Bicycles, Beer and the Factory Jobs that Aren't Coming Back

Manufacturing is going the way of agriculture, which technology has reshaped to employ ever-fewer workers. But traditional manufacturing isn't the only game in town.

The news is full of reports about the resurgence of manufacturing in the United States, and both President Obama and Mitt Romney are talking about the comeback of factories. But the reality is that traditional factory jobs are going the way of agricultural jobs, which have disappeared since the 1800s as farming became mechanized and reshaped by technology.

That was Jon Roberts' message in August to a group of attendees at the annual conference of the North Carolina Association of County Commissioners. Roberts, a principal with the economic-development consulting firm TIP Strategies, is quick to point out that, while the pattern is clear, his assertion is merely an opinion--existing data can't be used to predict future trends. And he acknowledges that in 1880 you couldn't really have foreseen the continuing decline in employment in agriculture that has occurred.

The idea that the decline in manufacturing jobs is analogous to what has happened with agricultural employment was a fresh and powerful insight for me. For several reasons, I'm certain that Roberts is right. First off, he certainly has the credentials: He has a strong and diverse background in economic development, and he started a couple of his own manufacturing companies. He did economic-development planning for two governors, Washington's Booth Gardner and Texas' Ann Richards, and he worked as a consultant on the economic-development strategic plan for Texas when George W. Bush was that state's governor.

Furthermore, his data is compelling. A slide he showed the commissioners tracked the decrease of manufacturing as a percentage of all jobs in North Carolina from 26 percent to 11 percent over the two decades ending in 2011, while national data for 1970 through 2009 show manufacturing jobs declining from 26 percent to 9 percent. In both sets, the trend line is basically straight with no apparent impact from the recent recession: Manufacturing jobs were being lost before the downturn and after.

Finally, Roberts makes a strong case that the reason the jobs are leaving manufacturing is because of the same kind of technology-driven increases in productivity that reshaped agriculture. Today, crops are raised and livestock is produced by a tiny fraction of the workers who were needed a hundred years ago. Technology is producing the same sorts of changes in manufacturing, where the same or greater output is produced by ever-fewer workers.

North Carolina employment by industry
Roberts says he usually gets pushback from elected officials on his conclusion that they should look beyond traditional manufacturing for job growth, so that's what he expected to hear in the question-and-comment period after his North Carolina presentation. But one of the first to speak was a commissioner from Transylvania County, in the mountains of western North Carolina, who pointed to the line on Roberts' slide that showed leisure and hospitality steadily increasing as a share of total employment.

The commissioner told an interesting story, about a fellow from Colorado who had been coming to Transylvania County for years because he liked to mountain-bike there. It turns out that the mountain-biker runs a very successful craft brewery in Colorado. He had been selling more and more beer east of the Mississippi, so he decided to open a second brewery in Brevard
, the county seat of Transylvania County.

When I followed up, I found that the commissioner was talking about Dale Katechis, the founder of Oskar Blues Brewery. Katechis (who also has started his own bicycle company) is forthright that his passion for mountain-biking was the primary consideration for locating his new brewery in Brevard. "It's not really an epicenter of shipping or on a major thoroughfare," he said with a laugh in an interview with CNBC. "It's a place where I have come to retreat, and ... I thought if I'm going to be away from home, maybe I can bring my kids to a place where I can also get some work done and we're able to save on the cost of shipping beer to the East Coast."

Oskar Blues is one of three craft breweries recently locating in western North Carolina. Sounds like the beginning of a cluster. Success of that kind is organic, arising from the unique strengths of a particular place rather than the cookie-cutter approaches that seem to sweep like a virus through the economic-development world, where success has only counted when you did things that allowed elected officials to claim immediate job growth.

The decline of manufacturing has huge implications for economic-development policy built on government tax incentives aimed at stimulating manufacturing and on real-estate development. Public officials will have to fight harder and harder for fewer and fewer jobs. Success of the kind that is beginning to occur in western North Carolina is slow and incremental, but it is real. That commissioner from Transylvania County didn't claim to have brought the brewery to Brevard, but he glowed with pride when he told the story.