Manufacturing In 2012

On the commute home today, I experienced a moment of podcast heaven. Not only did I learn about a field that I know relatively little about (American manufacturing), but I learned about on an episode of EconTalk (Adam Davidson on Manufacturing) where the guest was Adam Davidson, one of the main reporters from NPR’s Planet Money. If you’re interested in getting some genuinely well informed perspective on the current state of manufacturing, it is well worth a listen. However, I was not content merely to listen to the podcast. I wanted to get some context for the state of manufacturing in Canada.

There’s a well known story in the media that manufacturing (especially manufacturing employment) is disappearing in North America. That story is even more pronounced in Ontario which was historically a major centre of manufacturing activity. If you focus on the percentage of jobs in manufacturing, the trend is clearly going down. Consider the following graph from Statistics Canada from a 2009 report called, Trends in manufacturing employment

Chart B Manufacturing’s share of employment has fallen sharply since the turn of the century

Even as the quantity of manufacturing jobs continue to drop, there are significant opportunities. For example, skilled machinists and technicians who understand CNC programming and other high end manufacturing techniques can find good jobs. Adam Davidson, rapidly becoming one of my favourite economics reporters, has reported on manufacturing jobs that pay “$30/hour” (roughly $60,000 per year) in his excellent article in the Atlantic Making It in America. Davidson comments on one American factory that still has classic lower skilled manufacturing jobs (i.e. annual pay around $27,000 a year). The only reason that category of job continues to exist is the cost of switching to machines is still too high. Manufacturing employment isn’t quite gone but it is rapidly splintering into two categories: higher skilled positions (require several years of technical training, specialized knowledge, etc) and lower skilled positions that will likely continue to decline.

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