factory jobs – The OM Blog by Heizer, Render, & Munson

OM in the News: The Megafactory Struggle to Find Workers

The U.S. is experiencing a factory-building boom as companies, burned by overstretched supply chains during the pandemic, reshore some of their operations, writes The Wall Street Journal (Dec. 12, 2023). The U.S. also has given priority to the nation’s semiconductor and EV industries, calling them matters of national security and setting aside billions of dollars in subsidies to aid their growth.

A student at Columbus State Community College studying engineering tech uses a VR headset

U.S. manufacturers have long struggled to find all the employees they need. The coming wave of megafactories, aided public incentives, is pushing the labor shortage into a crisis. The value of new manufacturing construction projects hit a record $102 billion last year, three times higher than 2019’s total. Since 2021, 33 manufacturing projects, most of them related to semiconductors or electric vehicles, have cost $1 billion or more.

More than half of the roughly 115,000 new positions expected to be created by the end of the decade could go unfilled, industry experts project. The anxiety is particularly acute in Central Ohio, where Intel is building two semiconductor plants at a combined cost of more than $20 billion, and Honda and LG Energy Solution are constructing a $3.5 billion electric-vehicle battery plant. The companies aim to hire more than 5,000 workers between them, and local suppliers that will serve the factories likely will need thousands more.

An Intel megafactory construction site in Ohio

Will students be interested? Manufacturers have tried to chip away at negative perceptions through public-awareness campaigns. “This is a different type of manufacturing,” said one 27 year old who shook off bad experiences with a previous factory job. “This is super-educated, specially trained. There’s a lot on the line for this type of work.”

Intel said its manufacturing technicians in the U.S. can earn $50,000 to $90,000 a year.

Classroom discussion questions:

What are your students attitudes towards factory jobs?
Why are these positions different from traditional manufacturing jobs?

OM in the News: Manufacturing Jobs are Looking Very Different

Digital transformation and Industry 4.0 are changing manufacturing, but the fact is that skilled operations talent is increasingly harder to come by. With projections that 2.4 million manufacturing jobs will be unfilled by 2028, the question becomes: What talent and skills do companies need in order to succeed in the factory of the future? Industry Week (Aug. 25, 2021) looks at four manufacturing jobs and how they are expected to evolve.

Production Planners will shift from managing shop floor issues to more proactive roles in which they analyze data insights, manage exceptions and identify opportunities for continuous improvement. They will move from using manual processes for monitoring inventory to using predictive analytics and “digital twins” (virtual representation of a part or a process) to create optimized production schedules and proactively manage inventory issues. And they will need skills in lean and six sigma, data analysis and visualization.

Industrial Engineers will increasingly use digital twins and other cyber-physical systems, in addition to other methods of automation, to create greater connectivity between manufacturing processes and shop floor operations. They will need skills in the areas of design for manufacturability, data science, python and R programing languages, co-bots, IoT sensors, digital twins and wearables.

Machine Operators. Today’s operators tend to specialize in one machine or product line and rely on personal judgment in overseeing machines and processes, leaving room for human error. In the future, operators will use digital twins and AI to proactively identify and solve issues. They will be trained as generalists who can work across machines and product lines.

Quality Analysts. Today’s quality experts are often making changes to standards in reaction to customer complaints, bad yields, or defective products. In the future, they will be able to monitor processes in real time, predict quality issues before they occur, and quickly trace and diagnose any issues through the use of digital twins, advanced analytics and the ability to embed intelligence quality controls. This will require an understanding of big data, data science, and machine learning.

But beyond the clear need for a much higher level of digital acumen, there is also a critical need for human skills that machines cannot replicate such as conceptual thinking, decision-making, problem-solving, and innovation.

Classroom discussion questions:

How many of your students will consider manufacturing jobs? Why?
Explain the concept of a “digital twin.”

OM in the News: Factories Demand White-Collar Education for Blue-Collar Work

An engineer creates 3-D blueprints to program machines that manufacture customer orders at a parts manufacturer

New manufacturing jobs that require more advanced skills are driving up the education level of factory workers who in past generations could get by without higher education, writes The Wall Street Journal (Dec. 10, 2019). American manufacturers are, for the first time, on track to employ more college graduates than workers with a high-school education or less, part of a shift toward automation that has increased factory output, opened the door to more women and reduced prospects for lower-skilled workers. “You used to do stuff by hand,” said a U. of Chicago prof. “Now, we need workers who can manage the machines.”

U.S. manufacturers have added more than a million jobs since the recession. Over the same time, they employed fewer people with at most a high-school diploma. Employment in manufacturing jobs that require the most complex problem-solving skills, such as industrial engineers, grew 10% between 2012 and 2018; jobs requiring the least declined 3%. (More than 40% of manufacturing workers have a college degree, up from 22% in 1991).

