Think About It… the e-book version

by Todd Youngblood

The US lost 2.5 million manufacturing jobs from 1994-2004. Does that mean I should jump out the window? Or is it a cause for celebration?

I really love to throw that job-loss statistic out on the table when talking to folks who sell for or into the manufacturing industry. Virtually every time the response focuses on the negative. Woe is me!!! Our manufacturing base is eroding!!! Cheap Chinese labor is wiping out America’s economy!!!

Makes me want to scream… A negative reaction reflects a fundamental lack of understanding about what drives an economy, any economy. The good news is, it also reflects an opportunity to re-focus attention on THE core concept in crafting a value proposition.

Two and a half million jobs just gone is a bad thing, right? Well, actually, no. China, our alleged nemesis, lost 25 million manufacturing jobs over the same time period. That’s 10 times more! Have you read anything about Chinese manufacturing going into the tank? There’s a critical fact missing here. When did inflation-adjusted U.S. manufacturing output peak? The – perhaps surprising – answer is 2007. That means we’re producing more with less! That’s a tremendously good thing.

Let’s add some context. In 1776, roughly 96% of the jobs in the US were agricultural jobs. In 1870 it was 50%. In 2008 it’s less than 1%. The % of our total GDP from agriculture followed a similar path from 90%+ in colonial days to less than 1% today. At the same time, the total amount of food produced has steadily grown. Over the last 50 years it’s gone up over 3% every year. Did we really want to hang on to those back-breaking, end-your-life-by-40 farming jobs? Or did it make more sense to use intellectual and technological advances to free up human labor and still maintain steady growth in total food output? In other words, did it make sense to produce more with less in agriculture?

Of course it made sense. That’s why we did it. The massive increases in agricultural productivity enabled huge numbers of people to move into better, higher-paying manufacturing jobs. Next, history repeated itself. At the end of World War II, 30% of U.S. jobs were in manufacturing. Today it’s less than 10%. At the same time, total output has risen at a steady 6% annually. Did we really want to hang on to those mind-numbing jobs depicted by Charlie Chaplin’s Little Tramp in the movie Modern Times? Or did we want to produce more with less?

Guess what’s happening in services? It’s an industry in a fairly early stage of its life-cycle, so the total number of jobs is still increasing. However… Job growth is just over 3% per year, while output is growing at an 8.5% annual rate. History is repeating itself again. The number of services job will inevitably plummet. That’s a good thing. It means that we are still figuring out ways to produce more with less.

What industry will overtake services? I don’t know, but I do know this: Productivity caused the hunter-gatherer jobs to give way to agriculture. Productivity caused the agricultural jobs to give way to manufacturing. Productivity caused the manufacturing jobs to give way to services. Productivity will cause the services jobs to give way to something.

It’s always been about productivity. It always will be about producing more with less. Every sales call, letter, e-mail, plan, thought and value proposition needs to reflect our quest to demonstrate how we can increase our customer’s productivity. Otherwise we’ll just be in the way of progress.