SDCE: So the role of the supply-chain middleman has already been replaced. You mentioned that production jobs have been supplemented by marketing, design, engineering and other roles that require a different kind of skill. Will we just continue to see this transition develop?
ET: There’s a perception that the United States has lost manufacturing and it’s gone overseas. That’s just not true. The United States has never manufactured more product than it is manufacturing today. Ever. What we’ve lost—and which will never come back—are these assembly-line type jobs. This major part of the employment picture has disappeared—not to foreign workers but to technology. The reason why there is so much angst over it is because you have your 10 or 20 million people who have spent their lives and have been brought up and trained to do jobs that no longer exist. And they’re completely unqualified for the jobs that do exist. To work on a production floor nowadays, you need to be an engineer of some sort or have some kind of aptitude to be able to run machines which now aren’t crank-and-lever machines but those that are run by a keyboard; it’s run using calculations; it’s run very differently than what it used to be. It’s because of efficiency that those jobs disappeared. What happens next is that the new economy, these new efficiencies require a whole new set of skills. Farmers had to move into the city in earlier days and learn how to become industrial workers. Now, the current industrial worker has to learn these new skills.
SDCE: Is this the next chapter in manufacturing? That paradigm shift?
ET: Exactly. And the great part about getting into manufacturing now is that you have more tools and equipment and technology at your disposal at a cheaper price than it has ever been before. And the talent that you are looking for is engineering and design. It’s a whole different type of acumen that is required to build these companies.
SDCE: What other big changes do you foresee impacting domestic manufacturing over the next few years?
ET: One thing that is inevitable—unions will disappear. In the manufacturing sector, with the exception of the very large manufacturers, you’re just not going to see the ability of a company to stay in business if it has a union. You saw that in Indiana this week where they just passed the legislation. Indiana is very focused on manufacturing and you can’t be a small- or mid-sized manufacturer and have to deal with a union. The other thing is that there is a lot of administrative bureaucracy in this country which at some point it is going to hit a breaking point. And either it’s going to get dramatically simplified by the government or it’s going to become so complicated it will be virtually ignored. There is a disconnect between Washington D.C. and the rest of the country. They just don’t understand this dynamic that is happening in terms of manufacturing. If you outsource 1,000 jobs, you can bring those jobs back but it’s only 50 jobs. And certain products will always be made overseas cheaper—those which require hand work and that machines cannot improve on. That will always be the case. It’s an ongoing story and more and more companies will start paying attention to it—this assumption that making product is cheaper overseas. Sure, if the economy improves and interest rates start going up, it makes it that much more expensive to invest in equipment. But it will only move the line a little bit—it won’t change the line’s existence.