Summer is often the season of celebrations, weddings, and graduations. As I recently watched my own daughter graduate from high school, I must admit to some mixed feelings — excitement for her future, but apprehension over funding the education of two college kids come fall. I'm lucky to have employment. Not so for some friends here in Solon, Ohio: Keithley Instruments, purchased last year by Danaher Corp. for $300 million, is moving hundreds of manufacturing jobs to China.
Keithley makes testing equipment for the U.S. government and electronics industry. The company's research and development operations will remain in Solon, as well as the manufacture of equipment with “Made in the USA” mandates. However, Keithley's new parent company is now Tektronix, Beaverton, Ore., a company that already owns factory space in China. Danaher is merging many of Keithley's operations with those of Tektronix, with the move to China deemed “in the best interest of Keithley's long-term competitiveness,” according to company sources. It certainly isn't in the best interest of their Ohio employees being tossed out into a lousy job market.
Fortunately it's not all doom and gloom when it comes to China. With Chinese wages rising at 17% per year, according to a report from the Boston Consulting Group (BCG), and transportation costs making it increasingly expensive to ship goods to the U.S., several large companies have begun reshoring portions of their manufacturing. For example, Wham-O Inc. — of Hula Hoop and Frisbee fame — brought half of its manufacturing back to the U.S. last year. Other companies making similar moves include NCR, General Electric, and Caterpillar, to name a few. Analysts at BCG forecast that American and Chinese labor costs will converge by 2015, once worker productivity is factored into the calculations. This is great news for U.S. manufacturing, though the report cautions that America's major competitive threat just may be our own government in the form of burdensome regulations.
A lack of skilled workers is yet another hindrance faced by American manufacturing. As many U.S. factory workers near retirement, few young workers are in the pipeline to replace them. To this end, the Obama Administration's June 8 endorsement of a manufacturing-skills credentialing system aims to boost manufacturing jobs growth as part of the Skills for America's Future initiative. The program promotes improved partnerships between industry and community colleges to ensure that students are developing skills relevant to work in today's high-tech factories. Fewer factory jobs are available now than in the past, but existing positions necessitate skilled work that tends to pay above-average wages. The new initiative may not help Keithley's displaced workers, but it may assist the next generation of U.S. factory workers. Now that's something worth celebrating.