We will never be rolling the clock back to the past, but there is a significant opportunity to renew manufacturing production and employment in the United States. Disruptions during the COVID-19 pandemic made businesses more cognizant of supply chain integrity. The war in Ukraine and a stronger competitive stance toward China have led political and business leaders to suggest that we should reshore more manufacturing. The recently passed federal CHIPS Act, designed to encourage additional semiconductor production in the U.S., is an example of a new industrial policy designed to achieve these aims.
The United States does indeed offer the opportunity for more resilient supply chains, stronger national security and new well-paying factory jobs. But most of these will be for highly skilled workers, not the low- to semi-skilled workers in traditional manufacturing. In fact, lower-skilled jobs may continue to disappear.
The story of Singapore is a preview of this future. Though perhaps better known among the American public as a financial center, Singapore has long had an important manufacturing sector as well. Having worked on consulting projects that had me traveling to and working with people in Singapore, I know that they are well aware that they are not a low-cost country, and that their economic success depends on operating at U.S. and European standards. While Singapore is in Southeast Asia, it is very much a developed country.
Singapore is one of the rare advanced economies that successfully reversed manufacturing decline. According to the Wall Street Journal, after falling by 9 percentage points from 2005 to 2013, manufacturing’s share of Singaporean GDP rose from 18 percent to 22 percent in 2021. This was accomplished through a vast deployment of robots and other advanced technology, and was accompanied by a decline in low-skill jobs. Most notably, 74 percent of the workers in Singapore’s manufacturing sector are now categorized as high skill. The Journal notes that, “Manufacturing is becoming a white-collar profession in Singapore.”
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The Singapore experience suggests that, for the United States to be truly competitive in advanced manufacturing sectors ranging from semiconductors to biopharma, it will have to embrace a similar program of deploying technology and automation. In turn, this means that the labor force in these new facilities will need to be high skill, even white collar, not what we think of as traditional blue-collar workers.
If America and American states want to remain competitive in the manufacturing world of the future, they must significantly increase the skill level of their manufacturing workforce. Even if manufacturing does not become a truly white-collar profession, it’s very likely that it will become a skilled one.
Adapting to this will require that both government and prospective workers think about the industry in that way. Young people will have to be willing to pursue skills to work in manufacturing industries that have long been perceived as in terminal decline. Given the Singapore experience, in which the number of manufacturing workers declined even as output and skill levels went up, young people may well decide that their future prospects are brighter in nonmanufacturing industries such as health care. This is probably a rational choice.
For many industries, whether or not there is a robust domestic presence may be something that can be left for the market to decide. But with manufacturing, retaining a significant volume of leading-edge capabilities is critical to national security and geo-strategic competitiveness. So governments at both the state and federal level have a stake in making sure that we develop the skilled workforce necessary to be competitive in the manufacturing game. They have to develop policies that position us to succeed in the high-tech, high-skill manufacturing world of the future.
Governing's opinion columns reflect the views of their authors and not necessarily those of Governing's editors or management.
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