrium labor market.”

    This seems like such an obvious idea to me. A wage subsidy is what the EITC should have been. I imagine this working as a negative payroll tax. How would you implement it?

  24. Gravatar of Greg Ransom Greg Ransom
    16. February 2012 at 12:36

    Scott has a plan for every problem — a plan for housing allocation, a plan for labor allocation.

    Scott Sumner for dictator.

    Krugman’s magic Asimov Button doesn’t hold a candle to the miracles of economic coordination achievable by making Scott our top-down planning Czar.

    Where’s the magic plan for Detroit?

  25. Gravatar of Major_Freedom Major_Freedom
    16. February 2012 at 12:38

    “Have the Fed boost AD so that Americans can find jobs in the service sector, where most work, and most seem to want to work.”

    1. “AD” is not the foundation for employment. No seller sells into and no investor invests into “AD”. Investment is carried out by taking into account TWO demands, namely, prices for input and prices for output. Increasing AD won’t affect this difference.

    2. Inflation, and the government deficits inflation encourages and facilitates, reduces the formation of sustainable capital because it artificially boosts profitability, and makes people think they’re wealthier than they really are, and coupled with taxation of these extra profits as if they are real profits, consumption out of capital is encouraged.

  26. Gravatar of J Mann J Mann
    16. February 2012 at 13:50

    I said this over at modeled behavior, but IMHO, another problem with the training is that you don’t have much of an ability to determine, ex ante, which applicants are likely to have the traits that make them want to be machinists in the long run.

    Hiring people with experience or at least a one year degree from someplace you are familiar with screens for people who are likely to be good machinists and/or likely to enjoy it enough to stay with it.

  27. Gravatar of nemi nemi
    17. February 2012 at 03:03

    In other news:
    There is a shortage of three dollar penthouses in Manhattan.
    What is the world coming to!

  28. Gravatar of ssumner ssumner
    17. February 2012 at 06:14

    Cthrom, That is the issue. The company would pay the subsidy, and be re-imbursed by the Treasury. In a country as big as the US there would be fraud. The question is whether it would be at acceptable levels.

    Greg, My plan for Detroit is no bailouts, laissez-faire, creative destruction. What’s yours?

    Major Freedom, Not the foundation, but a necessary condition.

    J Mann, Good point.

    Nemi, Touche!

  29. Gravatar of Primo Primo
    17. February 2012 at 06:50

    Scott Sumner wrote: ” . . . don’t forget all the “multiplier effect” jobs! Doctors to treat the Chinese workers when they are sick, construction workers building houses for them, waiters serving them when they go out to eat, etc.”

    Here’s a case that illustrates the point. Mac’s Barbecue in Gregory, Texas, near Corpus Christi is expanding the restaurant in anticipation of an influx of new customers. Why? Because Chinese company TPCO (Tianjin Pipe Corp.) is building a $1 billion pipe mill nearby, bringing several thousand new jobs with it. Not sure if they’ll bring workers from China, but I doubt they have much trouble finding trained or trainable workers. Construction has recently begun on the mill.
    http://www.caller.com/news/2012/jan/22/development-spark-catching-in-gregory-as-tpco/

    First phase of mill operation will be finishing of imported “green” pipe, presumably imported from TPCO’s Chinese mills. Interesting that they will ship their pipes past the US left coast for business friendlier Texas. It is a shame to watch the deep blue states like CA and IL decline before our eyes with their high taxes, onerous regulatory schemes, and expensive public employees. Evidence is that their unemployed, skilled workers are welcome in Texas.
    http://www.city-journal.org/2011/21_4_california-jobs.html

  30. Gravatar of RobbL RobbL
    17. February 2012 at 12:09

    Scott,

    If you read a newspaper article saying that there is a shortage of vacation homes in Martha’s Vineyard because someone said that they were willing to pay 60k to 100k and found no takers, what would you think?

  31. Gravatar of ssumner ssumner
    18. February 2012 at 07:39

    Primo, It’s interesting to see Chinese firms investing in the US. I take it we have better workers and technology for building the sorts of pipes needed in the oil industry.

    On second thought I think there’s something a bit fishy about that article I linked to, the US has lots of skilled factory workers. I wonder if that company ever tried putting an ad in Michigan or Ohio newspapers.

    I agree about the Texas model, and have a few posts on that.

    RobbL, Price too low? But don’t you think workers would be available from China at that price?

  32. Gravatar of Bryan Willman Bryan Willman
    18. February 2012 at 22:25

    That article refers to the folks from mfg.com, who have an, um, mixed reputation.

    You can read more than you might ever want to about this topic at http://www.practicalmachinist.com.

    The thing that is always left out is the job-value/salary issue. So, there’s a shortage of machinists? But, the marginal value of the job is, say $x per hour. More than that and the job loses money. OK, offer $x-0.01 per hour. If that works out to $10.99 per hour you have a problem.

    Better find a more efficient process, or more efficient people, who will cost more. Automation is your friend.

    Hint – when you get a real shortage, like the big software houses faced in the ’80s and ’90s, industry wide compensation will go through the roof. It’s very easy to recognize.

  33. Gravatar of Major_Freedom Major_Freedom
    18. February 2012 at 23:53

    ssumner:

    “Major Freedom, Not the foundation, but a necessary condition.”

    Semantics. People have to consume if they want to live and promote their well-being. Because there is a demand for consumption, there is profitable investment. It is not AD that is necessary for employment or production. It is saving and investment.

  34. Gravatar of ssumner ssumner
    19. February 2012 at 06:45

    Major Freeman, AD is completely unrelated to the “demand for consumption.”

    Bryan, Good point.

  35. Gravatar of Guy Guy
    25. February 2012 at 12:56

    As background, there was an interview by Russ Roberts on Econtalk with Adam Davidson about an article he wrote in the Atlantic that makes many similar points.

    The article was in the January edition: Making it in America.

    Some very interesting points about skilled versus unskilled labor as well as when to manufacture in the US versus overseas.

    For example: The combination of skilled labor and complex machines gives American factories a big advantage in manufacturing not only precision products, but also those that are made in small batches, as is the case with many fuel injectors.

  36. Gravatar of ssumner ssumner
    26. February 2012 at 07:52

    Guy, Thanks for the tip. That sounds plausible.

  37. Gravatar of Major_Freedom Major_Freedom
    26. February 2012 at 16:12

    summner:

    Major Freeman, AD is completely unrelated to the “demand for consumption.”

    It’s not completely unrelated. Consumption demand is a component of AD.

  38. Gravatar of ssumner ssumner
    28. February 2012 at 05:57

    Major, So are toasters–replace consumption with toasters and see how silly your earlier comment sounds.

  39. Gravatar of Major_Freedom Major_Freedom
    1. March 2012 at 22:32

    ssumner:

    Major, So are toasters–replace consumption with toasters and see how silly your earlier comment sounds.

    Consumption spending on toasters is a part of AD. Aggregate demand is the total money expenditures for goods and services. Toasters are a good, so spending money on toasters would obviously be included in AD.

    What silliness are you talking about? The only silliness I see is you saying consumption spending isn’t a part of AD, when AD is defined as C+I+G in money spending terms, where C is CONSUMPTION spending. Hello!

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