Improvements in manufacturing have made American factories more productive than ever and, despite recent job growth, require 1/3 fewer workers than the nearly 20 million employed in 1979, the industry’s labor peak. The workers that remain do much more cognitively demanding jobs. At Caterpillar, over 80% of job openings require or prefer a college degree. A majority of the company’s production jobs called for a degree or specialized skill.

At Harley-Davidson’s engine plant in Milwaukee, robotic arms now ferry motorcycle pieces, taking over the tough, repetitive work formerly done by employees. The machines have made the workplace safer, mirroring a national trend. In 2018, factory workers were hurt at half the rate as in 2003.

Classroom discussion questions:

How do these changes impact productivity, as discussed in Chapter 1 of your Heizer/Render/Munson text?
How many students in your class are looking for jobs in manufacturing?

OM in the News: Foxconn’s U.S. Factory Plans

Foxconn makes iPhones and other gadgets for Apple

Foxconn, which helped turn China into the center of electronics manufacturing, just announced it will build a $10 billion plant in Wisconsin to make display panels used in TVs and other products. This marks the first major U.S. investment for Foxconn, the world’s largest contract manufacturer of electronics and the maker of iPhones.

“Foxconn,” writes The Wall Street Journal (July 27, 2017), “is betting the U.S. can rebuild an electronics supply chain that largely shifted to China and other lower-cost Asian countries in recent decades.” The factory is expected to employ 3,000 people initially and as many as 13,000 people eventually. The state is providing Foxconn with a $3 billion, 15-year incentive package of tax credits.

In addition to the factory workers, it is estimated that the plant will create 22,000 indirect jobs and another 10,000 construction jobs– and draw as many as 150 supporting suppliers to Wisconsin and nearby states. The average salaries for the 13,000 jobs at the factory would be $53,000 annually, plus benefits.

The 20-million-sq.-ft. campus will primarily produce high-resolution liquid-crystal displays, known as 8K resolution LCD, used in smartphones and car dashboards, in addition to TVs. Many TVs currently sold in the U.S. are assembled in Mexico, so it is possible that the displays made in Wisconsin could be shipped across the border to be installed in TVs that are later shipped back to the U.S. for sale.

Classroom discussion questions:

Why is Foxconn entering the U.S?
What are the benefits and risks to Wisconsin?

OM in the News: Can the U.S. Bring Back 1/2 the Manufacturing Jobs that Moved Overseas?

Which jobs make sense to reshore from China?

For decades, U.S. companies have been chasing cheap labor offshore and then importing products to sell in the U.S. market. Now, according to Market Watch (March 9, 2017), “Trumponomics, a broader focus on Total Cost of Ownership (TCO) and advanced manufacturing have the potential to end the manufacturing stagnation of the past 30 years and create millions of manufacturing jobs in the U.S.”

Over the past 20 years, the boom in offshoring drove the U.S. goods trade deficit up by $640 billion a year, costing the U.S. 3-4 million manufacturing jobs. But one study revealed that 60% of offshoring decisions used only rudimentary cost calculations, typically just price or labor costs and ignored other costs such as freight, duty, carrying cost of inventory, delivery and impact on innovation.

Advanced manufacturing now helps level the global playing field. First, the number of labor hours per unit of output is reduced. Second, the gap in the labor cost per hour shrinks. For example, a highly skilled robot engineer in China makes 1/3 to 1/2 of American pay, and not the small fraction (5% or 10%) of the low-skilled Chinese workers. In addition, acquiring capital equipment is more expensive in China because of China’s value-added tax of 13% or 17% on imports. Fortunately, the U.S. can have automation and more jobs as it reshores.

The availability of a skilled workforce is essential for bringing jobs back, ranking second among the reasons given by U.S. and foreign companies moving jobs back or creating new manufacturing jobs here. When companies reshored and failed to find the needed workforce, the transition was painful. The good news is that the bleeding of manufacturing jobs to offshore has stopped. Reshoring balanced offshoring in both 2014 and 2015. In comparison, in 2000-2003 the U.S. lost a net 200,000 manufacturing jobs a year to offshoring.

Classroom discussion questions:

Explain the TCO concept.
Why is reshoring more feasible now than a decade ago?

OM in the News: Human Rights and Overseas Factory Workers

Bangladeshi volunteers and rescue workers at the scene of the Rana Plaza building collapse in April 2013 that killed 1,135 people. — Bangladeshi rescue workers at the scene of the Rana Plaza building collapse in 2013 that killed 1,135 people.

