Leland Teschler, Executive Editor
On Twitter @ DW_LeeTeschler
The N.Y. Times grabbed a lot of attention recently when it published an article about Apple’s travails trying to source a tiny screw in the U.S. for its Mac computer. According to the report Apple could get vast quantities of custom screws in China on short notice. But tests of the Mac stalled because a 20-employee U.S. machine shop Apple used could turnout at most 1,000 screws a day. The Times claimed this anecdote is a microcosm of the problems Apple would face if it tried moving a significant amount of manufacturing out of China and back to the U.S.
This story hit home with us because of our recent teardown of an Apple Smartwatch. The watch contained numerous super-tiny screws, many of which had odd-ball formats which made them accessible only with special screwdrivers. It would not surprise us to learn the average metal-working shop has trouble making such ultraminiature fasteners.
But to those familiar with supply chains for manufacturers, the Times story seemed to have a number of holes in its logic, a fact noticed by a legion of commenters on Slashdot.org, a news site that once billed itself as providing “news for nerds.” The Times story gave the impression that Apple’s huge order for screws went to a Lockhart, Tex. specialty machine shop with little notice. Sources within Apple were portrayed as being surprised the supplier found itself understaffed and experiencing delays because materials “were regularly out of place or late,” to quote the Times.
In the real world, of course, manufacturers know better than to walk into a 20-person company and suddenly place an order for hundreds of thousands of parts. One suspects something is missing in the Times narrative. But perhaps including all the facts might blur the article’s central theme: Apple can’t practically bring iPhone manufacturing back to the U.S., and by implication, other manufacturers would have similar problems with efforts at U.S. onshoring.
However, the difficulty of manufacturing onshoring doesn’t make it not worth the effort. One compelling reason is what’s called the employment multiplier. A recent study by the Economic Policy Institute’s director of research Josh Bivens reveals that for every 100 jobs lost in durable manufacturing, another 744.1 indirectly related jobs are lost as well.
To get a handle on indirect jobs, consider that a job at a factory supports jobs in restaurants and diners where workers eat, grocery stores where they buy food, and medical offices where they pay for services. Public-sector jobs supported by worker taxes also fall in the indirect category.
In contrast, for every 100 jobs lost in retail trade, only 122.1 indirectly related jobs go away. In fact, of the major industry groups, durable manufacturing ranks third-highest in the support of indirect jobs. (The highest is utilities, 957.7, followed by real estate and rental leasing, with 879.7. But the number of direct jobs in these groups is relatively small and can’t grow a whole lot.)
Unfortunately, the U.S. industries growing the fastest bring up the rear in terms of supporting indirect jobs. That’s the case for health care (205.6), services (210.3), and food service/accommodation (161.2).
The lesson seems clear. Revitalizing U.S. manufacturing comes under the heading of a task that needs to happen for the good of the country regardless of how difficult it happens to be.