05-05-2025
- Business
- Business Journals
Panelists: Manufacturing could resurge in powerful boost for regions
Post-World War II, manufacturing employed nearly a third of U.S. workers and accounted for a similar portion of GDP.
Today, those figures are near 8 percent and 10 percent, respectively.
Yet Jeff Korzenik, chief economist for Fifth Third Commercial Bank, says manufacturing holds significant potential.
'Every dollar added in manufacturing creates about $3 in GDP,' he said. 'Each manufacturing job generates five to seven additional jobs in the economy. It's a powerful multiplier effect that benefits the entire economy."
Boosting U.S. manufacturing by 50 percent poses a promising and even reasonable goal, and strategies employed by some manufacturers already show potential, Korzenik said.
At a discussion hosted by the Kansas City Business Journal, sponsored by Fifth Third Bank, and moderated by the bank's Kansas City president, Taylor Dunn, panelists talked about why manufacturing makes such a difference in regional economies, manufacturing myths and realities, and the battle for workers — as well as efficiency.
Assembling an economic boost
Kansas City-based Orizon Aerostructures, which builds large complex subassemblies for the aerospace industry, opened a facility in Chanute, Kan., in 2016.
It began with 30 people and a starting wage of $13 an hour.
Less than a decade later, that facility employs nearly 500, with a starting wage close to $22 an hour, said Orizon President Henry Newell. Meanwhile, unemployment in the county went from 7.6 percent to less than 3 percent, he said.
In addition, that facility buys many of the smaller components it uses from hundreds of suppliers — a prime example of the multiplier effect of manufacturing on an economy, Newell said.
'Our Chanute facility is a great case study,' he said.
If U.S. manufacturing were to grow by 50 percent, Korzenik said, it would mean 5 million direct jobs but 30 million new jobs through the multiplier effect.
'It makes manufacturing so important to a regional economy versus, say, retail jobs, which have virtually no add-on impact,' he said.
Kristie Keast, CEO of steel company BlueScope North America, said manufacturing also helps establish a strong community through tangential support services, economic resilience through good jobs, increased consumption and prosperity, and innovation. BlueScope has invested in housing, child care and support services to help bring people back to some of the rural areas in which it operates.
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Steve Sanders
A big manufacturing myth
Manufacturing suffers from a slew of misunderstandings, panelists said. Among the most prevalent: That it lacks career potential.
'Manufacturing has had a poor perception as quite a dark age, dirty, heavy, heavy industry, which has been a challenge to attract the younger generation,' Keast said. 'So we've done a lot of work in changing that perception, and authentically through cleaner and brighter factories, through progression with technology.'
Manufacturers recognize the need to work on their branding, even educating parents and school districts about the realities of modern manufacturing.
Partnerships with high schools and colleges help.
Through a relationship with Neosho County Community College in Chanute, Newell said, an Orizon-branded room offers training for mechanics in aerospace and defense, without the need to attend a four-year school.
The manufacturing workforce also has diversified from the stereotypical rural white man, particularly in attracting more women.
'Manufacturing pay is pretty good, and … it offers a great pathway for people for whom a four-year traditional college degree is not a good fit,' Korzenik said.
Aircraft manufacturing, for example, pays better than $55 an hour.
Many young people go into retail and leisure/hospitality, but that sector typically offers lower earnings potential, as well as a lower multiplier effect in terms of GDP, Korzenik said.
Economies in flux
Global shifts likewise have shifted the economics of manufacturing.
Over the past couple of decades, manufacturing costs in other countries have risen and their workforces have shrunk.
'The bottom line is, it's not as cheap as it once was to manufacture abroad,' Korzenik said.
That boosts the appeal of domestic manufacturing.
Similarly, natural disasters and the COVID-19 pandemic have jolted supply chains sufficiently that geographically diversifying or reshoring — bringing manufacturing back to the United States — became important concerns for many businesses. And the United States boasts low and relatively steady energy costs, a key factor for manufacturers.
However, the case for U.S. manufacturing isn't perfect, Korzenik said: a labor shortage, lag in adopting automation, significant regulatory burden, and strong dollar pose obstacles, though not insurmountable ones.
Automation may lag other countries, but it's growing.
Newell said that Orizon now spends its time on upfront engineering processes to create automation so production can run continuously, completely hands off. The company employs artificial intelligence, augmented reality, virtual reality, a classroom with Meta-style glasses, and other technological tools to maximize efficiency.
'This has just really happened in the last two to three years,' he said.
Likewise, BlueScope has implemented AI sensors for applications such as sorting or painting, algorithms that make product decisions, predictive analytics, robotics, and other measures, Keast said.
'Some of these trades, like welding, are quite a dying trade, so we have to overcome that,' she said.
BlueScope also has altered its prerequisites and expanded its searches for workers, recruiting from a broader array of sectors, such as others that work in shifts — nursing, food processing, food services, the military.
'Rather than expecting people to come with a forklift or a crane certificate, we actually train that in,' Keast said. 'What we were looking for was more people that are safety focused, can problem solve, and that want to be part of a team.'
Still, U.S. manufacturers need more workers, and the labor shortage is expected to worsen in the coming years, largely due to immigration policy.
'There's tremendous vulnerability to our labor shortage,' Korzenik said. 'We think that's going to start being felt.'
Panelists pointed to countries such as Japan and Australia, which already have had to deal with labor shortages and have tried strategies the United States could consider. Those include encouraging more female labor force participation, facilitating reentry of retirees into the workforce, and establishing guest worker programs.