After more than 1,100 deaths exposed dangerous labor conditions in Bangladesh in 2013, brands like H&M, Walmart and Gap were among the most powerful companies that pledged to improve the safety of some of the country’s poorest workers. “But 3 years later,” The New York Times (May 31, 2016) writes, “those promises are still unfulfilled, and that safety, labor and other issues persist in Bangladesh and other countries where global retailers benefit from an inexpensive work force.“

A new report by the Asia Floor Wage Alliance has put another spotlight on the conditions. In Bangladesh, tens of thousands of workers sew garments in buildings without proper fire exits. In Indonesia, India and elsewhere, pregnant women are vulnerable to reduced wages and discrimination. In Cambodia, workers who protested for an extra $20 a month were shot and killed.

The brands say that in recent years they have made significant progress in structural repairs and monitoring of factories. But the report accuses Walmart of benefiting from forced labor and other abusive practices in a number of Asian countries. In Cambodia, for instance, workers at factories who make Walmart products are required to work 10-14 hours a day in sweltering heat, without access to clean drinking water or breaks — conditions that have contributed to “mass fainting episodes.” Workers who refuse or who try to speak up for themselves risk being fired.

Factories in many developing countries are under enormous pressure to churn out billions of dollars worth of goods at costs low enough to beat out the competition for business from foreign companies. H&M, with $25 billion in sales, is one of the biggest beneficiaries of the so-called fast-fashion craze, relying on factories in many countries to help quickly refresh its clothing offerings.

Classroom discussion questions:

What are the ethical responsibities of OM managers whose supply chains are in developing countries?
Why is it difficult to meet labor condition commitments?

OM in the News: Poor Countries and Manufacturing Jobs

Cows on the streets of Ahmedabad, India. India has vowed to build better roads and clear red tape to pull it into the leagues of Asia's industrial powerhouses. — Cows on the streets of Ahmedabad. India has vowed to build better roads and clear red tape to pull it into the leagues of Asia’s industrial powerhouses.

The U.S. and Europe—and East Asia more recently—first got rich because of their factories. Over time, as incomes rose and their economies became more sophisticated, they shifted into modern services like health care and finance. But today, parts of South Asia, Africa and Latin America are failing to create thriving manufacturing sectors even though their wages remain low. Manufacturing employment and output are peaking and declining at vastly lower levels of income and development than they did in the West. When manufacturing peaked as a source of jobs in the U.S. in 1953, it employed 26% of American workers, and overall per capita income was around $17,700 in today’s dollars. By 2010, manufacturing accounted for around 9% of U.S. jobs.

Factory automation and robotics are reducing the need for unskilled workers from the countryside to staff assembly lines. Industrial latecomers now have to compete against China, whose massive, integrated manufacturing machine has made it the world’s factory floor and created a huge barrier to entry. Lower trade barriers and better communication have made it easier for supply chains to be spread over farther-flung locales, bringing more countries into direct competition for factory investment. “The factory-led model of advancement—which, for more than a century, has offered the quickest route out of poverty—is simply no longer available to today’s poorest nations,” writes The Wall Street Journal (Nov. 25, 2015). India must joust more often with other cut-rate producers like Bangladesh or Vietnam for slices of the manufacturing process—a component or an assembly here, some product development there—rather than for “start-to-finish industry.”

More factories also might not translate into as many jobs, at least not for humans. Sales of industrial robots shot up by 29% last year to a record of nearly 230,000 units and are expected to keep climbing, to 400,000 units shipped by 2020, especially in Asia.

Classroom discussion questions:

U.S. ever recoup the manufacturing jobs it lost since 1950? Why?
Why is it harder for India to catch up with China?

OM in the News: Getting the U.S. Manufacturing Strategy Right

Manufacturing's technological revolution may not add jobs but will drive growth in the broader economy — Manufacturing’s technological revolution may not add jobs but will drive growth in the broader economy

For years, Washington has made increasing manufacturing employment a priority, hoping to engineer a return to the time when high-school graduates could use factory jobs as a route to the middle class. “Sadly, that isn’t going to happen,” writes the Brooking Institution’s Martin Baily, in The Wall Street Journal (June 3, 2015). Of the 5.7 million manufacturing jobs that disappeared in the 2000s, only 870,000 have returned and the claim that millions more are coming back is a myth.

But manufacturing will be crucial to the U.S. economy in the future not for its ability to create jobs but for its potential to drive innovation and productivity growth, and for its role in international trade and competitiveness. That means if the U.S. is serious about promoting a recovery in manufacturing, it will stop measuring success by the number of people employed in the sector and start supporting the technological advancements that are making factories more productive, competitive and innovative. This technological revolution may result in fewer factory jobs for low-skilled workers, but it promises to benefit society by driving growth not only in manufacturing but in the broader U.S. economy, as well. Already under way, the shift is being powered by three key technology developments.

