No jobs, no money

Joe Nocera has an op-ed column in The New York Times about the economy:

If you want to feel optimistic about the state of manufacturing in America, you ought to spend a day with Stephen Gray. Then again, if you want to feel depressed about the state of manufacturing in America, you ought to spend a day with— yup— Stephen Gray.
Gray, 46, is chief executive of Gray Construction, a family-owned company, based in Lexington, Kentucky, that builds factories for big firms. As a result, far more than most people, he has his finger on the pulse of manufacturing in this country. Not so long ago, Gray told me, the future looked grim. Manufacturing companies were canceling construction projects. The ten or so factories he was building were nearing completion, yet there was nothing new in the pipeline. Gray Construction was forced to lay off employees. The recession was taking a terrible toll.
But, in the summer of 2010, Gray Construction began to turn around because manufacturing itself began to turn around. There were six big jobs up for bid, including a Siemens factory in Charlotte and a Caterpillar plant in Winston-Salem, both in North Carolina. Gray won them all. It now has 22 projects in various stages of development. With the two North Carolina plants nearly done, Gray asked me if I wanted to tour them. I said yes.
It is impossible not to be impressed with modern manufacturing plants like the Siemens and Caterpillar facilities. They are, first of all, immense; the Caterpillar plant in Winston-Salem, for instance, which will make gigantic axles for its mining trucks, is 850,000 square feet. Both plants use complex robotics, yet still convey the brawn we associate with manufacturing, with giant cranes that lift— in the case of the Siemens plant— the 280-ton gas turbines the plant will soon be making.
Secondly, these plants offer something that has become increasingly rare: middle-class jobs that don’t require a college degree. The jobs pay between $20 and $30 an hour, plus benefits, allowing a skilled machinist to make a decent middle-class living.
The key word, of course, is “skilled.” One reason Siemens and Caterpillar chose North Carolina is that Charlotte and Winston-Salem have community colleges that stress manufacturing skills.
Forsyth Tech, a local community college in Winston-Salem, was involved in wooing Caterpillar and created a program, in cooperation with the company, to make sure its graduates have the machining skills the company needs. Job training was part of the incentives packages that were dangled in front of the companies to lure them to North Carolina.When I asked Richard Voorberg of Siemens why the German company chose to put its new plant in Charlotte instead of, say, China, he said that for highly skilled work, the labor cost differential wasn’t very big and that, in any case, factors like shipping costs and efficiency mattered more. “For this kind of manufacturing,” he said, “the US can compete with China.” Gray Construction’s backlog of projects suggests that other manufacturers, many of them foreign companies, have come to the same conclusion. That’s the optimistic part.
Now for the depressing part. Despite the size of the factories, the tens of millions in investments the companies are making, not to mention the millions in incentives and tax abatements that Charlotte and Winston-Salem used to land them, neither Siemens nor Caterpillar is going to employ that many people. Caterpillar is getting an estimated $14 million in incentives, yet it will employ only five hundred or so workers in Winston-Salem. Siemens doesn’t expect to employ more than eight hundred people in the Charlotte facility. The same robotics technology that makes these plants so efficient also means they don’t need many people on the factory floor.
At the airport, on my way back to New York, I saw a headline from that day’s Winston-Salem Journal: “Lost,” it read, “108,000 Jobs.” The article was about a study, conducted by the left-leaning Economic Policy Institute, that claimed that North Carolina had lost that many jobs, most of them in manufacturing, “due in part to the trade deficit with China.”
In particular, North Carolina’s once thriving furniture industry has been decimated in the last decade. But I saw another example just down the street from Caterpillar: a Dell factory that had employed more than nine hundred people— and had only been open four years— that shut down in late 2010. The Caterpillar factory won’t even replace the lost Dell jobs next door, much less put a dent in all the jobs lost in the last decade.
Manufacturing is terribly important. “More than any other sector, manufacturing creates additional jobs in the supply chain,” says Andrew Liveris, the chief executive of Dow Chemical, who has been pushing for a national manufacturing strategy.
It’s encouraging, for sure, that manufacturers again see America as a place where they can build things profitably. But my day in North Carolina suggests that the road back to true manufacturing prosperity is going to be a long one indeed.

Rico says it's gonna take more than this to stave off a repeat of 1929...