For decades, good manufacturing jobs allowed workers to own homes and cars, take nice family vacations, satisfy their health care needs, send children to college and retire with financial security.
The importance of this group -- the manufacturing middle class -- to the United States has been immeasurable. Manufacturing jobs created a vision of American life that led immigrants around the world to our shores. At Kennametal Inc., I have personally witnessed the American dream become a reality for many of our employees.
As the middle class began to shift from manufacturing to service, the U.S. economy and the middle class began to experience a steady but sharp decline. According to the Congressional Budget Office, manufacturing GDP dropped 40 percent from 1980 to 2007. After-tax income for the middle 60 percent of Americans fell 7 percent during the same time period. Manufacturers were challenged to comply with noncompetitive tax codes and policies, and forced to make the decision to remain competitive or go under, which essentially put the manufacturing middle class out of business.
Contrast this trend with a regression analysis performed by our data research team, which found every one point increase in manufacturing activity translates to 0.4 percent growth in middle class income. The absence of this powerful, positive link has contributed to the financial pressure on the middle class during the last several years. Yet it is also part of how we must once again restore the vision and the reality of a strong manufacturing middle class.
The economy today is obviously different from a generation ago. Yet, if the middle class is to rise again, American manufacturing must also rebound. The challenge is no longer about numbers. It is about perception and overcoming it.
Today, manufacturing is alive and well in this country, leading the economic recovery. We see it every day at Kennametal, which sits on the front-end of the supply line as a global leader in innovative custom and standard wear-resistant solutions for demanding environments.
Right now, nearly 1 million U.S. manufacturing jobs are unfilled, including hundreds at Kennametal. Recent economic forecasts from the Manufacturers Alliance for Productivity and Innovation predict manufacturing production will significantly outpace the overall economy and grow 3.4 percent this year, adding another 170,000 jobs along the way.
At the same time, the National Association of Manufacturers estimates reveal that nearly 2.7 million manufacturing workers will retire in the next decade and demand for skilled labor will increase. The problem isn't the availability of jobs, but rather the ability to find skilled workers to fill these jobs.
As the last large publicly traded company in our industry still headquartered in the U.S., we recognize training the next generation of American workers is critical to remaining competitive and rebuilding the middle class. We do our part to offer unique educational and training opportunities to current and prospective employees that continue to evolve, but we also understand it will not solve all of our industry's problems.
Regulations place American manufacturers at a 20 percent competitive disadvantage compared with our nine largest trading partners. We need to examine tax rate, tax credit and tax code solutions to help bridge that gap.
It's time to reintroduce manufacturing to the middle class. It will require common sense and the combined efforts of industry, education and government to make it happen.
A prosperous middle class doesn't result from economic growth -- it drives economic growth, and recapturing the American dream starts with the manufacturing middle class.bizopinion
Carlos M. Cardoso is chairman, president and CEO of Latrobe-based manufacturer Kennametal Inc. He is chairman of The Manufacturers Alliance/MAPI and chair of the Pennsylvania Governor's Manufacturing Council. Follow him on Twitter at @CarlosMCardoso. First Published June 30, 2012 12:00 AM