The first is the Internet of things, in which embedded sensors transmit information from machine to machine, allowing them to work together and identify maintenance problems before a breakdown occurs. The second is advanced manufacturing, which includes 3-D printing, new materials and the “digital thread,” where companies use very accurate digital models to guide all stages of product development, speeding the time to market and improving quality. Finally, there is distributed innovation, in which crowdsourcing is used to find radical solutions to technical challenges much more quickly and cheaply than with traditional in-house R&D.

Classroom discussion questions:

1. Which is more important–number of jobs or technology?

2. Describe the Internet of things with several examples.

OM in the News: U.S. Factory Jobs are Gone?

The headline in the latest BusinessWeek article (Jan.27-Feb. 4, 2014) reads: Factory Jobs are Gone. Get Over It. The magazine writes: “Politicians think creating millions of high-tech manufacturing jobs is the answer. It isn’t.” Over the past 60 years, U.S. GDP increased from $2.6 trillion to $15.5 trillion, which means that absolute manufacturing output more than tripled. Those goods were produced by fewer people. As we note in Chapter 1, the number of employees in manufacturing was 16 million in 1953 (about a 1/3 of total nonfarm employment), 19 million in 1980 (about a 1/5), and 12 million in 2012 (about a 1/10). Service industries have taken up the slack. Even much of the value generated by U.S. manufacturing involves service work—about a 1/3 of the total. More than 1/2 of all people still employed in the U.S. manufacturing sector work in such services as management, technical support, and sales.

Over the past 30 years, manufacturers have spent more on labor-saving machinery and hired fewer (but more skilled) workers to run it. From 1980 to 2012 across the whole economy, output per hour worked increased 85%. In manufacturing output per hour climbed 189%. The proportion of manufacturing workers with some college education has increased from 1/5 to 1/2 since 1969.

Developing countries have taken over much of the low-skilled, low-capital production once done in the U.S. Consider the garment industry or tire manufacturing. Such low-tech work is even more mind-numbing and poorly paid than it was when the work was done in the U.S. through the 1970s. Many of the workers killed in the recent Rana Plaza garment factory collapse in Bangladesh earned just $3 a day. Some politicians have regretted the loss of similar jobs in the U.S. The question is: Do we want such jobs here now?

For every $1 spent by the federal government on retraining workers and helping them find jobs after they lost theirs to trade competition, the U.S. spends about $400 on Social Security and disability payments for those who exit the workforce rather than seek new work. So perhaps retraining programs are the solution.

Classroom discussion questions:

1. How has productivity impacted manufacturing in the U.S.?

2. Will the U.S. recover the millions of factory jobs it lost since 1953?

OM in the News and Video Tip: Factory Apprenticeship Is Latest Model From Germany

BMW's plant in S.C. employs 7,000 — BMW’s plant in S.C. employs 7,000

For Joerg Klisch, hiring the first 60 workers to build heavy engines at his company’s new factory in South Carolina was easy, writes The New York Times (Dec. 1, 2013). Finding the next 60 was not so simple. “It seemed like we had sucked up everybody who knew about diesel engines,” said Klisch. So he did what he would have done back home in Germany: he set out to train them himself. Working with local high schools and a career center in Aiken County, S.C.—and a curriculum nearly identical to the one at the company’s German headquarters–Klisch now has 9 juniors and seniors enrolled in its apprenticeship program.

Inspired by a partnership between schools and industry that is seen as a key to Germany’s advanced industrial capability and relatively low unemployment rate, projects like this one are practically unheard of in the United States. But experts in government and academia, along with those inside companies like BMW, which has its only American factory in S.C., say apprenticeships are a desperately needed option for younger workers who want decent paying jobs, or increasingly, any job at all. And without more programs like Klisch’s, they maintain that the nascent recovery in American manufacturing will run out of steam for lack of qualified workers.

“As a nation, over the course of the last couple of decades, we have regrettably and mistakenly devalued apprenticeships and training,” said Thomas E. Perez, the secretary of labor. But S.C.’s emphasis on job training has also been a major calling card overseas. The state lured BMW here 2 decades ago and more recently persuaded France’s Michelin and Germany’s Continental Tire to expand in the state. Apprenticeship Carolina started in 2007 with 777 students at 90 companies. It now has 4,500 students at more than 600 companies and aims to add 1,400 more companies by 2020.

The New York Times article link contains an excellent 3 minute video clip, called “Creating Skilled Workers,” that you may wish to show in class.

Classroom discussion questions:

1. How do such programs affect productivity? (See pages 15-17 in Chapter 1).

2. Why are there so few apprenticeship programs in the US?